The Mind Over Money Folly
Last night PBS’s Nova had a broadcast titled “Mind over Money” about the ways psychology affects economic decision-making. It was a standard World take on the latest in behavioral economics, namely that there is really no such thing as a rational market.
The typical proponents of this view were favorably interviewed, Robert Shiller and Richard Thaler among them, stridently advancing the idea that emotions play such an important role in decision-making that few people are truly rational about the decisions they make. This is all played out in the market, and with the financial markets recently demonstrating how hosed people got, it must be true.
Nah. Sorry.
Everything anyone does is always and perfectly rational, every time.
The reason is simple, and has a bit to do with a portion of the show that featured a scientist doing experiments to graphically see how much of a certain part of the brain is activiated when a subject is offered money. It turns out it is stimulated the same as it is when offered sex, drugs, or food. The scientist then said something along the lines of “The brain has evolved yadda-yadda.”
Now, if evolution is the culprit, then why isn’t that perfectly rational? Heaven forbid we’d have evolved not to have an emotional switch to move us to get food to eat and have sex to procreate, or make it easier to do those things which is what the very reasonable tool of money does. Now, the idea of evolution is crap, but it does make perfect rational sense to someone who buys into a materialist world view. The interesting thing is, how can someone with such a view say what is rational or what is not? If it is perfectly rational for a beast who has evolved with a larger body, stronger muscles, and sharper claws to eat you, what do you have to say about that?
The “there is really irrationality after all” folly was further exposed when another scientist did an experiment in which a good number of subjects were all put in front of a computer connected to a market exchange simulation, and they were told that over time the asset they were trading would be devalued to nothing. They then started trying to buy or sell the asset.
As they got going they actually overvalued the asset for quite some time, forming a speculative bubble. As time went on the price of the asset was far above the value the simulation had established, until eventually the prices started tumbling dramatically, popping the bubble. The experiment was a success! These subjects unwittingly created a bubble thus proving they behaved, ahem, irrationally.
Not.
What is never addressed in these kinds of experiments (there are so many of them) is that the experimenters must make an initial assumption about what the value of the test asset is. Here’s the bazillion dollar question:
Where did that come from?
Where did the initial consideration that the asset was falling come from to begin with? The experimenters may look at the aforementioned results with glee, but real life is not like that. In real life somehow someway a market value of an asset comes to be—laboratory dweebs are not there to just say “This is the value and what you think about it is wrong.”
Again, why is what they say it is wrong while what you say it is is right?
No, it wasn’t that people were behaving irrationally—those experimenters were dutifully (and very rationally) worshipping one of the most powerful gods, Hindsight. Those subjects were simply trying to maximize their self-interest (quite rationally) and when people lie and cheat and exploit markets… and engage in extraordinarily rational human sacrifice, bubbles form and pop and form and pop and form and pop and you get a business cycle.
Which means the issue is not that people are irrational.
It means they are unrighteous.
That is the true folly. It is even more foolish that they dismiss what they think is the folly, but it is not irrational to do so because they haven't a clue about God or who He is, even though many will boast zealously that they do. Makes perfect sense, perfectly rational. It is wholly unrighteous, however.
There is only one way to be righteous, and that is to link up with the one perfect value assessor, Jesus Christ. He’s it. He’s the One.
Jesus Christ is the one quant who gets value correct all the time, every time. All the other quants no matter how brilliant they are with the numbers are just guessing, and if they try to get what’s valued without Christ they are only arriving at what the Jesuits want them to see.
In fact, close to the end of this Nova episode was a surreal scene with a number of young bright-eyed quants searing their attention into huge computer screens. Scanning scanning scanning. They will scan and scan and scan ultimately to do only one of two things.
One, they will further the human sacrifice efforts of millions and millions of people paying them to peel off any and all of those market discrepencies and anomolies so they can have their retirement secured.
Or two, they will ensure the pool of veritably valued capital sowed into the lives of those who love with Christ’s love will be manifest broadly so all may benefit and further demonstrate His love as He did.
