Rational astrologies

Suppose that you are transported back in time several hundred years. You start a new life in an old century, and memories of the future grow vague and dreamlike. You know you are from the future, but the details are chased away like morning mist by a scalding sun. You marry, have children. You get on with things.

Suddenly, your wife becomes ill. She may die. You consult the very best physicians. They discuss imbalances of her humors, and where and how she should be bled. You were never a doctor or a scientist. The men you consult seem knowledgeable and sincere. But all of a sudden you get a flash of memory from your forgotten future. The medicine of this era is really bad. Almost none of what they think they know is true. Some of their treatments do some good, but others are actively harmful. On average, outcomes are neither better nor worse with than without treatment.

You know your insight from the future is trustworthy. Do you let the doctors treat your wife, even pay them handsomely to do so?

Of course you do. With no special scientific or medical talent, you have no means of finding and evaluating an alternative treatment. You do have the option of turning the doctors away, letting nature take its course. From a narrowly rationalistic perspective, you understand that nontreatment would be “optimal”: Your wife’s chances would be just as good without treatment, and you would save a lot of coin. That doesn’t matter. You pay the most respected doctors you can find a great deal of money to do whatever they can do. And it is perfectly rational that you should do so. Let’s understand why.

You know that your wife’s expected medical outcome is unchanged by the treatment. But your “payoff” is not solely a function of that outcome. Whether your wife lives or dies, your future welfare turns crucially on how your actions are viewed by other people. First and foremost, you must consider the perceptions of your wife herself. Your life will be a living hell if your beloved dies and you think she had the slightest doubt that you did everything possible to help her. Your wife has no mad insights from the future. She is a creature of her time and its conventions. She will know your devotion if you hire the best doctors of the city to attend her day and night. She may be less sure of your love if you do nothing, or if you listen to the neighborhood madwoman who counsels feeding moldy bread to the ill.

Moreover, it is not only your wife’s regard to which you must attend. Your children and friends, patrons and colleagues, are observing your behavior. If you call in the respected doctors, you will have done everything you could have done. If you do nothing, or take a flyer on a madwoman, you will not have. Your behavior will have been indefensible. Perhaps you are a freethinker, an intellectual, a noncomformist. That makes for lively dinner conversation. But you are human, and when things get serious, you depend upon the regard of others, both to earn your keep and to shape and sustain your own sense of self. If your wife dies and it is the world’s judgment that you permitted her to die, rationalizations of your actions will ring hollow. You will be miserable in your own skin, and your position in your community will be compromised.

The mainstream medicine of several centuries ago was what I think of as a rational astrology. A rational astrology is a set of beliefs which one rationally behaves as if were true, regardless of whether they are in fact. Rational astrologies need not be entirely fake or false. Like bullshit, the essential characteristic of a rational astrology is the indifference to truth or falsehood of the factors that compel ones behavior. Some rational astrologies may turn out to be largely true, and that happy coincidence can be a great blessing. But they are still a rational astrologies to the degree the factors that persuade us to behave as though the beliefs are true are not closely related to the fact of their truth. The beliefs that undergird modern medicine may represent a well-founded characterizations of reality. But, now as centuries ago, most of us act as if those beliefs are true regardless of own judgments, especially when giving advice or making decisions for other people. Medicine remains a rational astrology. We hope that our truth-seeking institutions — universities and hospitals, the scientific method and peer review — have created convergence between the beliefs we behave as if are true and those that actually are true. But we behave as if they are true regardless.

There is nothing very exotic about all this. It is obvious there can be advantage in deferring to convention and authority. But rational astrologies are a bit more interesting, and a bit more insidious, than wearing a tie to get ahead in your career. When an aspiring banker puts on a suit, he may compromise his personal fashion sense, but his intellect and integrity are intact. He knows that he is conforming to a fairly arbitrary convention, because that is what is socially required of him. Rational astrologies refer to conventional beliefs adherence to which confers important benefits. In order to gain the benefits, an individual must persuade himself that the favored beliefs are in fact true, or else pretend to believe and know himself to be a cynical prevaricator. Either choice is problematic. If one embraces an orthodoxy as true regardless of the evidence, one contributes to what may be a misguided and destructive consensus. If one pretends whenever obeisance is socially required, it becomes hard to view oneself as a person of integrity, or else one must adopt a very sophisticated and contextualized notion of integrity. The vast majority of us, I think, avoid the cognitive dissonance and gin up a sincere deference to the conventional beliefs that it is in our interest to hold. When confronted with opposing evidence, we may toy with alternative viewpoints. But we stick with the consensus until the consensus shifts. And, after all, who could blame us?

