Yes, you should examine the implications of your theory

And yes, you should examine the implications of your theory wherever they lead you:

Consider the case of behavioral economics. One of the observed patterns is a status quo bias—a tendency to over weight potential losses relative to potential gains. I am not sure if it has occurred to any of those arguing for behavioral economics that two of the most striking examples of that pattern are the precautionary principle and the campaign to slow or prevent global warming.

Further:

For one final example, consider the case of Social Security. Behavioral economics provides an argument in favor of it. Individuals badly underweight costs and benefits in the distant future—so-called hyperbolic discounting. Hence they will be less willing than they should be to provide voluntarily for their old age. Hence the government must solve the problem via a program of forced saving.

The problem with the argument is that hyperbolic discounting, insofar as it is real, applies to voters and politicians as well as to people saving for their old age. Hence it is predictable that the force will be real but the saving will be imaginary—there are always politically profitable ways of spending money that happens to be lying around—leaving the system with a trust fund full of IOU\’s.

For if you don\’t examine all of the implications of your theory it could well come around and bite you on the arse.

1 thought on “Yes, you should examine the implications of your theory”

  1. O/T I suppose, but I’m not sure I’d give any paper that refers to so called hyperbolic discounting, insofar as it is real the time of day. That’s a theory you can take to the bank.

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