Back in the depths of time, this Asimov guy wrote about a Hari Seldon as a fictional character who understood the underlying forces of human behaviour so well, he could put it all in equations, figure out crisis points in the future, and put odds on which way the crisis would settle. There are famous economists on record as being inspired by Hari Seldon to enter that field of economics, as it was the closest thing to psychohistory on the menu.

Of course Hari's psychohistory included anthropology and sociology and psychology along with economics, but, at the moment, they are all safely cocooned in their silos and only fitfully interact. Since the 70's a good piece of the economics research has gone down a particular rabbit hole after a rational actor.

A lot like Lewis Carroll's white rabbit, you need to be in a strange, imaginative mental state, to see mapping human behaviour onto a rational anything as...rational. It's about as useful in predicting a population's behaviour, as modeling national leadership behaviour on the queen of hearts would be...of course the OOWSNN may be a pretty good fit with that queen, so stuck clocks and all that. The problem of using extreme behaviour in satire, is reality has an odd sense of humour. (Google has this site, on a search for 'OOWSNN'! No others of course, so it hasn't fallen into popular culture yet, but google knows who I am!)...and it's 'Orange One, Who Shall Not be Named'.)

Anyway, as I've ranted on about before, we're all tribal...to the bone - or into the bone, wait...does bone have DNA?...Does marrow?...30 seconds of Google, and yes bones have DNA, all good. In the fourth paragraph and already have a metaphor/pun saved from the bin by the magic of Google.

So, tribal...The learnings in anthropology/sociology about human behaviour over the ages are applicable to us now. We've learned an awful lot in 10,000 years, but we haven't evolved much. We used evolution to get where we are, and evolution is about spreading the seed - prestige and survival are how we do that.  The drivers to spread the seed are as powerful in us, as they are in any animal. We just have the ability to make decisions based on more than that. We can be rational, not that we are most of the time.

We need prestige to attract a mate. We need to survive to propagate. Survival has taught us fear. Fear of pain and death and...not mating. That fear, in all it's complexity, combined with the quest for prestige, in all it's complexity, are the underlying motivators of pretty much all human behaviour. One of the funny things is that a lot of experiential fear is about loss of prestige! What the heck, let's make it Prestige and Fear and have the capitalised versions be broadly defined in an evolutionary context. - I think I might have ended up capitalising them before in a persuasive context, somewhere in the depths of the archive, but they hadn't made it into the glossary, so whatev...There I go, adding more terms to the glossary of terms.

So let's get back to Hari and psychohistory. We want to make predictions about future states of the world so we can optimise 'good' for the greatest number. Economic's conceit  is that 'good' can be defined in dollars cus it makes the math easy. Silly economists. People don't do easy.

You want psychohistory, you need to use real people, not rational ones. By the economic model, the only people fitting their rational people are considered by other branches of the social sciences, as way out there, special cases. They are, in fact, packaged in the psychiatry manuals as suffering from antisocial personality disorders - it's a bit weird cus part of the definition is that they are superficially charming and usually quite popular or...socially successful - and for the pedants, it isn't technically a disorder until it starts to mess up your life, so high functioning sociopaths and psychopaths don't have a disorder, but they're not who I'd think you want to model your society around.

So let's look at how we got here. Money is an often effective proxy for prestige, so the maximisation of money gets to be a useful proxy for maximisation of prestige. It is an important variable in determining what people's behaviour and as long as the other things we value stay comparably constant. Money is almost always a useful variable. Unfortunately this whole field of study has formed around it being the only variable in determining people's behaviour, and that's just silly.

Money is a decent proxy for prestige and is a heck of a lot easier to measure, so in a lot of cases, it was a useful lens to view 'good' through. When choosing between brands of motor oil, or glue it worked pretty well. Now, the whole branding/advertising thing was soon taken over by people who knew the economists had oversimplified the problem, but I'll get to marketers later.

Money is more useful in the more lower tiers of Maslow's hierarchy of needs in a western world environment, as money is a decent proxy for food and shelter when you are in need. The prioritisation that drive people in need, don't have as much room for more subtle pecking orders. It's cash and physical threats that drive the bus.  'Not money' prestige becomes an important factor higher up, however. A professor want's cutting edge research and highly cited papers, as much or more than more cash.

aside/

and yes Maslow is not cutting edge thinking on the ideas it covers, and the ideas have been more thoughtfully represented both before and since, But its a simple model that gets the broad strokes right. So yes I'm using a simplified model of human behavior to criticize the economics profession for using a simplified model of human behavior...whatevs.

