The post is related to the today published article of Geoffrey M. Hodgson, Why rumours of the death of Max U are exaggerated .
In it, he discussed the rumoured death of Max U, whom we all know from economics - the only economist defying the law of mortality :-) For those not following the line of thought - we are talking about utility maximization, the cornerstone of the so-called mainstream economics. But, to be honest, neither Max Hap or Max Mor, or anything related simply to morality, as Geoff Hodgson claims, will be enough either… Far from it, to be sincere.
Simply, humans are complex beings, to start with. I do not concur either with the social ontology group that mathematics should not be used at all in economics, for more see any work of Tony Lawson or the recently published article of Yannick Slade-Caffarel here. But, if the economics and "its" (sic!) math is to survive, better to say, to progress, it will simply need to revisit the libraries and study (and then, consequently, model!) humans, society and culture way better than it did so far. Way better… To some really basic, merely technical/econometric issues, already Dave Giles has pointed to, here.
And this is by far only a floscule – I mean this 100%, with all the heavy (theoretical and modelling) work it brings with it…
One more issue: I think economics has become prone to the self-fulfilling prophecy. At the university, you get taught different ways to optimize some mathematical functions (we could start the list with Lagrange, Bellman, Hamilton, etc.) like this was the essence of economic thinking. Then, an economist goes out and sees the world through these spectacles. But real (other) people do not do it, at least "in Gaussian terms"… If I'm frank, I do not optimize in my life, I rarely even think (only) in this way. My decisions are based on my ratio, my logic, my intuition, my past experiences, my current feeling, emotions, compassion, if you want some basic moral and ethics (i.e. what I think is the right/just thing to do), my ambitions, my plans, my vision for the future, and this is still only the start (hmm – Max U was not mentioned, although it surely also counts here). And then, after some thinking, trying to consider all of the above, I make a decision, in whatever way, and, seen from a psychological viewpoint, if I'm happy with it, say, in the next hour, I go on freely. This is how I work. What do you want me to optimize here? And how? With trivariate doubly robust kernel local sieve-based HAC time series cross section incidental-parameter-free GMM estimator? What the f… is going on here? From me, one might start to even expect I would optimize with the (imaginary) estimator above, with the math I'm doing currently… But from my neighbour? My mother? My friends? My niece, nephew, brother-in-law? They don't even know what an "estimator" is… And they don't need to!!! Heaven's sake!"#$
This might sound a floscule, but again it is not. Economics needs to start studying reality, real people, from flesh and blood. Study (!) them, and not convince them they should change (and use the estimator above). But: this is far from going banal, "down", basic – precisely the opposite: it is to start going up (!), into the world of real complexity! Heavy complexity!! With no super-banal and simple optimization lines noted above. The real questions are a) will this (and when) happen?; and b – more interesting) where will it lead us?
Let's get surprised. Until then: let's leave Max U to die, with no special need to mourn either.
Written by: Andrej Srakar.