Economics - Psychology's Neglected Branch

Written by Sam Vaknin


Continued from page 1

All-inclusiveness (anamnetic) – It must encompass, integrate, and incorporate allrepparttar facts known about economic behaviour. Coherence – It must be chronological, structured and causal. It must explain, for instance, why a certain economic policy leads to specific economic outcomes - and why. Consistency – It must be self-consistent. Its sub-"units" cannot contradict one another or go againstrepparttar 104966 grain ofrepparttar 104967 main "theory". It must also be consistent withrepparttar 104968 observed phenomena, both those related to economics and those pertaining to non-economic human behaviour. It must adequately cope with irrationality and cognitive deficits. Logical compatibility – It must not violaterepparttar 104969 laws of its internal logic andrepparttar 104970 rules of logic "out there", inrepparttar 104971 real world. Insightfulness – It must castrepparttar 104972 familiar in a new light, mine patterns and rules from big bodies of data ("data mining"). Its insights must berepparttar 104973 inevitable conclusion ofrepparttar 104974 logic,repparttar 104975 language, andrepparttar 104976 evolution ofrepparttar 104977 theory. Aesthetic – Economic theory must be both plausible and "right", beautiful (aesthetic), not cumbersome, not awkward, not discontinuous, smooth, and so on. Parsimony – The theory must employ a minimum number of assumptions and entities to explainrepparttar 104978 maximum number of observed economic behaviours. Explanatory Powers – It must explainrepparttar 104979 behaviour of economic actors, their decisions, and why economic events developrepparttar 104980 way they do. Predictive (prognostic) Powers – Economic theory must be able to predict future economic events and trends as well asrepparttar 104981 future behaviour of economic actors. Prescriptive Powers – The theory must yield policy prescriptions, much like physics yields technology. Economists must develop "economic technology" - a set of tools, blueprints, rules of thumb, and mechanisms withrepparttar 104982 power to changerepparttar 104983 " economic world". Imposing – It must be regarded by society asrepparttar 104984 preferable and guiding organizing principle inrepparttar 104985 economic sphere of human behaviour. Elasticity – Economic theory must possessrepparttar 104986 intrinsic abilities to self organize, reorganize, give room to emerging order, accommodate new data comfortably, and avoid rigid reactions to attacks from within and from without. Many current economic theories do not meet these cumulative criteria and are, thus, merely glorified narratives.

But meetingrepparttar 104987 above conditions is not enough. Scientific theories must also passrepparttar 104988 crucial hurdles of testability, verifiability, refutability, falsifiability, and repeatability. Yet, many economists go as far as to argue that no experiments can be designed to testrepparttar 104989 statements of economic theories.

It is difficult - perhaps impossible - to test hypotheses in economics for four reasons.

Ethical – Experiments would have to involve human subjects, ignorant ofrepparttar 104990 reasons forrepparttar 104991 experiments and their aims. Sometimes evenrepparttar 104992 very existence of an experiment will have to remain a secret (as with double blind experiments). Some experiments may involve unpleasant experiences. This is ethically unacceptable. Design Problems - The design of experiments in economics is awkward and difficult. Mistakes are often inevitable, however careful and meticulousrepparttar 104993 designer ofrepparttar 104994 experiment is. The Psychological Uncertainty Principle – The current mental state of a human subject can be (theoretically) fully known. Butrepparttar 104995 passage of time and, sometimes,repparttar 104996 experiment itself, influencerepparttar 104997 subject and alter his or her mental state - a problem known in economic literature as "time inconsistencies". The very processes of measurement and observation influencerepparttar 104998 subject and change it. Uniqueness – Experiments in economics, therefore, tend to be unique. They cannot be repeated even whenrepparttar 104999 SAME subjects are involved, simply because no human subject remainsrepparttar 105000 same for long. Repeatingrepparttar 105001 experiments with other subjects casts in doubtrepparttar 105002 scientific value ofrepparttar 105003 results. The undergeneration of testable hypotheses – Economic theories do not generate a sufficient number of hypotheses, which can be subjected to scientific testing. This has to do withrepparttar 105004 fabulous (i.e., storytelling) nature ofrepparttar 105005 discipline. In a way, economics has an affinity with some private languages. It is a form of art and, as such, it is self-sufficient and self-contained. If certain structural, internal constraints and requirements are met – a statement in economics is deemed to be true even if it does not satisfy external (scientific) requirements. Thus,repparttar 105006 standard theory of utility is considered valid in economics despite overwhelming empirical evidence torepparttar 105007 contrary - simply because it is aesthetic and mathematically convenient.