/end aside

Let's move the early economic thinking of Adam Smith and Keynes in years to the 1930's. Smith and Keynes didn't use microfoundations with a rational actor to make their insights, in fact, Keynesian thinking fell out of favour with the so called Chicago School of economic thinkers, for mostly that reason. If you used microfoundations you could quantize things much more easily, and use those fancy computer things to make complex shiny economic models that kicked out numbers as answers, so were clearly better than trying to think through how actual people would behave.

aside/

If I understand correctly, the 'Chicago School' or 'fresh water' economists included many of the midwest universities and moved to understanding Macro-Economics through a Micro-Economic frame. So they modeled the Economy as a bunch of individuals, all trying to make the best decision for themselves.

The "salt water" economists (those based on the coasts) continued to modify Keynesian ideas with simpler, non-quantified models and those models had a lot more explanatory power in the recent Great Recession. I'm not sure whether the terms were invented by Paul Krugman, but that's where I learned them.

David Hoffman's work shows that crowds can be better modeled as a single consciousness, working to collective purpose. There may be groups within the crowd that have more, different, or more relevant information around a given condition, and they may form a crowd within the crowd - and they may even persuade the crowd to follow them - but that whole scenario results in the crowd acting to a single purpose, once they hash stuff out.

Crowds effectively collapse into evolutionary "tribes" based on their individual understanding and perspective of a given situation, and then any resulting differences between those crowds results in conflict. That scales from sporting fans, doing chants - to civil war. The consequence of the resulting actions of a given tribe define how severe the conflict is.

/end aside

During the Depression and into the WWII there was an awful lot of movement by people in the Western World up and down the Maslow's Hierarchy of Needs. Again, is the Hierarchy of Needs conclusive or complete? No, but it's a useful framework to think around for this problem.

People were going from worlds dominated by Fear - not enough food, no security, physical hardship and needs dominated worlds - to 'that would be nice', prestige dominated worlds - where having a nicer garden than the neighbour could be a big thing.

The basic economic methods, measured as cash, is very useful in understanding a person in the needs world. Will someone going hungry, work harder for the ability to feed themselves and their family? Ummm, yes. Measuring whether decisions driven by needs are going to logically perform the same when it's prestige dominated, doesn't line up as well. Think about garden's again...or cars...or houses...or whatev...

In cases where the drivers of human behaviour didn't match up to money, you could add in a fudge factor of a smoothing function, or blame the data source, or issues with questionnaires or any of dozens of other things, and you'd already been published before any replication studies failed, so it was already 'how it was done'.

The result is a science, that desperately wants to be considered a science, instead of all that touchy feely psychology/sociology/anthropology stuff with their lack of quantification and hard numbers. That science does come up with the right answers when prestige can be modeled as money, which is often enough in the Western World, that economists don't want to have to learn it all again, with an only somewhat different baseline. 

The crisis points, where the differences between models get tested, don't happen in real world situations that often, so being able to test which style of theory works better is rare.  One of those moments did recently occur, and the fresh-water folks had nothing, while the salt water guys could - and did correctly predict outcomes, all over the place.

It won't be a 'hard' science until we learn how to measure, at least on aggregate, an awful lot more detail on how people make preferential judgments. In the meantime, let's accept that money is an imperfect measure of prestige, and at least recognise when other factors are going to be pushing Prestige around. That would identify instances when economists should adjust their prestige term. All science includes simplifications that limit the usefulness of a given theory to a given problem. In science generally, variables are rigorously identified, and simplified out deliberately (or, more recently, and more and more often, statistically modeled empirically and simplified onto a single variable in exactly the same way economists had been misusing statistics for ages).

Let's look at a case study. Lets say I earn a comfortable wage as a economics professor writing for the New York Times on the side and with a Nobel-ish prize to my name. Am I going to take a new university job primarily about wages? No. I'm going to quit Princeton, and work at a place doing research that interests me {CUNY) that might let me change the world for the better. (Any relationship to reality that example may have, was...pretty deliberate. But Dr. Krugman probably won't notice, so I should be good)

You want Psychohistory, you need to branch out. A professor measures themselves by cites their papers receive, by invitations to Davos, by awards and Nobel Prizes. Money isn't the primary driver even for Economics Professors. You want to predict behavior you need to balance how much that person has already achieved, how they personally rank achievements, how much more they might achieve, and what field they are achieving/have achieved things in.

In the comfortable middle class, those garden questions start to explain a lot more of human behaviour. If the neighbour turns up with a new model car, most people will, at least, think about upgrading - Prestige.

I once thought it was the height of cool to be able to drink a beer faster than most. I once thought that the winning team in particular sports were cool. I once thought that having a fast car was cool. (I never really did think having a big house was cool. I grew up with that one, and it's a lot of work.) Money is a way to shape your world to help maximise the doing of things you think is cool, but it's hardly the driving factor.