After all, who could blame us? That is what drives rational astrologies, the fixative that seals them into place. In financial terms, behavior in accordance with conventional wisdom comes bundled with extremely valuable put options that are not available when we deviate. If, after an independent evaluation of the evidence, I make a medical decision considered “quack” and it doesn’t work out, I will bear the full cost of the tragedy. The world will blame me. I will blame myself, if I am an ordinarily sensitive human. If I do what authorities suggest, even if the expected outcome is in fact worse than with the “quack” treatment, then it will not be all my fault if things go bad. I will not be blamed by others, or put in jail for negligent homicide. The consolation of peers will help me to console myself that I did all that could and should have been done. If you understand how to value options, then you understand that the value of hewing to convention is increasing in uncertainty. If I am certain that the “quack” treatment will work, I will lose nothing by showing the imposing men in white coats an upraised middle finger. But even if I am quite sure the average outcome under the quack treatment is better than with the conventional treatment, if there is sufficient downside uncertainty surrounding the outcomes, the benefit of convention will come to exceed the cost.

If you knew with perfect certainty that a conventional cancer treatment had a 10% likelihood of success and a crazy unconventional “quack” treatment had a 10.1% likelihood, which one would you choose for a loved one? I’d like to think I’m good enough and courageous enough to choose door number two. But I like to think a lot of things. In the real world, of course, we never know with perfect certainty that conventional beliefs are wrong, and we can always console ourselves that we are imperfect judges and perhaps it is the best strategy to defer to social consensus. In any given case, that may be true or it may not be. But it is certainly convenient. It allows us to collect a lot of extremely valuable put options, and compels us to believe and behave in very conventional ways.

I see rational astrologies everywhere. I think they are the stuff that social reality is made of, bones of arbitrary belief that masquerade as truth and shape every aspect of our lives and institutions.

We crave rational astrologies very desperately, so much that we habitually and quite explicitly embed them into our laws. Regulations often provide “safe harbors”, practices that may or may not actually live up to the spirit and intent of the legislative requirement, but which if adhered to immunize the regulated parties from sanction. People grow quickly indifferent to the actual purpose of these law but very attentive to the prerequisites for safe harbor. Rational astrologies are conventional beliefs adherence to which elicits provision of safe harbor by the people around us, socially if not legally.

The inspiration for this post was a wonderful conversation (many moons ago now) between Bryan Caplan and Adam Ozimek on the value of “sheepskin”, a college degree. Caplan is a proponent of the “signalling model” of higher education, which suggests that rather than “educating” students in a traditional sense, college provides already able students with a means of signalling to employers preexisting valuable characteristics like diligence and conformity. Ozimek is sympathetic to the traditional “human capital” story, that we gain valuable skills through education and achievement of a college degree reflects that accomplishment. Both of them are trying to explain the wage premium that college graduates enjoy.

I’m pretty agnostic to this debate — I think people really do learn stuff in college, but I think attaining a degree also reflects and signals all kinds of preexisting characteristics about the sort of people who do it. I’d add the “social capital” story to the mix, that college students make connections, with peers, faculty, and institutions, that increase their likelihood of being placed in high-wage positions. (And, I’d argue, actual graduation is an important consummation of membership in “the club”, so post-college social and institutional connections are weaker for those who don’t collect their sheepskin.)

But even if none of those stories were true, “rational astrology” would be sufficient to explain a large college wage premium.

Suppose that it is merely conventional to believe that college graduates are better job candidates than non-graduates, and that graduates of high-prestige colleges are better than graduates of low prestige colleges. Suppose that in fact, the distribution of degrees is wholly orthogonal to the ability of job candidates to succeed, but that outcomes are uncertain and there is no sure predictor of employee success.

