Presidential Address: Dispelling the Illusion of Irrationality: Re-doing Economics from the Ground Up

Jeffrey, H.J.. / Published 2014 / Presentation

Video Click here to listen to an audio of this presentation, with the slides included.
Slides Click here for a PDF copy of the slides for this presentation.
Presenter H. Joel Jeffrey, Ph.D.
Date September 24, 2011
Abstract: Economics as it exists today is the apotheosis of behaviorism: i.e., economics describes individual behavior as input and output, decision as choice of outcome, and equating value with prudential value. Accepting that world description forces one to conclude that people are irrational, driven by hidden forces that shape their decisions; that is the view held, popularized, and acted on by economists today. Besides being a pathogenic degradation, this view is fundamentally erroneous, for it is based on the flawed assumption that persons are input-output machines. Starting with the recognition that economic behavior is behavior, and continuing with the recognition that people choose what to do based on their reasons, and that everything a person does is a case of engaging in a social practice of a community, a new paradigm for economics will be developed during this presentation. The presenter will show that the problem is not people; the problem is the paradigm whose central concept is that persons are machines. People and their behavior, including their economic behavior, make sense, and the claimed irrationality is an illusion produced by flawed behavior descriptions.
1. Jeffrey, H.J. (2010). Homo Communitatis: A rigorous foundation for behavioral finance. 2. Jeffrey, H.J. & Putman, A.O. (2013). The Irrationality illusion: A new paradigm for economics and behavioral economics. The Journal of Behavioral Finance, 14:3, 161-194. 3. Jeffrey, H.J. & Putman, A.O. (2015). “Subjective Probability in Behavioral Economics and Finance: A Radical Reformulation,” The Journal of Behavioral Finance, 16(3), 231-249.