People really underweight the role that norms play in sustaining a modern economy. I suspect that if the "default option" folks got their way and people started regarding default as a commercial decision with no more moral weight than changing cable vendors, the advocates of this position would be unpleasantly surprised to find that the only thing less fun than being young and burdened with student loans is being young and completely unable to access any form of credit at all.My first corporate job was building models to decide who got unsecured loans and, based on that experience, I'm pretty sure she's wrong in the particulars. A change in attitudes would affect default rates somewhat but there are a number of powerful external incentives here that would limit the impact of a new set of norms.
I agree, however, with McArdle's larger point, which is strange, since I don't believe that McArdle agrees with it herself.
As noted before, freshwater economics is essentially a reductionist approach that relies heavily on a number of simplifying assumptions. If you claim that social norming plays a significant role in the economy, then you have to allow for local optima and plateaus and collective action problems and all sorts of behavior that is not rational in the economic sense and which will not average out when you look at things in the aggregate. That way lies madness and perhaps even Keynesianism.
It's possible that McArdle is starting to question what she learned at the feet of her Booth School professors, but I think it's more likely that she's willing to engage in a bit of intellectual inconsistency to reach her desired conclusion.
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