Speaker series
Evolution and the Social Mind
Speaker Series
 
Thinking and Feeling
 
A Presentation by Professor Paul Romer
Economics and Graduate School of Business, Stanford University
Friday, March 5, 1999 at 12:30pm - 2:00pm
Anthropology, HSSB 2001A
 
 
Abstract
 
When economists talk about human behavior, they have tended to alternate between two extremes. Traditionalists in economics and their followers in fields such as political science specify a utility function and a maximization operator and make no claims about what goes on inside the human head. When pressed, a traditionalist will fall back to the standard "as if" position: "All we claim is that people behave as if they maximize utility." At the other extreme, behavioral economists, psychologists, anthropologists and other scientists study the particulars of behavior. Until recently, scientists working at these two extremes have traced the divergence to fundamentally different conceptions of human nature. This essay argues to the contrary that the tension between these approaches springs from a methodological gap that can easily be resolved and that is already in the process of being filled. To communicate effectively and productively with each other and to achieve the kind of interaction between theory and evidence that is essential for scientific progress, economists need to develop an intermediate layer of theory that lies between these two domains. This new level of theory involves the construction of models that look inside the human head and distinguishes between thinking and feeling as two major classes of mechanisms guiding choice.

How, in practice, can economists and other students of human behavior distinguish between thoughts and feelings? The traditional approach in economics gave the concept of utility maximization empirical content by imposing specific restrictions. It argued that the utility function should have as arguments only current consumption activities that are under the control of the person in question. The three examples I will discuss show that feelings are functions of both current variables and variables that were realized in the past. They are also determined at least in part by variables over which the subject may have no control. A growing body of evidence shows that if we interpret the traditional utility function as a one-dimensional summary of a person's feelings, these traditional restrictions on the arguments in the utility function do not hold.

Once we admit these results, many of the superficial differences between feelings and thoughts disappear. In particular, the mental systems that generate feelings look like systems that collect information, store it, make inferences, and change behavior in ways that we usually associate only with the metal modules that produce conscious thought. However, two suggestive differences between thoughts and feelings remain. The first is that the systems that generate feelings can be less sensitive to -- in some cases totally insensitive to -- information that from a design point of view should be relevant but that is encoded linguistically or symbolically. The second difference is implicit in the use of the term welfare. Humans agree that feelings like pain and shame are unpleasant or bad and that feelings like accomplishment and solidarity with a group are pleasant or good. If we interpret feelings in the broadest possible sense, human welfare is determined by the feelings that a person experiences. Thoughts have instrumental value for people, but feelings have intrinsic value. Economics will not lose all of its scientific content if we admit that people actually have feelings.
 

 
 
Background
 
The Economist identified Paul Romer's Ph.D. thesis in 1983 as laying the foundation of "new growth theory" in economics. Up until then, most work in macroeconomics focused on government policies that would encourage capital accumulation or fine-tune aggregate demand with adjustments to monetary and fiscal policy. This neo-classical approach treated scientific discovery, technological change, innovation, and productivity growth as peripheral concerns in national economic policy. Romer's new growth theory moved these factors back to the center of macroeconomic analysis, made them endogenous rather than exogenous to models of growth, and used their interrelationships to answer the puzzle: What makes possible and sustains economic growth in a physical world characterized by diminishing returns and scarcity? For a developing country, the most important government policies may be those that determine the rate of technology transfer from the rest of the world. For an advanced economy, the most important policies may be the ones that influence the rate of technological innovation in the private sector. These theories have become influential in the understanding of otherwise puzzling features of long-term national and global economic development. Last year he was identified as one of America's 25 most influential people by Time magazine.

As an undergraduate at the University of Chicago, Paul Romer studied mathematics and physics. He began graduate work in economics at MIT, then transferred back to the University of Chicago where he received his Ph.D. in 1983. He went on to become a faculty member in the Department of Economics at the University of Rochester, the University of Chicago, and the University of California, Berkeley. Since July 1996, he has been a Professor of Economics at Stanford and is now the Ralph Landau Senior Fellow of the Center for Economic Policy Research, and has been a Fellow at the Center for Advanced Study in the Behavioral Sciences, and a member of the Executive Committee of the American Economic Association.
 

 

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Evolution and the Social Mind
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