Journaltalk - Adam Smith, Behavioral Economist

Adam Smith, Behavioral Economist

About this article

Author
  • NaVa Ashraf
  • Colin F. Camerer
  • George Loeweinstein.
Volume Number 19
Issue Number 3
Pages 131-145
Publication year 2005

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About JOURNAL OF ECONOMIC PERSPECTIVES

Publisher AMER ECONOMIC ASSOC
Grouping social sciences
Categories economics

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1 comments

  1. In this article, the authors conclude that Adam Smith is a behavioral economist. They base this conclusion on a number of behavioral insights derived from the Theory of Moral Sentiments (TMS). Mainly, they call on preferences, the dual-process framework of the passions and the impartial spectator, loss aversion, intertemporal choice, and overconfidence, as the clues connecting Smith with contemporary behavioral economics. Thus, they seem to believe that a pattern of people’s behavioral manifestations can be traced by economists through lab experiments, neuroscience research, etc., and, in this respect, Adam Smith’s theory of moral behavior provides important inspiration.

    Contrary to Ashraf et al., I consider that in order to arrive to a more correct conclusion on Smith’s methodological position in the economic science, one has to look at both Smith’s behavioral insights in TMS, and his economic/cognitive insights in the Wealth of Nations (WN). The key is to realize that although Smith did dedicate an entire treatise to theorizing about human passions, his ulterior focus became people’s drive for economic improvement. Thus, in the WN he pursued the question on what are the circumstances propitious for the actions of the “the great mob(s) of mankind” to attain their passion for material well-being? Or, what environment helps people’s actions to converge, be compatible with one another, in spite of the other behavioral innate dimensions Smith evokes in TMS.

    From this perspective, rather than being a behavioral economist, who resumes himself at attributing people’s behavior to their innate moral nature, Smith might well be seen an institutional economist (in the New Institutional Economics field), who’s works provide a basis for a closer inquiry into the social and legal norms which provide individuals with the framework of incentives that guide them to behave morally or immorally in their social and market interactions.

    posted 22 Sep 2010 by Olga

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