May 14, 2012
Andrew Gelman points us to a peculiar Bloomberg column by Reid Hastie that refers to some well-known research results from cognitive psychology with the seeming purpose of undermining efforts to hold anyone accountable for the economic crisis. The piece tells us:
“Just as we are wired to like a diet rich in fats and sugars, we have an appetite for simple, coherent narratives.”
which we are urged to remember:
“the next time you hear a good story about why the financial recession, or any other economically significant event, was caused by a single collection of bad actors.”
This is a truly bizarre juxtaposition. There is a great deal of evidence that many actors in the financial sector were at least unethical in their behavior (e.g. bond rating agencies giving investment grade ratings to issues they knew were junk), and may well have broken the law. In effect what Hastie is telling us is that we should not be concerned about this evidence and its implications for the markets and the economy because we are hard-wired to like a good story.
Sorry, but this one makes no sense. If the argument is that the bad actors in the financial sector should not be held responsible for the economic crisis, then the argument should be based on the facts and the economics. The assertion that the people who think the financial industry was responsible just have some cognition problem is pretty much just a crude ad hominem argument.
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