Know what? I think everyone is very rationally doing the former.
I think no one is doing the latter.
How unrighteous is that.
The typical proponents of this view were favorably interviewed, Robert Shiller and Richard Thaler among them, stridently advancing the idea that emotions play such an important role in decision-making that few people are truly rational about the decisions they make. This is all played out in the market, and with the financial markets recently demonstrating how hosed people got, it must be true.
Nah. Sorry.
Everything anyone does is always and perfectly rational, every time.
The reason is simple, and has a bit to do with a portion of the show that featured a scientist doing experiments to graphically see how much of a certain part of the brain is activiated when a subject is offered money. It turns out it is stimulated the same as it is when offered sex, drugs, or food. The scientist then said something along the lines of “The brain has evolved yadda-yadda.”
Now, if evolution is the culprit, then why isn’t that perfectly rational? Heaven forbid we’d have evolved not to have an emotional switch to move us to get food to eat and have sex to procreate, or make it easier to do those things which is what the very reasonable tool of money does. Now, the idea of evolution is crap, but it does make perfect rational sense to someone who buys into a materialist world view. The interesting thing is, how can someone with such a view say what is rational or what is not? If it is perfectly rational for a beast who has evolved with a larger body, stronger muscles, and sharper claws to eat you, what do you have to say about that?
The “there is really irrationality after all” folly was further exposed when another scientist did an experiment in which a good number of subjects were all put in front of a computer connected to a market exchange simulation, and they were told that over time the asset they were trading would be devalued to nothing. They then started trying to buy or sell the asset.
As they got going they actually overvalued the asset for quite some time, forming a speculative bubble. As time went on the price of the asset was far above the value the simulation had established, until eventually the prices started tumbling dramatically, popping the bubble. The experiment was a success! These subjects unwittingly created a bubble thus proving they behaved, ahem, irrationally.
Not.
What is never addressed in these kinds of experiments (there are so many of them) is that the experimenters must make an initial assumption about what the value of the test asset is. Here’s the bazillion dollar question:
Where did that come from?
Where did the initial consideration that the asset was falling come from to begin with? The experimenters may look at the aforementioned results with glee, but real life is not like that. In real life somehow someway a market value of an asset comes to be—laboratory dweebs are not there to just say “This is the value and what you think about it is wrong.”
Again, why is what they say it is wrong while what you say it is is right?
No, it wasn’t that people were behaving irrationally—those experimenters were dutifully (and very rationally) worshipping one of the most powerful gods, Hindsight. Those subjects were simply trying to maximize their self-interest (quite rationally) and when people lie and cheat and exploit markets… and engage in extraordinarily rational human sacrifice, bubbles form and pop and form and pop and form and pop and you get a business cycle.
Which means the issue is not that people are irrational.
It means they are unrighteous.
That is the true folly. It is even more foolish that they dismiss what they think is the folly, but it is not irrational to do so because they haven't a clue about God or who He is, even though many will boast zealously that they do. Makes perfect sense, perfectly rational. It is wholly unrighteous, however.
There is only one way to be righteous, and that is to link up with the one perfect value assessor, Jesus Christ. He’s it. He’s the One.
Jesus Christ is the one quant who gets value correct all the time, every time. All the other quants no matter how brilliant they are with the numbers are just guessing, and if they try to get what’s valued without Christ they are only arriving at what the Jesuits want them to see.
In fact, close to the end of this Nova episode was a surreal scene with a number of young bright-eyed quants searing their attention into huge computer screens. Scanning scanning scanning. They will scan and scan and scan ultimately to do only one of two things.
One, they will further the human sacrifice efforts of millions and millions of people paying them to peel off any and all of those market discrepencies and anomolies so they can have their retirement secured.
Or two, they will ensure the pool of veritably valued capital sowed into the lives of those who love with Christ’s love will be manifest broadly so all may benefit and further demonstrate His love as He did.
Know what? I think everyone is very rationally doing the former.
I think no one is doing the latter.
How unrighteous is that.
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