One reaction to my recent piece in Econ Journal Watch is "economics isn't about what people say or believe; it's about what people DO." The easy response is: Not anymore, it isn't! Survey research has exploded in economics....I posted this comment:
I know by introspection that my beliefs affect my behavior, and I know by experience that asking people what they are doing is often informative. So how did a doctrine so contrary to common sense ever become conventional wisdom?...
How can asking people be so useful for getting new ideas, but so useless for testing existing ideas? It's not impossible, but highly implausible. If people have insightful new things to tell us, they probably have informative old things to tell us too....
I hate to speak ill of the dead, but duty calls. Behaviorism had a lot of smart adherents, but their arguments on its behalf were lame from the start. Furthermore, I strongly suspect that even in its heydey, a lot of economists didn't believe it, but were too scared to say so.
"I know by introspection that my beliefs affect my behavior, and I know by experience that asking people what they are doing is often informative. So how did a doctrine so contrary to common sense ever become conventional wisdom?"
Yes "beliefs affect behavior" and "asking people what they are doing is often informative." But stated beliefs don't reliably affect behavior, and people often don't give informative answers. Most people say, for example, that they oppose government spending, but most of those same people will scream like mad when the programs they favor are threatened.
The reliable prediction of economic choices on the basis of expressed beliefs or attitudes requires a degree of skill in posing questions that is beyond the ability of most surveyors. The rare, skillful survey is so intrusive or annoying as to deter all but the two-sigma cases who enjoy responding to surveys. That is to say, surveys are likely to produce either garbage or unrepresentative views.
Talk is cheap, inconsistent, and often at odds with behavior. The only reliable way to understand behavior is to observe behavior.
As the old saying goes (revised slightly to fit the occasion): Don't believe a word I say, just watch what I do.
"...How can asking people be so useful for getting new ideas, but so useless for testing existing ideas? It's not impossible, but highly implausible. If people have insightful new things to tell us, they probably have informative old things to tell us too."
That's sloppy reasoning. Here's why: "Asking people" can suggest testable hypotheses, which can be tested only by collecting data about economic behavior. But, as I explain above, "asking people" isn't a valid way of collecting data with which to test hypotheses.
Glen Whitman of Agoraphilia seems to be on my side of the argument:
[P]eople will say all kinds of things, but what they say means very little unless accompanied by real choices, with real sacrifices and trade-offs. “Actions speak louder than words,” goes the old cliché.I rest my case.
Of course, speech is also a form of action. In evaluating a speech act, the revealed preference approach would conclude that the subjective benefit of speaking must be greater than the subjective cost of speaking, and no more. It would not foolishly assume the meaningfulness of what’s been said. Saying “I want X” does not reveal that I want X; it reveals that I want someone to think I want X. If the behavioral objection to revealed preference is right, then the speech act may reveal even less – but it certainly doesn’t reveal more.
If lots of people say, “I want to quit smoking,” maybe they really do wish to quit, all things considered, including the pain and difficulty of quitting. Or maybe they just know the “right” answer to the question. Quitting smoking is hard; saying you’d like to quit is easy. Ask people if they’d like to visit Jamaica, and I’ll bet most of them say yes, and they won’t be lying. But tickets to Jamaica are expensive, and talk is cheap. The real test is whether they’re buying the tickets and boarding the plane.