So, what are economic "theories" good for?

Economic "theories" and narratives offer an organizing principle, a sense of order, predictability, and justice. They postulate an inexorable drive toward greater welfare and utility (i.e.,repparttar 105008 idea of progress). They render our chaotic world meaningful and make us feel part of a larger whole. Economics strives to answerrepparttar 105009 "why’s" and "how’s" of our daily life. It is dialogic and prescriptive (i.e., provides behavioural prescriptions). In certain ways, it is akin to religion.

In its catechism,repparttar 105010 believer (let's say, a politician) asks: "Why... (and here follows an economic problem or behaviour)".

The economist answers:

"The situation is like this not becauserepparttar 105011 world is whimsically cruel, irrational, and arbitrary - but because ... (and here follows a causal explanation based on an economic model). If you were to do this or thatrepparttar 105012 situation is bound to improve".

The believer feels reassured by this explanation and byrepparttar 105013 explicit affirmation that there is hope providing he followsrepparttar 105014 prescriptions. His belief inrepparttar 105015 existence of linear order and justice administered by some supreme, transcendental principle is restored.

This sense of "law and order" is further enhanced whenrepparttar 105016 theory yields predictions which come true, either because they are self-fulfilling or because some real "law", or pattern, has emerged. Alas, this happens rarely. As "The Economist" notes gloomily, economists haverepparttar 105017 most disheartening record of failed predictions - and prescriptions.



Sam Vaknin is the author of Malignant Self Love - Narcissism Revisited and After the Rain - How the West Lost the East. He is a columnist for Central Europe Review, PopMatters, and eBookWeb , a United Press International (UPI) Senior Business Correspondent, and the editor of mental health and Central East Europe categories in The Open Directory Bellaonline, and Suite101 .

Visit Sam's Web site at http://samvak.tripod.com




Narcissism in the Boardroom - Part II

Written by Sam Vaknin


Continued from page 1

But pathological narcissism is not an isolated phenomenon. It is embedded in our contemporary culture. The West's is a narcissistic civilization. It upholds narcissistic values and penalizes alternative value-systems. From an early age, children are taught to avoid self-criticism, to deceive themselves regarding their capacities and attainments, to feel entitled, and to exploit others.

As Lilian Katz observed in her important paper, "Distinctions between Self-Esteem and Narcissism: Implications for Practice", published byrepparttar Educational Resources Information Center,repparttar 104965 line between enhancing self-esteem and fostering narcissism is often blurred by educators and parents.

Both Christopher Lasch in "The Culture of Narcissism" and Theodore Millon in his books about personality disorders, singled out American society as narcissistic. Litigiousness may berepparttar 104966 flip side of an inane sense of entitlement. Consumerism is built on this common and communal lie of "I can do anything I want and possess everything I desire if I only apply myself to it" and onrepparttar 104967 pathological envy it fosters.

Not surprisingly, narcissistic disorders are more common among men than among women. This may be because narcissism conforms to masculine social mores and torepparttar 104968 prevailing ethos of capitalism. Ambition, achievements, hierarchy, ruthlessness, drive - are both social values and narcissistic male traits. Social thinkers likerepparttar 104969 aforementioned Lasch speculated that modern American culture - a self-centred one - increasesrepparttar 104970 rate of incidence ofrepparttar 104971 narcissistic personality disorder.

