A tool for the kit

Robert Schiller writes in the New York Times today about the pyschology of economists

“Why do professional economists always seem to find that concerns with bubbles are overblown or unsubstantiated? I have wondered about this for years, and still do not quite have an answer. It must have something to do with the tool kit given to economists (as opposed to psychologists) and perhaps even with the self-selection of those attracted to the technical, mathematical field of economics. Economists aren’t generally trained in psychology, and so want to divert the subject of discussion to things they understand well. They pride themselves on being rational. The notion that people are making huge errors in judgment is not appealing.”

If Schiller knew more about the HBDI, he would realize that it would provide a reminder that not all people think like economists, – in other words, not all of us operate primarily from a rational perspective. Training and experience cause economists to prefer rational thinking – and hanging out primarily with those in their own profession, causes them to reinforce their thinking.

So the big lesson from this is to keep connected with people in diverse fields. And the small lesson might be to use a tool like the Herrmann walk-around on my website to ensure that you are looking at a bigger picture.