The Daily Parker

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Gentler economics

Duke's Dan Ariely suggests accepting irrationality in designing economic policies:

When it comes to designing things in our physical world, we all understand how flawed we are and design the physical world around us accordingly. We realize that we can’t run very fast or far, so we invent cars and design public transportation. We understand our physical limitations, and we design steps, electric lights, heating, cooling, etc., to overcome these deficiencies. ...

What I find amazing is that when it comes to designing the mental and cognitive realm, we somehow assume that human beings are without bounds. We cling to the idea that we are fully rational beings, and that, like mental Supermen, we can figure out anything. ...

Don’t misunderstand me, I value standard economics and I think it provides important and useful insights into human endeavors. But I also think that it is incomplete, and that accepting all economic principles on faith is ill-advised and even dangerous. If we’re going to try to understand human behavior and use this knowledge to design the world around us—including institutions such as taxes, education systems, and financial markets—we need to use additional tools and other disciplines, including psychology, sociology, and philosophy.

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