Personal incredulity

Paul Krugman wrote in his NY Times blog about the weakness of the argument from personal incredulity:

‘Dawkins uses it to refer to people who say “I just can’t believe that something as intricate as an eye can evolve through random changes.” The point, of course, is that our intuition has a hard time dealing both with the idea of selection and the sheer length of time evolution has to do its work, so your personal feeling that something isn’t plausible is a very bad guide.’

Krugman’s issue is that when people use their intuition to determine their views on economic policy it can lead them astray. Specifically his view is that a household budget is simply different from a national budget – you cannot reduce the national debt in the same way you bring down household debt.

Our brains have evolved over millions of years to deal with a very specific environment that we have now left far behind.

Behavioural psychology is full of examples where our intuition would work very well in a prehistoric setting but struggles in a highly interconnected society.

One example is how we understand and respond to risk. As a species we are very risk averse. This is partly explainable in the context of a village of a couple of hundred people. If you think you saw a lion then perhaps it is better to be safe than sorry. If you hear about someone dying from a disease then it is right to be worried.

However it does not work as well when you are fed a stream of information about deaths and calamities from 7 billion people around the world. It fixes us to our news feeds but does not do much for general levels of stress or good decision-making.

Our intuition simply does not scale. No matter how good our understanding is of how an individual might behave in any given situation we cannot simply extrapolate from there to an understanding of a whole economy, market or society.

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