Consider the situation of a hiring decisionmaker at a large firm. She reads through a lot of resumés and interviews candidates. She develops hunches about who is and isn’t good. Our decisionmaker has real ability: the people she thinks are good are, on average, substantially better than the people she thinks are not so good. But there is huge uncertainty surrounding hiring outcomes. Often even people in her “good” group don’t work out, and each failed hire is an emotionally and financially costly event for the firm. How will our hiring agent behave? If she is rational, whenever possible, she will choose people from her “good” pile who also went to prestigious colleges. She will be entirely indifferent to the actual untruth of the claim that Harvard grads are “good”. She will choose the Harvard grad whenever possible, because if a Harvard graduate doesn’t work out, she will be partially immunized from blame for the failure. If she had chosen a person who, according to her judgment, was an equally promising or even better candidate but who had no college degree, and that candidate didn’t work out, her choice would be difficult to defend and her own employment might be called into question. Thus, whenever possible, hiring decisionmakers rationally choose the Harvard man over similar or even slightly more promising candidates without the credential, and would rationally do so even if she understands that a Harvard degree contains no information whatsoever about the quality of the candidate, but that it is conventional to pretend that it does. People hiring for more prestigious and lucrative positions attract larger pools of applicants, and have greater ability to find Harvard grads not very much less promising than other applicants, and so rationally hire them. People hiring for less remunerative positions attract fewer prestige candidates of acceptable quality, and so must do without the valuable protection a candidate’s nice degree might confer. Candidates with prestige degrees end up disproportionately holding higher paid jobs, for reasons that have nothing to do with what the degree says about them, and everything to do with what the degree offers to the person who hires them.

This is not rocket science. It is a commonplace to point out that “no one ever got fired for going with [ Harvard / Microsoft / IBM / Goldman Sachs ]“. An obvious corollary of that is that it would be very valuable to become the thing that no one ever got fired for buying. One way of becoming the safe choice is by being really, really good, sure. But I don’t think it’s overly cynical to suggest that actual quality is not always well correlated with being the unimpeachable hire, and that once, somehow, an organization gains that cachet, a lot of hiring occurs that is somewhat insulated from the actual merit of the choice. [ Harvard / Microsoft / IBM / Goldman Sachs ] credentials may be informative of quality, or they may not, but they are very valuable regardless, once it becomes conventional to treat them as if they signify quality.

Rational astrologies are very difficult to dislodge. People who have relied upon them in the past have a stake in their persisting. More importantly, present and future decisionmakers require safe harbors and conventional choices, and unless it is clear what new convention is to be coordinated around, the old convention remains the obvious focal point. Very visible anomalies are insufficient to undo a rational astrology. There needs to be a clear alternative that is immune to the whatever called the old beliefs into question. The major US ratings agencies are a fantastic example. They could not have performed more poorly during last decade’s credit bubble. But regulators and asset managers require some conventional measure of quality around which to build safe harbors. Lacking a clearly superior alternative, we prefer to collectively ignore indisputable evidence of inadequacy and corruption, and have doubled down on the convention that ratings are informative markers of quality. Asset managers still find safety in purchasing AAA debt rather than unrated securities on which they’ve done their own due diligence. We invent and sustain astrologies because we require them, not because they are true.

The process by which rational astrologies are chosen is the process by which the world is ruled. The United States is the world’s financial power because it is conventional to pretend that the US dollar is a safe asset, and so long as it is conventional it is true and so the convention is very difficult to dislodge. Economics as a discipline has not performed very well from the perspective of commonsensical outside observers like the Queen of England. But the conventions of economic analysis are the rational astrology of technocratic government, and decisions that can’t be couched and justified according to those conventions cannot be safely taken by policy makers. Policy is largely a side effect of the risk-averse behavior of political careerists, who rationally parade their adherence to this moment’s conventions as enthusiastically as noblemen deferred to pronouncements of a court astrologer in an earlier time. We can only hope that the our era’s conventions engender better policy as a side-effect than attention to the movement of the stars. (As far as I am concerned, the jury is still out.) But it is not individuals’ independent judgment of the wisdom of these conventions that guides collective behavior. Our behavior, and often our sincere beliefs, are largely formed in reaction to the terrifying accountability that comes with making consequential choices unconventionally. Our rational astrologies are at the core of who we are, as individuals and as societies.

