Moral sentiments and economics

Having read it some years ago, I’ve been looking through Economic Analysis, Moral Philosophy and Public Policy by Daniel Hausman and Michael McPherson while revising a paper for publication. It reminded me – if ever I absorbed it properly in the first place – that economists use the word ‘normative’ in a specific sense. It means, to us, the opposite of positive, something involving ethics or value judgements, and therefore outside the scope of what economists aim to do. We concentrate on ‘positive’ questions, following the distinction famously made by Milton Friedman, and Lionel Robbins before him.

However, as Hausman and McPherson argue, while economists claim ethical issues are a sphere apart, they/we often assume rationality – and that itself implies a moral stance. “Like morality, rationality is normative. One ought to be rational. One is wicked if not moral and foolish if not rational.” The book goes on to argue the case that the “moral principles implicit in standard views of rationality are implausible.” As a card carrying economist, I don’t agree with all they say here, but do wholeheartedly agree that economics and ‘moral sentiments’ cannot be separated. The impartiality economics aims for in trying to insist on being a ‘positive’ science is laudable, and economics should continue to distinguish the technical and value-laden elements of analysis. But we should not continue to shy away from the ethical debate. Doing so has not served the reputation of economics at all well.



One thought on “Moral sentiments and economics

  1. The problem with rationality as a normative assumption is that it is ungrounded.
    By that I mean rational reasoning starts from beliefs and preferences (I presume Savage’s model of choice). Both of these are arbitrary and ungrounded. Even the assumption in decision theory that preferences must be consistent is, in the end, dubious.
    For far too long we in the elite have presumed the higher ground on the basis of rationality, not realizing that all to often that rational deduction is based on, from my perspective, biased, self-serving, unrealized, beliefs and preferences. Hmm

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