I think building companies that do cool things is cool. I think helping people who need help is cool.  I think that helping people who don't really need help, but could do with some, is cool. I think building companies with other people is cool. I think thanks from the people around you and ties of mutual obligation are totally cool. Money is a key to doing all of that, but not the key. I could probably convince people who have money to let me borrow some of theirs, because I did something cool with/for/around them. Heck, I might still have to!

I don't think being rich on it's own is cool, unless it helps/feeds back into doing cool stuff, with/for cool people. I think most people want pretty similar things to me, in their heart. I think most people are pretty messed up, about what our society says they should think is cool, and what their heart says is cool. Our biology wants feedback from people, and our society tells us we should want feedback from dollars. Dollars are hard to cuddle with.

Now being all solutions oriented, now that we've got the problem definition worked out, what does the map to solutions look like?  We can tie some of the tribal evolutionary stuff into economics with a couple substitutions.  Money is unproxied into Currency and Assets.  The only real Currency is the flow of people's time.  The only real Assets are the stock of land, the past results of others people's time, and the future IOU for people's time (measured as the stock of Currency...). You can conceptualise the stock of a flow as a lake. People with lots of currency have created a personal dam, and are controlling how the water that passes through the resulting lake gets used.

We use money to exchange the bulk of people's time, but we also use friendship, partnership, parent-ship, future obligation-ship, and whatev-ship. The future output of your own time is only going to be a wee roundoff lost in the noise of other people's time, even if you only include the living ones. The past results of other people's time make any of the resent variables a teeny round off error on that historic collection of intellectual property (IP), but we don't figure that's worth anything in our society. At least we don't carry it around in most (any?) economic models as a public good. If accounted for as value added, those past contributions to IP are 99.99 (lots more 9's)% of everything. We only account for those contributions in the time it takes for someone in the know to access that knowledge.

That understanding clarifies that the single most economically important thing in an economy is teachers. They are the bridge to historical knowledge, which is where most of our societies wealth is stored. In a more complete accounting model, that bridge to the historical IP is the greatest value in almost any industry, by some margin. Teachers are often paid out of the society's collective wealth, as a government program, but don't get anything close to the recompense, their contribution deserves. 

If you are filthy rich, you're filthy rich mostly because of what people in the past learned and shared. That is the moral justification to high taxes. It's a balance between motivating individual effort with greed, and rewarding the society you live in, because that society's collective efforts created the opportunity and the systems for you to succeed, and had more to do with your success by far, than anything you did.

Everything you do to improve an asset is using other people's time and your own work...or other people's knowledge that allowed people to build the power saw and drill and C&C machine, and taught people to use it, and made the medical advances that lead to you surviving the car accident you were in at age 7, and taught that medical advance to the Doctor that saved you, and taught the driver of the ambulance how to drive and built the road for him to drive on and whatev...point driven hard enough and could be expounded on for years, and get really repetitive, and still not finish...I was thinking about giving it a shot - but 'boring'.

Yes that is incorporating Labour Theory of Money (LTM) in with a historic value of IP idea. Just because Marx used something doesn't make it wrong, and Smith used it too, and he's the root of capitalism justification.

We're social animals, spending a huge reservoir of a mostly historically collected heap of Currency and adding and improving and growing, in a really small way, that Reserve. Anthropology is tied into that Reserve by it mostly being a historical inheritance from those that came before.  The social sciences, as practiced today, have all tended to silo knowledge and not cross connect enough in obvious ways. The view of individual responsibility, individual success and individual status is only relevant in the Prestige to attract a mate and to spread your seed

The Society is not an individual anything, it is a group thing. David Hoffman's observation that any group of individuals can be modeled as a single conscious and if you separate the orbits of a brain, it acts as two separate, distinct conscious', provide a hint towards more collective behaviour. It's how we're wired, and when we act the way society directs us now, it leads to disillusionment. 

Were I to push to get this published, which faculty would own it? How could it lead to funding dollars? Our academic system has become part of the societal trend towards hoarding Currency to extract people's time for scarce resource, instead of freely spending that historical legacy to the improvement of the societies that produced it.

The social cost of access to that Historical Horde (HH) of knowledge and understanding is the time it takes curators of that knowledge/understanding to transfer it to people's heads, not the time it took to figure it out.  Expensive new ideas are immediately discounted to transfer costs - like a new car loses value when you drive it off a lot.

It takes freshly minted currency (the curators time) to transfer that inheritance, which makes University's more curation banks and the financial industry in truth - leaving what the economists model as the financial industry, involving only the fresh generation and mobilization of new Currency, ignoring the value in the HH.

