Sunday, June 03, 2007

Economics: The Stories We Tell Ourselves

by Tanta on 6/03/2007 06:04:00 AM

Being a former Lit Major with an occupational interest in Economics, I was fascinated by this interview with Robert Frank, Professor of Economics at Cornell and a co-author of our Ben Bernanke's. Professor Frank is a fan of throttling back on all those graphs and equations in the teaching of introductory economics, in favor of a bit of storytelling:

The narrative theory of learning now tells us that information gets into the brain a lot more easily in some forms than others. You can get information into the student’s brain in the form of equations and graphs, yes, but it’s a lot of work to do that. If you can wrap the same ideas around stories, around narratives, they seem to slide into the brain without any effort at all. After all, we evolved as storytellers; that’s what we’re good at. That’s how we always exchanged ideas and information. And if a narrative has an actor, a plot, if it makes sense, then the brain stores it quite easily; you can pull it up for further processing without any effort; you can repeat the story to others. Those seem to be the steps that really make for active learning in the brain. [Emphasis added]

One gathers that the good professor has never read The Sound and the Fury. Or any given day's edition of the New York Times or the Washington Post or the Podunk Startlegram, wherein easily-grasped storylines--Evil Bank Forecloses On Piteous Family, Stupid Borrower Fails to Read Fine Print, Young Family Achieves Wealth Through Homeownership, Sinister Accountants Re-enact Enron Saga--do have a tendency to substitute for those graphs and equations, but not everyone is convinced we're the wiser for it. In fact, it seems as if Dr. Frank is entirely innocent of the role narratives play in ideology and propaganda, something the Lit crowd has been aware of for some time and that surely one of Dr. Frank's colleagues at Cornell's English Department might have warned him about.

I am not trying to make the tedious point about anecdotes and data, nor am I suggesting that Frank makes that mistake. I'm wondering how anyone as sophisticated as Frank can miss the distinction between plot and point of view, which, forgive me, is covered in Lit 101 as often as "opportunity cost" is covered in Econ 101. Here's an example of Frank's "economic naturalist" theory of storytelling in action:
So, for example, Bill Tjoa, one of my students in 1997, asked, Why do the keypads in the drive-up ATM machines have Braille dots on them? It’s a good question. Drivers obviously can see; why do they need Braille dots on the drive-up cash machines? Mr. Tjoa made use of the cost-benefit principle. That’s probably the simplest and most important of all of the ideas we try to stress in the course. It says that if the benefit exceeds the cost, then it’s a good idea. What he argued was that you’re going to make the machines with Braille dots on the keypads anyway for the walk-up machines, so you’ve got to incur the expense of designing and manufacturing the keypads with the Braille dots. Once you’ve done that, it’s just cheaper to make all of the machines the same way, rather than keep two separate inventories and make sure that the right machines go out to the right destinations. So: Cost lower, benefit the same, it doesn’t inconvenience drivers any to use the machines with the Braille dots, so it would be foolish to do it any other way. So the real question isn’t why should there be Braille dots on the keypads — why shouldn’t there be? There’s no reason not to put them there.

Now, I have worked for banks, so I've gotten that question a lot over the years. It never arises, at least in my experience, as the sort of thoughtful, normal-human-mind-struggles-with-economic-concepts question like "Why couldn't we just print more money? What is money, anyway?" No, it comes out in a rather different tone, more the "gotcha" thing, not a question that is hard to answer but a rhetorical question that is designed to answer itself: "boy are those banks dumb" being the approximate burden of wisdom of the exercise.

I confess it has always floored me. "Well," I say, looking as kindly and thoughtful as I can manage, "you are assuming that no one uses the drive-up lanes except drivers." Well, yeah, har, har, who else uses the drive-up lane, hikers? "Well," I say, "there are passengers, you see." Silence. "And we always counsel our blind customers not to give their PIN to the cabbie." Silence. "Of course, we could force them to make the cab wait--meter running--while they walk in to use the teller window, but it seems so unfair to do that when you can put Braille plates on the ATMs and the cannister console." Silence.

But I am not an economist, and so it never occurred to me to accept the hidden assumption that the drive-up is only for drivers. Of course it's hard to argue with Frank's assertion that "there's no reason not to put them there." So it's an extremely inexpensive way of allowing the drive-up to be useful to blind passengers in a car, apparently, because per Frank the purpose was merely to save costs on machine production while not inconveniencing drivers.

The thing is that it does seem to "inconvenience" them. It just bugs people that those Braille dots are there. It bugs them so much that the question finally got the attention of an economist, who immediately understood the question in the way that drives me nuts about economists, they never having read The Sound and the Fury, and hence never showing a lot of willingness to imagine that there is an alternative point of view that can wreak havoc with our comfortable storylines if we are willing to let it. Not everyone is behind the wheel. Sometimes it is worth the effort to challenge the stories everyone repeats. It appears that in certain contexts this is a revolutionary thought. Oh, my.

We Lit types may very well be soft-hearted and fanciful, but you Econ types are still dismal.