Economics In Ten Season 8 - Episode 1 - Herbert Simon
Jul 12, 2024
Discover the revolutionary ideas of Herbert Simon, who challenged traditional economic theories by introducing the concept of 'satisficing.' Explore his fascinating contributions to both economics and artificial intelligence, and learn about his unique personal style and love for culinary delights. The hosts share amusing anecdotes and engage in a fun quiz about famous acronyms, all while highlighting Simon's impact on modern thought and decision-making. Join in for laughs and enlightening discussions about legacy and mentorship sprinkled with whimsy!
01:23:07
Satisficing vs. Maximizing
- Herbert Simon challenged traditional economics by exploring how decisions are made with imperfect information.
- He argued that people satisfice, making "good enough" decisions, rather than maximizing utility.
Be Curious, Be a Generalist
- Be curious and ask lots of questions to excel in any field.
- Don't specialize too early; become a good generalist first.
Simon's Family Background
- Simon's father was a German immigrant, an electrical engineer, and a patent attorney.
- His mother's ancestors were "48ers," who emigrated after failed 1848 revolutions.
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Intro
00:00 • 2min
The Legacy of Herbert Simon in Economics and AI
02:21 • 5min
Legacy of the 48ers: Immigration and Political Influence in Milwaukee
07:40 • 2min
Heritage and Economic Legacy
09:26 • 19min
Embracing Imperfection in Economics
28:04 • 20min
The Legacy of Herbert Simon
47:37 • 9min
Nobel Flavors: A Culinary Celebration
56:34 • 4min
Acronyms and Nostalgia
01:00:31 • 4min
Whimsical Mentorship and Economics
01:04:58 • 16min
Reflections on Herbert Simon and Upcoming Features
01:20:46 • 2min
The protestant ethic and the spirit of capitalism
Max Weber
In this book, Max Weber argues that the Protestant work ethic, especially as influenced by Calvinism, played a significant role in the development of modern capitalism.
Weber posits that the concept of a 'calling' and the this-worldly asceticism of Protestantism fostered a culture of hard work, thrift, and the accumulation of wealth, which were crucial for the emergence of capitalist culture.
He contrasts this with the traditional economic attitudes and the medieval monastic ideal of other-worldly asceticism.
The book also explores how these religious ideas influenced the development of a rational and disciplined approach to economic activity, which became a hallmark of modern capitalism.
Progress and poverty
English Land Restoration League
In 'Progress and Poverty', Henry George examines the paradox of why poverty and economic depressions occur alongside technological and economic progress.
He argues that the private ownership of land, which increases in value without the owner's effort, is a primary cause of poverty and economic cycles.
George proposes a single tax on land values as a remedy, suggesting it would reduce other taxes, encourage productive use of land, and distribute wealth more equitably.
The book was highly influential, contributing to the Progressive Era and worldwide social reform movements.
Administrative Behavior
A Study of Decision-Making Processes in Administrative Organization
Herbert Simon
Administrative Behavior is a seminal work that focuses on the decision-making processes at the heart of organizational management.
Written by Herbert A. Simon, the book rejects the notion of an omniscient 'economic man' and introduces the concept of 'administrative man' who 'satisfices'—looks for a satisfactory course of action rather than an optimal one.
The book explores how administrative efficiency is influenced by factors such as specialization, hierarchy of authority, and the limitations of human rationality.
It is considered one of the most influential books on social science thinking and was named 'Book of the Half Century' by Public Administration Review.
The great illusion
Angell, Norman Sir
In 'The Great Illusion,' Norman Angell argues that the economic costs of war are so high that no nation can hope to gain from it.
He contends that modern economic systems, based on trade and contract law, make war futile because conquest does not lead to economic benefits.
The book refutes the common belief that military power results in greater wealth and instead posits that advanced economies can only generate value in the absence of military conflicts.
Angell also discusses the psychological and moral aspects of war, emphasizing that the nature of modern capitalism makes nationalist sentiment among capitalists irrelevant.
Despite its publication just before World War I, which seemed to contradict his thesis, the book remains a significant work in the field of international relations and peace studies.
Thinking, Fast and Slow
Daniel Kahneman
In this book, Daniel Kahneman takes readers on a tour of the mind, explaining how the two systems of thought shape our judgments and decisions.
System 1 is fast, automatic, and emotional, while System 2 is slower, effortful, and logical.
Kahneman discusses the impact of cognitive biases, the difficulties of predicting future happiness, and the effects of overconfidence on corporate strategies.
He offers practical insights into how to guard against mental glitches and how to benefit from slow thinking in both personal and business life.
The book also explores the distinction between the 'experiencing self' and the 'remembering self' and their roles in our perception of happiness.
