I've always been more of a Vampire Slayer man myself, but when duty calls.... The hunt for the lair of zombie lies takes us to Goerge Akerloff's early work introducing cognitive dissonance into economics.
Paul Krugman has been focusing increasing attention of late on so-called "zombie lies", ones that just keep coming back from the dead, no matter how many times they are killed. For example, from late last week:
Decade of the Living Dead
Barry Ritholtz expresses amazement at the way the Fannie-Freddie-CRA lie - the claim that gubmint bureaucrats forced all those poor bankers into making bad loans - not only persists, but seems to be growing in influence.
But this story is hardly unique. Ever since I began writing for the Times - and probably before, but I wasn't paying so much attention then - I've been struck over and over again by the unkillability of zombie lies....
The CRA aspect of this zombie lie leads directly back to Adam Kessler's lead article in the real-world economics review #54, "Cognitive dissonance, the Global Financial Crisis and the discipline of economics", which I wrote about in late October in my diary "Cognitive dissonance in free market economists". As you may recall, Kessler surveyed two groups of economists, one a random sample of members of the American Economics Association, the other [quoting from the abstract] "consisted of the signers of the notorious open letter circulated by the Cato Institute opposing President Obama's stimulus program," which he took to be representative of "an influential group of economists whom I call believers in laissez faire (BLF)."
One of the questions he asked about was the role of the CRA in the fiscal crisis, and he took the belief in this as evidence of cognitive dissonance, explaining, "I provide evidence which suggests that the BLF responded to this shock in a manner that can best be described as irrational, ill-considered and clearly erroneous. I consider the social-psychological concept cognitive dissonance as the best explanatory framework for understanding this response. Cognitive dissonance theory predicts that when real-world events "disconfirm" deeply-held beliefs this creates psychological discomfort in persons and they will respond by means of distortion and denial."
This is, in short, Kessler's explanation for zombie lies--at least among the hard-core believers in the economics profession. It doesn't answer Krugman's question in full, about why such zombie lies persist, not just among true believers, but among the wider political class. But it does provide a starting point, one worth taking a closer look at, particularly in terms of George Akerloff's original introduction of the idea of cognitive disonance into the economic literature, "The Economic Consequences of Cognitive Dissonance", by George A. Akerlof and William T. Dickens, written in 1982, which I also quoted from in my diary. (Not available online, but from the JSTOR database available in some libraries.)
Akerloff and Dickens looked at the example of workers in a hazardous industry under two conditions: First, without any safety equipment avaialble, then after such equipment becomes available. They find that workers tend to minimize the hazardous they face in the first instance, with the result that they generally fail to use the safety equipment once it becomes available--an objectively irrational course of action predicated on a false belief that at least afforded psychological comfort when no real comfort was available.
As similar dynamic seems at play with our zombie lies: They may have never been true, but at least they provided some psychological comfort, and therefore people cling to them, even when the danger that doing so posses should be utterly transparent. From the original 1982 article:
If you believe global warming is "a hoax", then you'll love the 9-page so-called "report" of the GOP minority on the Financial Crisis Inquiry Commission. It's got that same self-righteous reality-free appeal.
So, the Financial Crisis Inquiry Commission's report is being delayed until January--the report was originally due today--and the Republicans on the commission are siezing on the delay to pull out, issue their own micro-report (a whole 9 pages!) and blast the Democrats on the panel, accusing them of political hijinks, in typical GOP-projection style.
Shahien Nasiripour at HuffPo gives a fairly straightforward account ("Financial Crisis Panel In Turmoil As Republicans Defect; Plan To Blame Government For Crisis"), but John D. McKinnon at WSJ ("GOP Set to Issue Own Fiscal Report") and John Maggs at Poitico ("Financial crisis committee in turmoil") give more of a sense of how this is likely to be spun into typical Versailles mush, at best, and a downright disinformation fest at worst.
McKinnon' led:
Republican members of a commission investigating the financial crisis will issue their own report Wednesday that could undermine the body's formal conclusions, the latest sign of partisan discord on the troubled panel.
In an interview Tuesday, the panel's Republican vice chairman charged his Democratic counterparts with turning their official report into a "hit piece" to foster political attacks on the financial sector and the GOP.
And Maggs':
Another bipartisan commission - this one seeking the causes of the financial crisis - is ending up deadlocked in a partisan dispute.
Republican members of the Financial Crisis Inquiry Commission, which was supposed to complete its final report Wednesday, are preparing to issue dissenting opinions on their own in the coming days. They are unhappy that commission chairman Phil Angelides, a Democrat, has delayed the report until late January, and that he has reserved just 36 pages for dissenting opinions in a document expected to run many hundreds of pages.
The Republicans are supposedly steamed because they only get 9 pages each to raise specific objections, but are posturing as if they have no input at all into the report itself. Of course this makes perfect sense in terms of the GOP mindset that demands 100% capitulation on all legislative matters. But when it comes a fact-finding report, not so much.
However the rationale developes a whole new level of holes when it turns out their "solution" is to produce a "report" that's just 1/4 the length of what they're complaining Angelides has limited them to. That's much, much less space than Angelides offered them. So why so short? Obviously, they have no interest in presenting a detailed explanation of the crisis. They want a short, punchy, easy-to-digest, easy-to-quote, Fox News friendly document.
Only Versailes could possibly take these jokers seriously.
But it gets even better when you look at the actual contents, such as they are.