If we widen out the Prestige bit to include your private hoard of other people's time (measured in cash), the amount of the HH that has been transferred to your head, and your private collection of respect, love and fellowship from other people, we're getting there.  Economic maximisation gets tuned to Prestige maximisation which gets us to real micro-founded principals and the fresh-water guys methodology of micro-foundations may start to be right, they just didn't micro the foundation far enough...they stopped at trees for a forest idea.

Rich people that are miserable, the drive of Currency inheritors to get respect from their peers, the definition of your peers, class divides, religious divides, sporting rivalries, fashion choices, car branding, whatev...are all in there. It's this part of prestige that the marketing guys totally get, and they've been combining economics with behavioural psychology for ever... 

Being the best fan of your team gets you prestige in that tribe, so you spend a bunch of your time making and dressing up in that silly costume and spend a bunch of your hoard of other people's time to buy tickets to the game and the material for the costume and it's all perfectly rational, so rational behaviour IS behavioural behavior...and the fresh water guys and the salt water guys can all realize that they're focusing on differing subset's of the same thing, and we can all get along!

All you economist types have to do, is completely reset the foundations of one of, if not the most important, tribes you belong to, and throw away lots of your Prestige linked to your life's work. But it would let us right the train and continue past a number of roadblocks the science is rooted in. Like that's gonna happen. It gets back to persuasion. 

I think this idea is pretty much stillborn until a high Prestige member of one of the established, siloed tiers of knowledge, risks that prestige to midwife the idea and get the YUGE prestige bonus that confers...

People that have it, are really fond of high prestige, but really, when this all comes together, you'll be way more prestiged as the founder of a new branch of thought, and a new period of Currency can be added to the inheritable Historic Hoard (HH).  The cool thing about HH is the cost of access, is the your ability to Persuade (E|T) the curators of that knowledge (school or training place of some form) to hand it over.  The cost is the time it takes to transfer the knowledge and understanding. We're back to currency again (and LTV), but that money stuff is only as a transfer media, with the supply governed by the wrong variables, and has no intrinsic value.

If you can get face time with experts in a field; because they enjoy your company; or they're your father in law; or they like your cooking; or whatev; you can still receive the knowledge and understanding from the HH.  The problem of accounting for volunteer time or traditional unpaid women's roles, or the like makes any of that contribution to society isn't included in any formal measure. Economist's know they are missing a bunch of this and make estimates and try to account for it when they think it matters, but seem to be doing it in an inefficient frame.

The Economy is really based on the HH, land, and the living transfer of people's time. Putting a number on the value of volunteering, or raising a kid time, or hanging out with friends time, is really hard, but at least you'll be estimating the real value exchange - or leave a gap in the equation for people to think about.

Just take all of the models and ideas around economics and put in a few additional terms for all the stuff that has been overlooked, and we have a starting point! GDP = I + C + G + (X - M) + U, with everything before the U being classical notation, and U is a huge fudge factor encompassing all the existing goods and stock of knowledge plus the contribution of past knowledge as a factor of the efficiency of education and curation in the region of choice. Now the GDP of a developed nation changes in respect to under/undeveloped nations and the historical contributions of the local institutions dominate the values and we have a useful target to aim for.

We can kick the society out of the spiral of trying to maximise happiness by maximising the hoard of other people's time you control, and get it into a spiral of maximising Currency that we are all programed biologically through evolution to value.  See we even get the biologists under this big tent.

The more you think about it, the more this framework makes conceptual sense.  Bloody hard to work out practical applications for it, but it holds up well in tests against the HH, and is obviously (to me, the most prestiged - and only member, that I know of - and I haven't looked very hard - of this combined field) a new Currency that want to get out of a single individual's (or thousands of people that have long been discussing it, whatev...) mind and be added to the HH.  And I fully expect, it isn't just in this authoring individual's mind, cus actually new ideas are really rare, but isn't anywhere else I've looked for it - although haven't look that hard.

When the other people that've thought of it read this, let me know how I can help getting this into the HH, and if there is anything I can do...It will probably die a lonely death, and be reborn in other peoples heads until that prestige'd member of the established hierarchy comes to believe it, so it can be release as curated truth, and grab a spot in the HH that young, ambitious students can then progress along to betterment of mankind - old established guys will continue to fight it and hold a grudge against the prestige'd member who midwife's it into the HH for all time, but stuff happens...

See how you can predict social behaviours with this model! It's psycho-history!  Azimov gets the name for sure, I'm happy to be forgotten by time...well not happy, but my contribution to society will leave me Fulfilled enough to not sweat the credit!

Edit, late 2017

The gave the Economics Nobel-ish to the Behavioural Economics guy. They are getting there.  Baby steps :)