The road to serfdom
Friedrich Von Hayek
In this influential book, Hayek argues that the abandonment of individualism and classical liberalism leads to a loss of freedom, the creation of an oppressive society, and ultimately, the tyranny of a dictator.
He challenges the view that fascism and Nazism are capitalist reactions against socialism, instead positing that these ideologies share common roots in central economic planning and the empowerment of the state over the individual.
The book emphasizes the dangers of collectivism and the importance of maintaining a free market system to preserve human freedom and dignity.
Freakonomics
A Rogue Economist Explores the Hidden Side of Everything
Andrea Montero Cusset
Steven D. Levitt
Stephen J. Dubner
Freakonomics is a collaboration between economist Steven D. Levitt and journalist Stephen J. Dubner that delves into the riddles of everyday life, from cheating and crime to parenting and sports.
The book argues that economics is fundamentally the study of incentives and how people get what they want or need, especially when others want or need the same thing.
It covers various topics such as the inner workings of a crack gang, the truth about real estate agents, and the secrets of the Ku Klux Klan, using forceful storytelling and wry insight to challenge conventional wisdom.
Nudge
Improving Decisions About Health, Wealth, and Happiness
Richard H. Thaler
Cass R. Sunstein
In 'Nudge,' Thaler and Sunstein argue that by understanding how people think, we can design 'choice architectures' that nudge people toward better decisions for themselves, their families, and society.
The book introduces the concept of 'libertarian paternalism,' where gentle nudges guide people toward beneficial choices without limiting their freedom.
It explores various aspects of human decision-making, including the distinction between the 'Automatic System' and the 'Reflective System' of thinking, and provides numerous examples of how nudges can be applied in real-life scenarios to improve outcomes in health, finance, and other areas.
1984
None
George Orwell
Published in 1949, '1984' is a cautionary tale by George Orwell that explores the dangers of totalitarianism.
The novel is set in a dystopian future where the world is divided into three super-states, with the protagonist Winston Smith living in Oceania, ruled by the mysterious and omnipotent leader Big Brother.
Winston works at the Ministry of Truth, where he rewrites historical records to conform to the Party's ever-changing narrative.
He begins an illicit love affair with Julia and starts to rebel against the Party, but they are eventually caught and subjected to brutal torture and indoctrination.
The novel highlights themes of government surveillance, manipulation of language and history, and the suppression of individual freedom and independent thought.
The Theory of the Leisure Class
An Economic Study of Institutions
Thorstein Veblen
In 'The Theory of the Leisure Class', Thorstein Veblen presents a critical analysis of the social and economic behaviors of the upper class, arguing that economic life is driven by social vestiges from pre-historic times rather than by notions of utility.
Veblen introduces concepts such as 'conspicuous consumption', 'pecuniary superiority', and 'vicarious leisure', highlighting how the leisure class demonstrates its economic superiority through non-productive activities and the display of wealth.
The book challenges contemporary economic theories by emphasizing the role of social and cultural factors in shaping economic behaviors and critiques the wasteful and exploitative nature of the leisure class's activities.
Models of My Life
Models of My Life
Herbert Simon
23 things they don't tell you about capitalism
Ha-Joon Chang
Death of Economics
Death of Economics
Paul Ormerod
Prospect Theory: An Analysis of Decision under Risk
Prospect Theory: An Analysis of Decision under Risk
Amos Tversky
The Economic Problem
The Economic Problem
Pete and Gav
Cogs and Monsters
Cogs and Monsters
Diana Coles
How Firms Fail
How Firms Fail
Paul Roland
The Apple Story of a Maze
The Apple Story of a Maze
Herbert Simon
Snoop Dogg Cookbook
Snoop Dogg Cookbook
Snoop Dogg
One of the fundamental principles of orthodox economics the idea that all economic agents "maximise" - consumers aim to maximise utility (econ speak for happiness) and producers profit. Nobel Prize winning economist Herbert Simon challenged this assumption and in doing so coined a new verb, ‘to satisfice’ to show how consumers and producers in the ‘real world’ behave somewhat differently. This is the first episode of Season 8 of our award winning podcast, with the theme of the season being "the economists' economist'. In this episode, your friendly neighbourhood economists, Pete and Gav, enter the world of Ha-Joon Chang’s favourite economist - Herbert Simon. In the course of our journey of discovery we will meet a robot named after Herb, suggest the perfect past-time for long train journeys and discover Simon's surprising and unusual sartorial choices. As always there is a challenging quiz and lashings of bonhomie. Technical support comes from our muse Nic.
PS You may hear background vocals from baby Henry during the course of the episode and we would correct the following errata which occurred during the course of enthusiastic discussions:
Tom Swift was a character from American teen sci-fi books
Mr Miyagi of Karate Kid fame was, in fact, Japanese