Nasiripour's led is much more straightforward, and leads directly to a discussion of contents:
The lead article in the recent real-world economics review #54, "Cognitive dissonance, the Global Financial Crisis and the discipline of economics" by Adam Kessler took a look at the widespread resistance of many economists to learning even the most basic lessons from the financial crisis and ensuing Great Recession. As stated in the title, the lens Kessler looked through was that of cognitive dissonance. In his abstract, he wrote:
The global financial and economic crisis has produced a powerful shock to the worldview of an influential group of economists whom I call believers in laissez faire (BLF). I provide evidence which suggests that the BLF responded to this shock in a manner that can best be described as irrational, ill-considered and clearly erroneous. I consider the social-psychological concept cognitive dissonance as the best explanatory framework for understanding this response. Cognitive dissonance theory predicts that when real-world events "disconfirm" deeply-held beliefs this creates psychological discomfort in persons and they will respond by means of distortion and denial. I test the proposition that the BLF experienced cognitive dissonance through a survey in which I asked two groups of economists what their views were on 10 possible causes of the Great Recession. One group consisted of the signers of the notorious open letter circulated by the Cato Institute opposing President Obama's stimulus program. (I consider members of this group to be self-proclaimed BLFs.) The second group consisted of a random sample of members of the American Economics Association. One of the possible causes I listed on the survey is the U.S. Community Reinvestment Act (CRA) of 1977. The notion that the CRA is a major cause of the crisis apparently has great resonance among the BLF but is demonstrably false. Among other results, 46% of the signers of the letter believe that the CRA was one of three top causes of the crisis compared to 12% of the "other" economists. I conclude that the BLF exhibit symptoms to cognitive dissonance.
As Kessler goes on to explain, the CRA question isn't the only one that's demonstrably false. But it is most transparently false. The concept of cognitive dissonance was dramatically illustrated by the case of a UFO who's prediction of world destruction failed, leading to a dramatic intensification of belief. But such extreme cases are part of a much broader landscape that social scientists have studied over the years, and that economists have studied as well since Nobel Prize-winning economist George Akerloff co-authored the first paper on it in 1982. In this diary, I want to provide brief excerpts on cognitive dissonance, its application to economics, and Kessler's demonstration of the falsity of blaming the CRA. I'll conclude with some broader speculations about the wider influence of cognitive dissonance.
For quite some time I've been bothered by folks simply writing off Democrats as "corporate sellouts". It's not because I don't think there's some truth in the charge. I'm sure there is--and more than just "some truth" in the case of the worst and most powerful of the lot.
But there's other things going on as well, and the charge is both too simple and too polarizing to be as helpful to us as it ought to be. I unexpectedly came on another reason to feel this way while doing some research for a couple of unrelated posts on cognitive dissonance in economics. As I often do, I took a look at Wikipedia to see what leads I might get there in fleshing out the background, and in the entry on cognitive dissoncne I found a discussion of four different major paradigms, one of which is the "induced-compliance paradigm", which kicked off thus:
The Induced-Compliance Paradigm
In Festinger and Carlsmith's classic 1959 experiment, students were asked to spend an hour on boring and tedious tasks (e.g., turning pegs a quarter turn, over and over again). The tasks were designed to generate a strong, negative attitude. Once the subjects had done this, the experimenters asked some of them to do a simple favor. They were asked to talk to another subject (actually an actor) and persuade them that the tasks were interesting and engaging. Some participants were paid $20 (inflation adjusted to 2010, this equates to $150) for this favor, another group was paid $1 (or $7.50 in "2010 dollars"), and a control group was not asked to perform the favor.
When asked to rate the boring tasks at the conclusion of the study (not in the presence of the other "subject"), those in the $1 group rated them more positively than those in the $20 and control groups. This was explained by Festinger and Carlsmith as evidence for cognitive dissonance. The researchers theorized that people experienced dissonance between the conflicting cognitions, "I told someone that the task was interesting", and "I actually found it boring." When paid only $1, students were forced to internalize the attitude they were induced to express, because they had no other justification. Those in the $20 condition, however, had an obvious external justification for their behavior, and thus experienced less dissonance.[9].
The implication here is quite straightforward: Rather than money changing people's votes in a straightforward "bought-and-paid-for" manner, there's clear evidence here that paying people less is a more effective way of actually changing their minds. Of course, the experiments represent a highly artificial setup, so one can't simply extrapolate from them to a situation where people's votes are being fought over. Still, they can form the basis for a more generalized understanding. Consider the next passage from the Wikipedia entry:
We must begin by acknowledging the hard truth: We will not eradicate violent conflict in our lifetimes. There will be times when nations -- acting individually or in concert -- will find the use of force not only necessary but morally justified. ~ Barack Obama (President of the United States. Peace Prize Acceptance Speech. December 10, 2009)
For years, Americans saw live, and in person, or on television screens, Presidential aspirant Barack Obama. Several mused; the man is calm in a crisis. "No drama Obama" was the phrase most often associated with the candidate. Those closely and personally connected to the potential President corroborated what was for most only an observation. The election did not change Barack Obama. His calm demeanor remained intact. Yet, many perceived a difference, not in his response to a predicament, but in the President's rhetoric. Empathy evolved into escalation. This was perhaps most evident on two occasions, when Mister Obama delivered his Address on the War in Afghanistan, and then again when the Commander-In Chief offered his Remarks in acceptance of the Nobel Peace Prize. After these events, the pensive pondered; what was there all along, Cerebral Discord, the Two Faces of Barack Obama.
