The Sociology of Economics: Rational People, Irrational Decisions

David Brooks is unhappy with the turn the conversation over the white working class has taken in the United States; that’s his right, although I think he’s caricaturing my position. But I do want to make a point about the nature of social explanation.

Mr. Brooks writes in a column titled “The Materialist Fallacy,” published in The New York Times on Feb. 14: “I don’t care how many factory jobs have been lost, it still doesn’t make sense to drop out of high school.”

True enough. But suppose we apply the same logic to another problem — say, obesity:

I don’t care how little manual work Americans engage in these days, or how available fast food has become, it still doesn’t make sense not to stay at your ideal weight through diet and exercise.

This is also true — yet few people do this (I don’t, although I’ll get on the treadmill in a few minutes).
The point is that it’s perfectly possible to invoke material causes for social changes — the prevalence of fast food making Americans heavier — even if perfectly rational, perfectly self-controlled individuals would not respond in the way real people really do.

Nobody — not the sociologist William Julius Wilson, not the economist Larry Mishel, not yours truly — denies that the bad effects of reduced opportunity would be much less if people always did what was in their best long-term interests. But people often don’t, which is why loss of economic opportunity can be socially as well as economically destructive.

That’s not crude materialism — it’s saying that people are human.

Same Net, More People Falling

In recent online posts, James Kwak, an associate professor at the University of Connecticut School of Law, and Mr. Mishel, in slightly different ways, make a point I was planning to get to: the rise in safety net spending over the past decade does not reflect an expansion of that safety net. Instead, it reflects two things: rising health care costs, and a terrible economic slump that has put many more people in need.

You really don’t want to fall into the Sharron Angle-type thing, where that Nevada politician looked at soaring numbers of people on unemployment insurance and food stamps and claimed that the welfare state had run amok.
It’s the financial sector run amok, and pushing more and more people over the edge.

Paul Krugman joined The New York Times in 1999 as a columnist on the Op-Ed page and continues as a professor of economics and international affairs at Princeton University. He was awarded the Nobel in economic science in 2008.

Mr Krugman is the author or editor of 20 books and more than 200 papers in professional journals and edited volumes, including “The Return of Depression Economics” (2008) and “The Conscience of a Liberal” (2007). Copyright 2011 The New York Times.