Tuesday, January 25, 2022

Economics is a woman, by ‘Tope Fasua

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Jaafar Jaafarhttps://dailynigerian.com/
Jaafar Jaafar is a graduate of Mass Communication from Bayero University, Kano. He was a reporter at Daily Trust, an assistant editor at Premium Times and now the editor-in-chief of Daily Nigerian.
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It has to be interesting writing an economic article around women. And there is no better reference for the subject than the question posed in the title of a book written by Katrine Marçal. Who Cooked Adam Smith’s Dinner? The book is a challenge to conventional economics. Already, some of us can prove that Adam Smith was wrong on a few fronts, especially his assumption that human beings are rational, and that markets or every economic phenomena in general actually get to something called ‘equilibrium’. Even in his time, economists deemed it wise to put a caveat on their postulations; “all things being equal”, ceteris paribus. Of course all things were never, and have never been equal.

The concept of ‘Homo Economicus’ (derived from Homo Sapiens), that man whose existence is defined by the manner in which he maximised economic returns, has been successfully challenged as we shall see in this writeup. I align with this group of new economists who propagate the ‘Heterodox’ school of thought.

And Adam offended the womenfolk. He wrote eloquently about the rational MAN (my emphasis), who took calculated decisions about everything, and always had information at his fingertips to help him always maximise his utility. Marçal says that that rational man could only be that; a man – certainly not a woman. Other economists in our time have proven that emotions actually go into the decision making process. Some ‘psycho-nomists’ have defined some of what happens as heuristics and cognitive biases.

We could give examples:

  1. Many times we buy and sell an item from/to the same person because we are just used to them. Few people, if any, do market surveys before buying/selling anything – especially fairly cheap items;
    2.We buy and sell things out of pity, greed, affection, love, fear, reciprocity, responsibility, irresponsibility etc.;
    3. We are spiritual beings. Spiritual things don’t make sense. We fast, we binge, we waste, we hoard, we sacrifice; we do all sorts of things that don’t make economic sense in the name of the spiritual. Many more examples abound.

In many of my recent engagements, I often remind people that they do very irrational things daily. I personally do, and I wouldn’t want to be close to someone who is perfectly rational and calculating, who does any and everything because it MAXIMISES their utility or satisfaction. Yes, there are people – men and women – who try to live by the book and so get like that. But they aren’t very nice or humane people at all; certainly no one’s idea of fun. They are the sort that go to any length to get what they want, because they believe in that zero sum game of equilibrium that old economics preaches; that idea of the ‘lone wolf’, who fends for himself and gathers as much of the goodies irrespective of who starves in the dog-eat-dog world. Luckily, the world is thinking differently today, as reflected in an article by Eric Greenberg and Karl Weber in the Huffington Post.

Katrine Marçal just wants to know, like many of us, who cooked for Adam Smith; for Adam Smith lived and died as a bachelor. That alone may have affected the balance of his ideas. Marriage, to him, was probably irrational. And many who are married today – at least in their necessary moments of marital downtime – will concur with him even when most will proffer that it is exactly that irrationality that we enjoy; the complexity of managing and loving another human being, whose mannerisms, ways of thinking, background, and sometimes future views are different from yours. Indeed some economists have gone further, and proposed that economics is actually a complex, not necessarily rational or straitjacketed affair. Economics can be very emotional. In fact, economics is a woman, and should be treated with as much care, caution, respect and perceptiveness, if we want to get the best of it. Economics is a modern-day lady. Extremely productive, often underrated, highly creative, and oh my God, lethal when crossed. The maltreatment of economics, its over-simplification, translating in fact to a denigration of such a nuanced discipline, may be responsible for the awful results we have been getting here in Africa.

Margaret Douglas was Adam Smith’s mum. When Adam’s dad died when he was just two years old, he left his estate for the little boy. His mum, Margaret stayed around Adam till she died, making sure he got his dinner every day. The question is; did she do what she did out of rationality? When Adam became an adult, did Margaret need to still care for him, look out for him, get his back, cook his dinner because of what she wanted? Was she calculating and trying to maximise her utility and interest? Some people may try and rationalise in the affirmative. But I would disagree. I would say she took those decisions based on some things that are now totally excluded from economics but which actually drive MOST of our decisions (especially here in Africa); emotions, biases, things we do that we just cannot explain, and even if we found out they were wrong, we would do them again because of those who are involved.

As a matter of fact, the field of economics had figured in some of those elements in the beginning. But gradually, the world saw a gradual and rapid denudation of the subject, a sort of mechanisation. We tried to infuse mathematics into economics. Engineers and physicists made their incursion. For some reason, we struggled to ‘scientify’ the subject. We had to be a science otherwise no one will take us serious. We wanted to be precise. We cooked up equations and solved complex calculations. We even conducted scientific experiments that tried to explain with exact precision how human beings behaved. We believed that by embracing the arts and unpredictabilities of human emotions, we were over-simplifying economics, not knowing that it was when we brought in scientific formulas that this happened. Man is simply not machine. At least most human beings aren’t.

And so we drew graphs and tried to predict stock market behaviours using algorithms and experiments gleaned from physics and the pure sciences. We got our just desserts. Markets crashed around our regal feet, because we forgot that ‘the best of men, is still but a man at the very best’. Human beings ran economic systems, and they often proved that they were simply human beings; highly irrational. Even markets – which are an agglomeration of individual actions and opinions, proved to us to never be efficient. Equilibrium was shown to be a myth. Insider information, passed across a glass of wine, in the church or mosque, in a cult meeting, in a Turkish steam bath, in a village burial, in the heat of passion, even over a bad quarrel, or on a death bed, always distorted poor old equilibrium. There are no guarantees when it comes to human nature.

Katrine Marçal’s concern in her book was however a tad different from mine, but absolutely very important all the same. She lamented the non-quantification of the work that women do; especially the traditional woman. A stay-at-home woman who keeps the house clean, bathes and cooks for the children, cleans up after everyone, including her husband, who slaves away while the ‘men’ of the house kick up their feet and relax is not included in a country’s calculation of the GDP. Even for the modern day woman, who does all these, and holds down a day job, only the aspect in the office is countenanced. Pretty unfair.

Whereas the advanced countries are trying hard to incorporate these values, others like ours are lagging behind. In fact it doesn’t come up at all. We must not only rethink our approach to economics, we must show more respect to the womenfolk. In my view, they are the stronger sex anyway. Perhaps women would naturally make better economists, for they better understand complexity.

Mr Fasua, an Economist, author, blogger and entrepreneur, can be reached through[email protected]

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