Economists have in the past often treated human beings as ideally rational. But they aren't. In this episode of the Social Science Bitespodcast Robert J. Shiller discusses how behavioural economics, drawing on psychology and even neuroscience, is transforming the nature of the subject and giving a better picture of markets and how they operate. Social Science Bites is made in association with SAGE.

Robert J. Shiller on Behavioural Economics

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 Here's a thought experiment: You want to spend a reasonably large sum of money providing assistance to a group of people with limited means. There's a lot of ways you might do that with a lot of strings and safeguards involved, but what about just giving them money -- "get cash directly into the hands of the poor in the cheapest, most efficient way possible." You and I might prefer that, since we, of course, are reputable people and good stewards and understand our own particular needs. But what about, well, others?   Economist Tavneet Suri has done more than just think about that; her fieldwork includes handing out money across villages in two rural areas in Kenya to see what happens. Her experiments include giving out a lump sum of cash and also spreading out that same amount over time. The results she details for host David Edmonds in this Social Science Bites podcast are, to be frank, heartening, although the mechanisms of disbursement definitely affect the outcomes.   Despite the good news, the idea of a universal basic income is by no means a settled remedy for helping the poor. For one thing, Suri says, "it's super, super expensive. It’s really expensive. And so, the question is, “Is that expense worth it?” And to understand that I think we need a few more years of understanding the benefits, understanding what people do with the incomes, understanding whether this can really kickstart these households out of poverty."   And perhaps the biggest question is whether the results of fieldwork in Kenya is generalizable. "I would love to do a study that replicates this in the West," she says. "The one thing about the West that I think is worth saying that's different is you wouldn't add it on top of existing programs. The idea is you would substitute existing programs with this. And that to me is the question: if you substituted it, what would happen?"   Suri is the Louis E. Seley Professor of Applied Economics and at the Massachusetts Institute of Technology's Sloan School of Management. She is an editor at the Review of Economics and Statistics; co-chair of the Agricultural Technology Adoption Initiative at the Abdul Latif Jameel Poverty Action Lab, known as J-PAL, at MIT; co-chair of the Digital Identification and Finance Initiative at J-PAL Africa; a member of the executive committee at J-PAL; and a faculty research fellow at the National Bureau of Economic Research. 

Tavneet Suri on Universal Basic Income

 How hard do we fight against information that runs counter to what we already think? While quantifying that may be difficult, Alex Edmans notes that the part of the brain that activates when something contradictory is encountered in the amygdala - “that is the fight-or-flight part of the brain, which lights up when you are attacked by a tiger. This is why confirmation can be so strong, it's so hardwired within us, we see evidence we don't like as being like attacked by a tiger.”    In this Social Science Bites podcast, Edmans, a professor of finance at London Business School and author of the just-released May Contain Lies: How Stories, Statistics, and Studies Exploit Our Biases – And What We Can Do About It, reviews the persistence of confirmation bias -- even among professors of finance.    “So, what is confirmation bias?” he asks host David Edmonds. “This is the temptation to accept something uncritically because we'd like it to be true. On the flip side, to reject a study, even if it's really careful, because we don't like the conclusions.”    Edmans made his professional name studying social responsibility in corporations; his 2020 book Grow the Pie: How Great Companies Deliver Both Purpose and Profit was a Financial Times Book of the Year. Yet he himself encountered the temptation to both quickly embrace findings, even flimsy ones, that support our thesis and to reject or even tear apart research, even robust results, that doesn’t.    While that might seem like an obviously critical thinking pitfall, surely knowing that it’s likely makes it easier to avoid. You might think so, but not necessarily. “So smart people can find things to nitpick with, even if the study is completely watertight,” Edmans details. “But then the same critical thinking facilities are suddenly switched off when they see something they like. So intelligence is, unfortunately, something deployed only selectively.”    Meanwhile, he views the glut of information and the accompanying glut of polarization as only making confirmation bias more prevalent, and not less.    Edmans, a fellow of the Academy of Social Sciences and former Fulbright Scholar, was previously a tenured professor at the Wharton Business School and an investment banker at Morgan Stanley. He has spoken to policymakers at the World Economic Forum and UK Parliament, and given the TED talk “What to Trust in a Post-Truth World." He was named Professor of the Year by Poets & Quants in 2021.   

