Sunday, January 29, 2017

biggest unanswered question

I'd like to hear people's answers from other fields and from a variety of economic subfields as well. Go, mysterious meme powers...

My answer for economics generally and behavioral economics specifically is exactly Tyler's: "culture".

To try to be slightly more specific: I basically see cultures as collections of norms and methods of norm enforcement.  There are various types of norms (but note that particular norms do not often fall clearly into exactly one bucket):

  1. Coordination norms, like which side of the street to drive on, are fairly well understood both in origin and enforcement (i.e. self-enforcing).
  2. Social enforcement of norms that provide public goods (e.g. littering) is getting to be fairly well understood. But which public goods are provided by norms and how this comes to be is utterly mysterious and of utmost importance. There are lots of pieces of the puzzle identified but not put together at all.
  3. Norms for division of goods (splitting the pie) is a sort of subcase of #2 but it's a weird area of study because these are some of the simplest and most universal norms yet the theories (e.g. Binmore's) of them are some of the most complex. It's really really interesting, but almost overkill.
  4. There are also many norms that are better described as heuristics for dealing with uncertainty and limited information (don't pick up hitchhikers; eat breakfast), and I don't think the selection and enforcement of these norms is at all well understood, nor given serious attention. I'm sure most are written off as individual heuristics, but the degree of social enforcement and arbitariness suggest to me something more is going on that just judgmentally inferring bad things about other people from their stupid decisions. I could be wrong. At the very least, the individual motivations for adhering to these norms are closely related to individual motivations for adhering to cooperative norms, so the literatures are intertwined.
  5. Lastly there are norms that are completely arbitrary, don't fit in any of the above categories, and exist solely for signaling value, like wearing ties to weddings. These are not very mysterious, in the same way that sexually selected traits are arbitrary but evolutionarily well understood.
In summary I'd say the most important and mysterious unanswered question of economics is the point from #2: which cooperative norms are chosen to be enforced and how does this come about?