About

0309A-PatrickJulius-March2015-4x6-300My name is Patrick Julius. I have a bachelor’s degree in cognitive science from the University of Michigan at Ann Arbor and a master’s degree in economics from California State University at Long Beach. Fitting this mix of degrees, I specialize in the new subfield of cognitive economics. This makes me in one sense heterodox; I disagree adamantly with most things that typical neoclassical economists say. But in another sense, I am actually quite orthodox. All I’m doing is bringing the insights of psychology, sociology, history, and political science—not to mention ethics—to the study of economics. The problem is simply that economists have divorced themselves so far from the rest of social science.

This blog, which I update every weekend, is about the current state of economics, both as it is and how economists imagine it to be. One of my central points is that these two are quite far apart, which has exacerbated if not caused the majority of economic problems in the world today. (Economists didn’t invent world hunger, but for over a decade now we’ve had the power to end it and haven’t done so. You’d be amazed how cheap it would be; we’re talking about 1% of First World GDP at most.)

The reason I call it “human economics” is that I want to emphasized that economics is about real human beings, not abstract idealized agents. Real human beings behave quite differently from idealized models–and quite differently from one another. Real human beings care about each other and value things outside themselves. Real human beings seek meaning and purpose in their lives, not simply ever more acquisition of wealth.

I contrast this with what I call “infinite identical psychopaths” (which used to be the name of the blog, but I decided it was a bit too confrontational), because this is what neoclassical economists appear to believe human beings are, at least if we judge by the models they use. These are the typical assumptions of a neoclassical economic model:

      1. Perfect information: All individuals know everything they need to know about the state of the world and the actions of other individuals.
      2. Rational expectations: Predictions about the future can only be wrong within a normal distribution, and in the long run are on average correct.
      3. Representative agents: All individuals are identical and interchangeable; a single type represents them all.
      4. Perfect competition: There are infinitely many agents in the market, and none of them ever collude with one another.
      5. “Economic rationality”: Individuals act according to a monotonic increasing utility function that is only dependent upon their own present and future consumption of goods.

I put the last one in scare quotes because it is the worst of the bunch. What economists call “rationality” has only a distant relation to actual rationality, either as understood by common usage or by formal philosophical terminology.

Don’t be scared by the terminology; a “utility function” is just a formal model of the things you care about when you make decisions. Things you want have positive utility; things you don’t want have negative utility. Larger numbers reflect stronger feelings: a bar of chocolate has much less positive utility than a decade of happy marriage; a pinched finger has much less negative utility than a year of continual torture. Utility maximization just means that you try to get the things you want and avoid the things you don’t. By talking about expected utility, we make some allowance for an uncertain future—but not much, because we have so-called “rational expectations”.

Since any action taken by an “economically rational” agent maximizes expected utility, it is impossible for such an agent to ever make a mistake in the usual sense. Whatever they do is always the best idea at the time. This is already an extremely strong assumption that doesn’t make a whole lot of sense applied to human beings; who among us can honestly say they’ve never done anything they later regretted?

The worst part, however, is the assumption that an individual’s utility function depends only upon their own consumption. What this means is that the only thing anyone cares about is how much stuff they have; considerations like family, loyalty, justice, honesty, and fairness cannot factor into their decisions. The “monotonic increasing” part means that more stuff is always better; if they already have twelve private jets, they’d still want a thirteenth; and even if children had to starve for it, they’d be just fine with that. They are, in other words, psychopaths..

I think “identical” is rather self-explanatory; by using representative agent models, neoclassicists effectively assume that there is no variation between human beings whatsoever. They all have the same desires, the same goals, the same capabilities, the same resources. Implicit in this assumption is the notion that there is no such thing as poverty or wealth inequality, not to mention diversity, disability, or even differences in taste. (One wonders why you’d even bother with economics if that were the case.)

As for “infinite”, that comes from the assumptions of perfect information and perfect competition. In order to really have perfect information, one would need a brain with enough storage capacity to contain the state of every particle in the visible universe. Maybe not quite infinite, but pretty darn close. Likewise, in order to have true perfect competition, there must be infinitely many individuals in the economy, all of whom are poised to instantly take any opportunity offered that allows them to make even the tiniest profit.