Alex Edmans on Confirmation Bias

Alison Gopnik on Care

 Consider some of the conflicts bubbling or boiling in the world today, and then plot where education – both schooling and less formal means of learning – fits in. Is it a victim, suffering from the conflict or perhaps a target of violence or repression? Maybe you see it as complicit in the violence, a perpetrator, so to speak. Or perhaps you see it as a liberator, offering a way out a system that is unjust in your opinion. Or just maybe, its role is as a peacebuilder.   Those scenarios are the framework in which Tejendra Pherali, a professor of education, conflict and peace at University College London, researches the intersection of education and conflict. In this Social Science Bites podcast, Pherali discusses the various roles education takes in a world of violence.   “We tend to think about education as teaching and learning in mathematics and so forth,” he tells interviewer David Edmonds. “But numeracy and literacy are always about something, so when we talk about the content, then we begin to talk about power, who decides what content is relevant and important, and for what purpose?”   Pherali walks us through various cases outlining the above from locales as varied as Gaza, Northern Ireland and his native Nepal, and while seeing education as a perpetrator might seem a sad job, his overall work endorses the value and need for education in peace and in war.   He closes with a nod to the real heroes of education in these scenarios.   “No matter where you go to, teachers are the most inspirational actors in educational systems. Yet, when we talk about education in conflict and crisis, teachers are not prioritized. Their issues, their lack of incentives, their lack of career progression, their stability in their lives, all of those issues do not feature as the important priorities in these programs. This is my conviction that if we really want to mitigate the adverse effects of conflict and crisis on education of millions of children, we need to invest in teachers.”   A fellow of the Academy of Social Sciences and of the Higher Education Academy, he is a co-research director of  Education Research in Conflict and Crisis and chair of the British Association for International and Comparative Education. 

Tejendra Pherali on Education and Conflict

 The work of human hands retains evidence of the humans who created the works. While this might seem obvious in the case of something like a painting, where the artist’s touch is the featured aspect, it’s much less obvious in things that aren’t supposed to betray their humanity. Take the algorithms that power search engines, which are expected to produce unvarnished and unbiased results, but which nonetheless reveal the thinking and implicit biases of their programmers.   While in an age where things like facial recognition or financial software algorithms are shown to uncannily reproduce the prejudices of their creators, this was much less obvious earlier in the century, when researchers like Safiya Umoja Noble were dissecting search engine results and revealing the sometimes appalling material they were highlighting.   In this Social Science Bites podcast, Noble -- the David O. Sears Presidential Endowed Chair of Social Sciences and professor of gender studies, African American studies, and information studies at the University of California, Los Angeles -- explains her findings, insights and recommendations for improvement with host David Edmonds.   And while we’ve presented this idea of residual digital bias as something somewhat intuitive, getting here was an uphill struggle, Noble reveals. “It was a bit like pushing a boulder up a mountain -- people really didn't believe that search engines could hold these kinds of really value-laden sensibilities that are programmed into the algorithm by the makers of these technologies. Even getting this idea that the search engine results hold values, and those values are biased or discriminatory or harmful, is probably the thrust of the contribution that I've made in a scholarly way.”   But through her academic work, such as directing the Center on Race & Digital Justice and co-directing of the Minderoo Initiative on Tech & Power at the UCLA Center for Critical Internet Inquiry and books like the 2018 title Algorithms of Oppression: How Search Engines Reinforce Racism, the scale of the problem and the harm it leaves behind are becoming known. Noble’s own contributions have been recognized, too, such as being named a MacArthur Foundation fellow in 2021 and the inaugural NAACP-Archewell Digital Civil Rights Award winner in 2022.  

Robert J. Shiller on Behavioural Economics

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