On the plane to San Francisco on Monday morning I finally got around to reading “The Marketplace of Perceptions” from Harvard Magazine. It’s all about behavioral economics, a field I can’t help but be fascinated by. It’s basically the place that economics/finance meets my marketing/cultural studies world. The big point of it is that “the ways in which alternatives are framed — not simply their relative value — heavily influence the decisions people make.” Of course they do. Seems obvious, but in a world where it was long believed that people acted in their best interest at all times, this must have been, and still is, a hard one to swallow.
What was most interesting about the article, however, wasn’t overly finance-centric. Rather, it discussed the political implications of the idea of framing.
We have had 30 years of deregulation in the United States, freeing up markets to work their magic. Ã¢â‚¬Å“Is that generally welfare-enhancing, or not?Ã¢â‚¬? Wanner asks. Ã¢â‚¬Å“Framing can call that into question. Everyone agrees that thereÃ¢â‚¬â„¢s informational asymmetryÃ¢â‚¬â€so we have laws that ensure drugs are tested, and truth-in-advertising laws. Still, there are subtle things about framing choices that are deceptive, though not inaccurate. We have the power of markets, but they are places where naive participants lose money. How do we manage markets so that the framing problem can be acknowledged and controlled? ItÃ¢â‚¬â„¢s an essential question in a time of rising inequality, when the well-educated are doing better and the poorly educated doing worse.Ã¢â‚¬?
I think that’s a really big point. I tried a couple times to explain why, but it wasn’t coming out right so I decided to just throw the quote out there and see if anyone else bites.