Economics for social animals

I’ve been reading the latest book by Robert Frank, Under the Influence: Putting Peer Pressure to Work. Although I greatly admire his work, and he has a knack for catching the moment – as with Luxury Fever or The Winner Take All Society –  I must confess I found this one a bit dull. This is nothing to do about disagreeing with the idea, which is to bring together thinking about social norms, altruism, positional goods and behavioural peer effects together to tease out policy implications, or rather policy approaches. This all seems blindingly obvious to me, and indeed one of ten lectures in my public policy economics course (one chapter in my Markets, State and People) covers exactly these social influences. I agree, too, that more economists ought to be more aware of social influence: we are not isolated individuals in making choices.

There are some deep questions for economists, once you accept the seemingly incontrovertible evidence that social norms can change, advertising works to persuade us to buy things, and positional arms races occur. What does it imply for a discipline whose models and welfare analysis are based on the concept of fixed preferences? For example, the way price indices are calculated – used to calculate in turn ‘real’ growth and productivity – assumes fixed preferences; but there are constant innovations and new goods, and there is no settled way of taking these into account in dividing pounds or euros spent into price and ‘real’ components.

Back to the book, though. Yes, of course to ensuring economics and policy advice are consistent with evidenced insights from social psychology or cognitive science or evolutionary theory. Yes, of course context affects how people make economic choices. But ….perhaps it was my frame of mind this week, but Under the Influence didn’t sing to me. It seems very long-winded. In fact, the prologue claims as a virtue the repetition in the book, arguing it will help get the message to stick. Students who are not familiar with the material might really enjoy this and find it sinking in. But not one for me.

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