 
 

49 Responses to “Rational astrologies”

  1. andrew writes:

    Brilliant! Mr. Waldmann, you are describing many of the same things that an organizational sociologist named John Meyer described as “formal social structure as myth and ceremony.” Normal people live in a world in which they are constantly constrained by the norms and values around them – in addition, much of the “ceremonial” behavior is not self-aware but may even be un-reflective! People go to college not only because it is to learn skills, or because they think it will signal some qualities to others, but because they could not comprehend doing otherwise when they hit the age of 18! And neither could anyone else around them. This unreflective behavior is what is called “script-following” – perhaps economists might call it “heuristics”

  2. gregorylent writes:

    mystics will agree with everything here

  3. hhoran writes:

    Seems you need to distinguish between various categories of astrologies before taking the idea much further.
    Your original example (medieval medicine) was an astrology about basic principles about how the world works (covering subjects we’d label “science” or “religion”) that if true, would be true at all times and in all places. Your later examples were local, not universal astrologies. Individual societies might recognize the power of a monarch, or the value of elite universities, but wouldn’t assume those values apply everywhere else.
    I think you also need to distinguish between wholly voluntary astrologies–no one forced people to buy IBM mainframes (and many didn’t) but if you don’t hire that rating agency, the risk of devasting lawsuits was very real. Yes it is all CYA in some sense, but the former seems more consistent with your original framing of the ideas.
    When I started reading, I thought you headed to astrologies within a narrow social/political group (i.e the huge imminent risk of inflation in Fed deliberations), where no one can question the need for austerity in the social circles that Fed members travel in, even though that astrology is openly challenged lots of other places the Fed members have access to. Quite different from your time traveller, who knew that no one anywhere in society openly questioned the efficacy of bloodletting via leeches.

  4. Diego Espinosa writes:

    Heuristics are, in aggregate, adaptive. Our fitness is improved by relying on simple decision rules under conditions of uncertainty and complexity. This is probably why random, benign rules (“rational astrologies”) survive: they form part of the fabric of that decision-making process.

  5. Foppe writes:

    An expansion on Keynes’s “A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way with his fellows, so that no-one can really blame him”?

  6. One more contributing factor to the strength of these astrologies: the woman who buys IBM is probably sensible and low risk in other parts of her work, and her consequent success will be conflated with the results of the IBM decision.

    More generally, people smart enough to know and follow the rational astrology strategy will be smart enough (and good enough at working with social convention and capital) to do other things well in life, and it will be hard to distinguish the success that comes from their genuine intelligence/strategic ability, from that which supposedly comes from the astrology. Many, if not most, of the people who opt out of modern medicine are people who opt out of other things in life that would make them look successful. So we think of those who opt out as being hippies or crazies or something else. And thus the astrology is reinforced.

    Only if the astrology is strongly anti-optimal for life goals will those who depart from it be able to demonstrate sufficiently reliable and predictable successes to prove that they aren’t really losers.

  7. Remy Martin writes:

    cf Jeremy Grantham’s “career risk” for investment managers. market direction & valuation are rational astrologies–the longer you ignore them, the more likely you are to lose assets and eventually get fired. as trend/valuation gets prolonged/extreme, almost everybody believes. tech stocks in 1999; subprime RMBS/CDOs in 2006-7. another reason the EMH and its ideological progeny do not work.

  8. Nick gogerty writes:

    Steve, nice post. Rational astrologies are probably worthy of a book. Even a gladwell type treatment might bring the term and concept into popular awareness so that people may spot them easier or at least have a shared way of explaining them and if not mitigating them at least acknowledging them.

  9. JKH writes:

    a) intended meaning paragraph 7:

    “A rational astrology is a set of beliefs which one rationally behaves as if were true, regardless of whether they are in fact.”

