Integrating Psychological Realism and Genetic Data into Mainstream Economics

The podcast features Dan Benjamin, a behavioral economist and geno economist, discussing the evolution of economics from a field traditionally lacking psychological realism to one increasingly incorporating it. Behavioral economics, once a fringe movement, has successfully integrated psychological elements into the standard economic model. Benjamin's work extends this by focusing on biases in reasoning, statistical inference, and the measurement of well-being beyond traditional economic indicators. He also introduces geno economics, which links DNA with behavior and economic outcomes, aiming to improve social science research through genetic data.

Benjamin highlights that while subjective well-being (happiness/life satisfaction) measures are broader than income or consumption, they are not complete. They often miss crucial aspects like family happiness, social status, sense of control, or meaning in life, which people care about. This necessitates developing composite measures of well-being. In geno economics, he emphasizes that genetic effects on behavioral traits are extremely small and operate through complex causal chains often involving environmental components, making a clean separation of "genes and environment" difficult and deterministic interpretations inaccurate. He stresses the need for careful interpretation to avoid misuse.

For geno economics, the primary challenge is sample size, requiring hundreds of thousands of individuals to detect small genetic associations. Benjamin's team addresses this by forming interdisciplinary consortia (like the Social Science Genetic Association Consortium) to pool genomic data linked to behavioral traits. The utility of genetic data lies in creating powerful predictors (e.g., for educational attainment) that can increase statistical power in research studies, especially expensive ones. He also recommends accompanying research papers with FAQs to clarify interpretations and address ethical concerns.

The integration of behavioral and geno economics into the mainstream depends on their proven applicability to policy and their ability to be incorporated into economic theory. While geno economics is currently at a basic science level, its potential to inform interventions, reduce inequality, and improve outcomes for disadvantaged children is a key motivator. However, the field must navigate a "long bad history" of mixing social science and genetics, demanding constant vigilance against misinterpretation, determinism, and potential for discrimination, ensuring ethical considerations are paramount.

"behavioral economics has grown from a movement that was at the the fringes of economics trying to bring psychological realism into economics from the 80s and 90s and today it has broken through into the mainstream of economics"

"happiness or life satisfaction measures do they capture everything that people care about and what we find is that they don't"

"those things which people care about aren't fully incorporated into their answers about their own happiness"

"Geno economics is the use of genetic data in economic and social science research"

"the single biggest challenge in Geno economics to date has been sample size"

"the sample sizes that you need to detect them are a hundred thousand people or more"

"there's a long bad history of mixing social science and genetics that we those of us in this field always need to have at the top of our minds"

"people think that if you find a gene that is related to a behavior or say related to educational attainment then you're somehow implying that it's deterministic... that's just not true"