Sunday, May 30, 2021

Stories that we tell ourselves

I first read about the importance of the stories that we tell ourselves and others in economics and social science in the book by George Akerlof and Robert Shiller (two Nobel Prize winners of different generations) “Animal Spirits”. I had attended a presentation by Akerlof when I spent some months in Berkeley in 2008. To be honest, at that time I thought it was what a nice man about to retire was doing as an afterthough to finish his career. Some time later I read “Narrative Economics” by Robert Shiller, and “Phishing for Phools” by the same two authors. And in-between we experienced the Global Financial Crisis, Brexit, Trump, many other national-populisms and now the Global Pandemic.

Around the same time, I read “The Economics of the Common Good,”by Jean Tirole, one of these books that great economists write for the broader pubic, but that only other economists like me read (or that is my impression). It is a great book, meant to summarize the work (and the perspective on the discipline of economics) of the great French economist after he received the Nobel Prize. In that book, in the chapter devoted to Behavioral Economics, Tirole presents three versions of the so-called Dictator Game, a two person interaction where one individual (the Dictator) has to decide how generous she is with another player (who doesn’t decide anything). Tirole explains the differences between the rationally selfish decision that we should expect (absence of generosity) and the outcomes of many experiments. In some of these experiments, for simple versions of the game, people can be generous. But in versions of the game where the decision-makers can hide their selfishness behind excuses (such as ignorance, or the existence of a horribly ungenerous possibility), then the Dictators can be as selfish as predicted by narrow-minded rationality. That is, our generosity depends on the stories that we tell ourselves, sometimes in a complex way.

I have seen what in my view are examples of this behavior in apparently normal people trying to justify their support for selfish nationalism behind the excuse of generosity. “I always think of the most vulnerable,” “if this (dead, prestigious) person had been around he would have done the same…” and many versions of the excuses that people use when they decide to be sophisticatedly selfish.

Of course, some people do not need much in terms of justification. It doesn’t seem that Trump or Bolsonaro and their closest followers need to hide their atrocious selfishness. But many other national-populists and elite members that promote populism can be very sophisticated when they need to. And they do it by telling themselves stories, or especially by promoting stories that others can tell each other. Needless to say, social media and corrupt media can do a lot to spread these stories like epidemics. Shiller used the models of epidemics with which we have become familiar lately to explain the rise and fall of stories -before the current pandemic.

All of us tell ourselves stories to try to justify our behavior and our decisions (usually taken by emotional reasons). But we must be aware of the risks of using stories that deviate too much from reality. In our times, we all must help people tell themselves true stories, especially about climate change and positive sum interactions. The alternative is extinction.


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