Otto Kernberg, a notable scholar of personality disorders, confirmed Lasch's intuition: "Society can make serious psychological abnormalities, which already exist in some percentage ofrepparttar 104972 population, seem to be at least superficially appropriate."

In their book "Personality Disorders in Modern Life", Theodore Millon and Roger Davis state, as a matter of fact, that pathological narcissism was oncerepparttar 104973 preserve of "the royal andrepparttar 104974 wealthy" and that it "seems to have gained prominence only inrepparttar 104975 late twentieth century". Narcissism, according to them, may be associated with "higher levels of Maslow's hierarchy of needs ... Individuals in less advantaged nations .. are too busy trying (to survive) ... to be arrogant and grandiose".

They - like Lasch before them - attribute pathological narcissism to "a society that stresses individualism and self-gratification atrepparttar 104976 expense of community, namelyrepparttar 104977 United States." They assert thatrepparttar 104978 disorder is more prevalent among certain professions with "star power" or respect. "In an individualistic culture,repparttar 104979 narcissist is 'God's gift torepparttar 104980 world'. In a collectivist society,repparttar 104981 narcissist is 'God's gift torepparttar 104982 collective."

Millon quotes Warren and Caponi's "The Role of Culture inrepparttar 104983 Development of Narcissistic Personality Disorders in America, Japan and Denmark":

"Individualistic narcissistic structures of self-regard (in individualistic societies) ... are rather self-contained and independent ... (In collectivist cultures) narcissistic configurations ofrepparttar 104984 we-self ... denote self-esteem derived from strong identification withrepparttar 104985 reputation and honor ofrepparttar 104986 family, groups, and others in hierarchical relationships."

Still, there are malignant narcissists among subsistence farmers in Africa, nomads inrepparttar 104987 Sinai desert, day laborers in east Europe, and intellectuals and socialites in Manhattan. Malignant narcissism is all-pervasive and independent of culture and society. It is true, though, thatrepparttar 104988 way pathological narcissism manifests and is experienced is dependent onrepparttar 104989 particulars of societies and cultures.

In some cultures, it is encouraged, in others suppressed. In some societies it is channeled against minorities - in others it is tainted with paranoia. In collectivist societies, it may be projected ontorepparttar 104990 collective, in individualistic societies, it is an individual's trait.

Yet, can families, organizations, ethnic groups, churches, and even whole nations be safely described as "narcissistic" or "pathologically self-absorbed"? Can we talk about a "corporate culture of narcissism"?

Human collectives - states, firms, households, institutions, political parties, cliques, bands - acquire a life and a character all their own. The longerrepparttar 104991 association or affiliation ofrepparttar 104992 members,repparttar 104993 more cohesive and conformistrepparttar 104994 inner dynamics ofrepparttar 104995 group,repparttar 104996 more persecutory or numerous its enemies, competitors, or adversaries,repparttar 104997 more intensiverepparttar 104998 physical and emotional experiences ofrepparttar 104999 individuals it is comprised of,repparttar 105000 strongerrepparttar 105001 bonds of locale, language, and history -repparttar 105002 more rigorous might an assertion of a common pathology be.

Such an all-pervasive and extensive pathology manifests itself inrepparttar 105003 behavior of each and every member. It is a defining - though often implicit or underlying - mental structure. It has explanatory and predictive powers. It is recurrent and invariable - a pattern of conduct melding distorted cognition and stunted emotions. And it is often vehemently denied.



Sam Vaknin is the author of Malignant Self Love - Narcissism Revisited and After the Rain - How the West Lost the East. He is a columnist for Central Europe Review, PopMatters, and eBookWeb , a United Press International (UPI) Senior Business Correspondent, and the editor of mental health and Central East Europe categories in The Open Directory Bellaonline, and Suite101 .

Visit Sam's Web site at http://samvak.tripod.com




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