If we continue to think about economics in terms of these infinite identical psychopaths, we will keep getting wrong answers, and potentially destroy the lives of millions of people. But we can do better; we can build a new economics to understand real human beings.

 

9 thoughts on “About

  1. Am I to understand, that, because of your degree, that you assert, that all should follow you to the lemming cliff to their death, of which you would not do as the lead lemming?

    Liked by 1 person

  2. Hey Patrick, I just found your blog through your article “What is the processing power of the human brain?” I loved the article, it answered my question and offered me a few others.

    I have to say, you express a dynamic mix of knowledge and interests in your writing, which makes it a pleasure to read your work. I laughed and learned a bunch!

    I will be referencing your blog on my own and look forward to reading more of your work!

    Take care.

    Like

  3. Hey, love the bio. That’s what I do in the field of faith. Gets me respect, but accomplished nothing. Hope you have better results. I have a question regarding your article on unions being a good kind of collusion. Thanks for all the information, by the way, it was very helpful.

    I am dealing with our union who I believe colluded with Kroger to eliminate student employees on Leave of Absence. The union (UFCW) has to provide insurance for all Kroger employees even if an employee is not a union member or pays dues. Since the Pandemic Kroger is having a difficult time getting and keeping employees. Yet, Kroger has promised to Feed the Future of all its employees seeking higher education by providing student employee Leave of Absence.

    In 2021 the union ratified a policy that gets the union off the hook for benefits provided for non-paying union “members” as well as helps keep employees working full-time at Kroger during a difficult time for them. It is hard to see that a form of line-item specific collusion did not occur during this CBA, but that the collusion was a win-win solution at the expense of the employees suppose to be protected by the union.

    What are your thoughts?

    Like

    • Not everything every union does is good, but overall I stand by my claim that the world is better off with unions than without them. Whatever specific harms particular unions may cause, they are clearly far smaller than the damage that would be done by corporations in a world where there were no unions.

      Indeed, even your particular example seems to support that: What, you think that if there had been no union, Kroger would have treated their employees *better*?

      Like

      • Well, answer this: Have you compared the Kroger’s without unions to the ones with them? Do you think that the nonunion stores’ employees are somehow suffering more than union stores? If so, then why wouldn’t they all just become union stores? Another question: Who polices the unions? Well, I’ll tell you– the Govt. If you look at all the regulations and laws and complaint links regarding the unions, you will see just how corrupt the unions have been over the century.

        Look, corporations are slave drivers. Unions are rackets. Corporations treat employees like slaves; unions treat members like pigeons. The difference– I can fight corporate using govt, labor attorneys, media and my own work ethic. It is very difficult to fight the collusion, incompetence and negligence of the union.

        I’m not blind. I have been treated unfairly by Kroger. I have been treated unfairly by the union. My conclusion– Kroger sucks; the union sucks more.

        Like

      • (1) “Do you think that the nonunion stores’ employees are somehow suffering more than union stores? If so, then why wouldn’t they all just become union stores?”

        There’s an obvious answer to this and a non-obvious answer.

        The obvious answer is that many of the non-union stores are non-union because their managers won’t let them unionize, not because their workers don’t want to.

        The non-obvious answer is that the *threat* of unionizing can be an effective deterrent which may cause managers of non-union stores to treat their employees better. So even if you don’t see any difference in treatment of employees between the two classes of store, that doesn’t mean the unions aren’t accomplishing anything.

        But really, why don’t I throw the question back at you: If unions suck so much, why do workers ever join unions? (Let me remind you that “closed shops” are illegal in the US, and “union shops” are illegal in “right-to-work” states. People join unions of their own free will.)

        Turns out that something can suck and people can still participate in it, because their other options are worse.

        Like

  4. So, question for you: How long have you worked blue collar and manual labor? How many unions have you belonged? How many nonunion companies have you worked? How long have you worked for Kroger or another grocer? It’s easy to wax poetic from the comfort of a degree-based wisdom. It’s another thing to have one’s iron in the fire. I have both the degree and the fire. You’re welcome.

    Like

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