The great thing about behavioural psychology and economics is that they help us to see that there are actually pretty good reasons why human beings swing from greed to fear, and why we're not really calculating machines or utility-maximisers.
Interpretation
This quote emphasizes that human behavior is influenced by underlying psychological and economic factors rather than purely rational calculations.
Niall Ferguson's quote highlights the complex nature of human decision-making, suggesting that our choices are often driven by emotions such as greed and fear rather than purely logical or rational thought. It points to the importance of behavioral psychology and economics in understanding these often irrational swings in human behavior, offering insight into why we do not always act as utility maximizers, but instead are shaped by deeper influences.
In practice
This quote can be used in a lecture on behavioral economics to illustrate human decision-making.
It's all very well for us to sit here in the west with our high incomes and cushy lives, and say it's immoral to violate the sovereignty of another state. But if the effect of that is to bring people in that country economic and political freedom, to raise their standard of living, to increase their life expectancy, then don't rule it out.
If the financial system has a defect, it is that it reflects and magnifies what we human beings are like. Money amplifies our tendency to overreact, to swing from exuberance when things are going well to deep depression when they go wrong. Booms and busts are products, at root, of our emotional volatility.
Civilisation is partly about restraining the male of the species from engaging in the violence of the hunter-gatherer period. But it doesn't take an awful lot to unleash it.
For 500 years the West patented six killer applications that set it apart. The first to download them was Japan. Over the last century, one Asian country after another has downloaded these killer apps- competition, modern science, the rule of law and private property rights, modern medicine, the consumer society and the work ethic. Those six things are the secret sauce of Western civilization.
The West may collapse very suddenly. Complex civilizations do that, because they operate, most of the time, on the edge of chaos.
Over time, the welfare state has become dysfunctional in a surprising way. But in a way it became a victim of its own success: It became so successful at prolonging life, that it becomes financially unsustainable, unless you make major changes to things like retirement ages.
It was as if personality itself had a 'face'. This non-physical face of personality seemed to be the real key to personality change. It remained scarred, distorted, 'ugly' or inferior the person himself acted out this role in his behaviour regardless of the changes in physical appearance. If this 'face of personality' could be reconstructed, if old emotional scars could be removed, then the person himself changed, even without facial plastic surgery.
Psychoanalysis is often about turning our ghosts into ancestors, even for patients who have not lost loved ones to death. We are often haunted by important relationships from the past that influence us unconsciously in the present. As we work them through, they go from haunting us to becoming simply part of our history. (243)
Wherever an inferiority complex exists, there is a good reason for it.
I think one of the major results of the psychology of decision making is that people's attitudes and feelings about losses and gains are really not symmetric. So we really feel more pain when we lose $10,000 than we feel pleasure when we get $10,000.
Emotions are continually affecting our thought processes and decisions, below the level of our awareness. And the most common emotion of them all is the desire for pleasure and the avoidance of pain.
I wrote several articles criticizing psychoanalysis, but the analysts weren't listening to my objections. So I finally quit after practicing it for six years.
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