2. ChrisAuld 5:04 pm 09/14/2013 This is another in a sequence of posts Mr. Bhalla has authored offering sweeping denouncements of research in economics. These pieces substantially misrepresent the methods and results of economic theory. Here, Mr. Bhalla continues his theme that the major problem with economics is human motivation is reduced to people acting as “money maximizing machines.” Economics, he claims, has no way of handling “heterogeneous human motives.” This claim easily demonstrated to be very much mistaken. As can be easily verified by opening an economic theory textbook or becoming passingly familiar with the content of the contemporary literature, the concept of utility maximization—jargon for minimally consistent behavior in a formally-defined sense—is easily amenable to modeling motivations other than material gain. That is one of the reasons this class of models remains the workhorse of economic theory, including in behavioral economics. Roughly speaking, “utility maximizing” behavior means “goal-directed” or “intentional” behavior. Goals and intentions in applied economic modeling are far more diverse than material gain. Some examples of “heterogeneous human motives” in economic research- - Models used by economists to attempt to understand the consequences of various environmental policies typically assume people care about both their own material well-being and the quality of the environment. The results of these models typically show that market outcomes are poor in that the market outcome involves too much material gain and too little environmental quality. This is also, incidentally, a counterexample to Bhalla’s oft-repeated and very much incorrect claim that economists think markets are perfect. - The evolutionary origins of altruistic behaviors (kin or otherwise) has long been a topic of much interest in microeconomics, and the large literature attempting to understand altruism and related phenomena is a consilient multidisciplinary effort, much of which has been developed in mainstream economics. - In a large body of research sometimes referred to as the New Social Interactions literature, implications of behaviors and motivations not mediated by market systems are studied. Mr. Bhalla references “herd behavior,” this type of model can capture that sort of phenomenon, as well as many other forms of other-regarding motivations. - In my own subfield, health economics, we often study behaviors in which people are motivated by tradeoffs between health and other goals. This sort of model is useful for describing how people interact with the health care system, for example. “Utility” and “rational” in economics and other behavioral sciences are scientific jargon: they do not have same meaning as the lay meanings of those words. Mr. Bhalla has misunderstood this jargon and how these concepts play out in applied economics, and all of his missives about what’s wrong with economics falter on this misunderstanding. Chris Auld Department of Economics University of Victoria - blogs.scientificamerican.com