The goal of this article is to show that instrumental rationality and utility that have been used in economics for many years does not work well. What is presented in the article is how significant the influence of utilitarianism has been on economics and why the economists get rid of humans’ goals and motivations. It is shown in the article that the human who decides in present is absolutely different from the human who decides over time. Many economists neglected this (...) problem because they wanted to have an effective and simple model. Becker’s economic method is presented as a dead end to which economics has been brought to. It is impossible to connect different selves of one human being by using the utility measure. The works of Schelling and J.S. Mill are used to explain this impossibility. The conclusion of this article is that instrumental rationality and utility have affected economics significantly. But, this simplified view on human nature is no longer valid. Hence, economics needs to think not only about the means but also about the human goals. Economics needs to rebuff relativism and show people how to achieve well-being. If we want to help people with their self-governance, we will have to choose reason over emotions. (shrink)

The phenomenon of weakness of will – not doing what we perceive as the best action – is not recognized by neoclassical economics due to the axiomatic assumptions of the revealed preference theory (RPT) that people do what is best for them. However, present bias shows that people have different preferences over time. As they cannot be compared by the utility measurements, economists need to normatively decide between selves (short- versus long-term preferences). A problem is that neoclassical economists perceive RPT (...) as value-free and incorporate present bias within the economic framework. The axiomatic assumption that people do what is best for them leads to theoretical and practical dilemmas. This work examines weakness of will to resolve some shortcomings of RPT. The concept of intention is used to provide multiple self conception with the framework to decide between selves, which had not been done before. The paper concludes that individuals should not always follow their revealed preferences (desires) but the intentions (reason) because the latter indicates what people really want. (shrink)

The goal of the article is to substantiate that despite the criticism the paradigm in economics will not change because of the axiomatic assumptions of value-free economics. How these assumptions work is demonstrated on the example of Gary Becker’s economic approach which is analyzed from the perspective of scientific research programme. The author indicates hard core of economic approach and the protective belt which makes hard core immune from any criticism. This immunity leads economists to believe that they are objective (...) scientists and, consequently, it results in epistemological hubris. Due to its tautological nature, economic approach is considered to be a degenerative programme. This conclusion is extended on value-free economics. In spite of these problems, many economists still believe in positive economics and they dismiss normative approaches. It has a negative influence on people. The conclusion of the article is that thanks to axiomatic assumptions economists do not have objective and ironclad methodology and they should accept normative values in their research. (shrink)

Altruism is embedded in our biology and in our culture. We offer our bus seats to the disabled and elderly, give directions to disoriented tourists, and donate a portion of our income charity. Yet for all the good it does, there are deep problems with altruism as it is practiced today. Nearly all of us, when asked, will say that we care about practicing altruism in a way that effectively improves the lives of others. Almost none of us, when asked, (...) can honestly say that we have made a serious effort to ensure that we are practicing altruism in a way that effectively improves the lives of others. Disparities like these are indicative of flaws in our cognitive architecture - biases which ensure that the traditional practice of altruism is incongruous with our own values. This disconnect between our values and our actions causes our altruistic efforts to help fewer people to a lesser extent than they otherwise could. I argue that traditional altruism is in need of reformation and defend a social and philosophical movement aimed at achieving this reformation known as effective altruism. The reason effective altruism is such a promising alternative to traditional altruism is its application of economic thinking to the realm of altruism and morality. An economist’s mentality is, I suggest, a necessary instrument for bridging the gap between our values and our actions, allowing us to practice altruism in a way that more effectively improves the lives of others. (shrink)

This paper addresses whether overindebted and non-overindebted consumers differ in their attitude toward money (specifically, the degree to which consumers care about money and feel difficulties keeping track of their money) and how this attitude impacts three different financial behavior categories: record keeping (e.g., recording spending in writing), adjusting balance (e.g., trying to find ways to decrease one’s expenses to match income), and monitoring balance (e.g., monitoring one’s spending to see if it is in line with what is expected). Overindebted (...) consumers were recruited via an NGO for consumer defense and were categorized (whenever possible) into two subgroups: consumers who became overindebted due to internal causes (e.g., bad financial management) and consumers who became overindebted due to external causes (e.g., unemployment). Non-overindebted consumers were a convenience sample. Non-overindebted consumers showed more positive attitudes toward money than both groups of overindebted consumers and overindebted due to external causes showed more positive attitudes than overindebted consumers due to internal causes. All groups share similar financial management behaviors except for monitoring balance, which was more frequent among non-overindebted consumers. Furthermore, a regression analysis indicates that money attitudes helped explain financial behavior differences between consumers above and beyond their indebtedness status. Consumers’ attitude predicted financial behaviors, even when controlling for relevant socioeconomic variables (education, income, age, and gender). Further analyses comparing money attitudes and financial behavior for the three subgroups (non-overindebted, overindebted due to internal causes, and overindebted due to external causes) showed no differences. (shrink)