Question about Econ and how it relates to other social sciences

Behavioral economists study a lot of the things that I think you are curious about, you may want to look a little further into that. There have been several really good studies related to organized/unorganized crime, religion and many other things that give people incentives to act a certain way.I can't think of any off the top of my head, but if I get a chance I will post a few in this thread. Of course, economic models require assumptions which limits their accuracy but they certainly can assist in the creation of legislation and policies.

quote:

---

do you think there a better way to study the situation before the choices are made, in order to more effectively predict the outcome?

---

"Forecasts are difficult to make...particularly ones about the future." -Samuel Goldwyn

quote:

---

if we could excel at say, psychology, could we use this to better explain economics (or vice versa)?

---

I do believe that psychology could play a larger role in economics, but being that every person is different, creating economic models and forecasts would be very difficult. I have only studied behavioral economics briefly, but would also like to study further into this, it is a very interesting field of study.

quote:

---

but if you could type out a person i bet you could predict their behavior really well

---

Exactly what type of behavior are you thinking about? Are you talking more about consumer choices or crime?

I would have no idea how to come up with anything like that, but I am sure there is someone out there that could come up with at least a decent predictor. The only issue is the number of externalities that can affect a person's choice on any given decision. For example, when I go to the grocery store to buy food the main factors that affect what I buy are obviously what I need, and my budget. But other factors such as: when I last ate, the weather, my mood, how much time I have to spend in the store, if I am with anyone in the store, if I see a desirable alternative first can all affect my decision tremendously. I just don't see how anymore can predict behavior so precisely even if the model was created for only one type of person.

quote:

---

if we could excel at say, psychology, could we use this to better explain economics (or vice versa)?

---

Sort of. I do think there is a sort of underlying truth to all fields of human knowledge that helps us understand each one better the more we know the interconnections.

I think the science of microeconomics is pretty well understood, and to a large extent, it actually HAS been used to get people to better understand cognitive psychology. For example, transactional interpersonal theory is all the rage, from Toru Sato to Dr. Phil, and it largely focuses on getting people to be more rational about their own behavioral patterns by getting them to see the emotional "payouts" and "costs" they get for doing the weird things they do.

Von Neumann & Nash's game theory from the 40's & 50's also contributes a lot to the fields of economics, international relations, and once again ... cognitive psychology/therapy.

Going the other way, I'm not sure how much studying psychology has to offer economics. We have "public choice theory" that was developed at UVa and other places, but that's mostly just an economic formalization of stuff we already knew from the Founding Fathers of the Constitution (or going back further, to political thinkers like Locke, Hobbes, Montesquieu, & Bastiat).

I would say that in general, psychology changes with new knowledge in economics, but that economics doesn't really change with new knowledge in psychology (although you might have more detailed models developed, like with "prospect theory" or the "Nudge" theories of Sunstein & Thaler). Economics accounts for behavioral quirks and emotional eccentricities, but only by just putting them into models as inputs. The models themselves are mostly mathematical, existing in their own realm.

well i completely understand in the academic sense how econ will influence psych moreso, b/c psych is still more individual-centric. economics is a much more generalized study, which will help show psychologists where to look into the individual

but i think it is pretty...fatalistic to exclude the individual it's affect on the system

quote:

---

By its nature, though, economics (and all other mathematical models for that matter) is made of simplified explanations added after the fact, and you've got to be careful enough to question the model's assumptions. Because from a self-contained perspective, the model should never be wrong unless there is faulty deductive reasoning or mathematical flaws. But with inductive or inferential reasoning (i.e., how we actually know most of the stuff we know), there is always new information out there that can throw everything off and force you to create a more sophisticated model to account for it.

---

it's funny that i read this after arguing about the BCS, with the argument started by complaints about the computer formulas being junk

SlowFlowPro, have you read "Freakonomics?" If you have not, I strongly recommend it. A good bit of the book is answering the question of why people cheat, commit crime, etc. Not to ruin the ending (as if there is an ending in observational non-fiction), but the point the authors are trying to make is that human beings take action and make decisions based on incentive. I think this idea is at the root of your question. Economics as a science is more concerned with finding causation between two or more independent variables. To your point, psychology certainly plays a part in that most (if not all) people are innately driven by incentives and personal gain. Perfect example: Nucky Thompson send a crate of Pimm's Cup to the senator with a note that reads "I do expect to have everything" (an obvious reference to the scene where Nucky bribes to get government money for new roads).