    “According to which”? // “rationally believes”? // “as if they were true”?

    b) + Keynes (# 5)

    c) Pascal’s wager?

  10. brian writes:

    Steve,

    Your wrong about people not getting fired for choosing the incumbent and safe choice. Tech buyers in the early nineties shifted away from IBM to new firms like Microsoft and Dell. Haven’t you read the Innovator’s Dilemma by Clayton Christensen?

  11. Kevin writes:

    Didn’t Galbraith explain that this is why corporations hire outside consultants? Their advice might be worthless, but the manager gets plausible deniability and can say, “I hired the top people.”

  12. streeteye writes:

    @brian Actually, Christensen described a similar process. Incumbents get disrupted because they are trained to follow the script that made them successful. The whole culture is optimized around executing that script. If you’re an old line disk drive manufacturer selling big drives to IBM and DEC, making a small drive is the easy part. It’s hard to build an organization optimized to serve little Dells and Compaqs and to get your best product and sales guys in tune with them instead of IBM and DEC, when those are the high-prestige, high-profit accounts that you’ve optimized your culture to serve, and the startups are initially unprofitable.

  13. PeterP writes:

    “Whether your wife lives or dies, your future welfare turns crucially on how your actions are viewed by other people.”

    You give a perfect description of the corruption of orthodox economics. It is not about truth anymore, this battle is over. By now they know their behavior is harmful http://delong.typepad.com/sdj/2011/01/what-have-we-unlearned-from-our-great-recession.html but they can’t change it for the fear of losing face and social standing. So instead they go on to rewrite history: they are all Minskyans now! http://www.debtdeflation.com/blogs/2012/06/30/what-utter-self-serving-drivel-brad-delong/

  14. [...] Spinning for Dollars – Paul Krugman An idea better kept in reserve – FT Alphaville Rational astrologies – interfluidity The white working [...]

  15. [...] you know following them won’t necessarily produce the best outcomes. You really must read his post in full; I think the first part is terrific but have some quibbles when he tries extending his [...]

  16. Eric Titus writes:

    Really interesting, but how does one act if one has a real alternative to one of these “rational astrologies?” I think there’s often more holding them in place than desire to avoid blame–perhaps people who were hired under the current system would take issue with the idea that they benefited from a problematic hiring process. Current users and beneficiaries of any “astrology” might take offense if it is challenged. It also strikes me as similar to the “McKinsey effect”–you know that there are better and cheaper options out there than McKinsey, but you may not have the expertise to find them. One of the funny things about hiring consultants is that firms often do it in areas where they have limited knowledge.

    Your argument has a good deal in common with “institutions” in sociology, as Andrew points out. The counterpart to Meyer is DiMaggio and Powell, who point out three basic ways that institutions diffuse: through coercion (you won’t get money without a Moody’s rating), copying (Apple is doing it, so maybe you should), and professional norms (you were told in business school that ratings are important). There’s been some interesting stuff relating to hedge funds — Zuckerman finds that firms are “punished” by investors for defying easy categorization, but others find that high performers benefit from being seen as unique.

  17. [...] Rational astrologies – interfluidity [...]

  18. Seth writes:

    Your “Rational Astrologies” remind me of Dennett’s “Belief in Belief”. His take is that more people believe that belief in God is “good for you” than actually authentically believe, so organized religions get a lot of ritualized “going along with it” participation. They are Rational Astrologies for their believers.

    For example: “Breaking the Spell: Religion as a Natural Phenomenon

  19. [...] Rational astrologies – interfluidity [...]

  20. Stefan writes:

    Great Post!

    I think that helps to explain a lot. Religion should work the same way. It follows from this idea that there is not necesserily a question weather religion is an evolutionary advantage. Or for science. Lots of science was (and probably still is) based on flawed paradigms, which were hard even to conceive once they were paramount. I recently read ‘Structure of scientific revolutions’ and Kuhn gives similar arguments why scientist fail to understand nature – even if they had plenty of evidence available.

  21. Nick Rowe writes:

    Steve: good post. But think of this:

    1. The very fact that one would dare say in public that something is a rational astrology suggests that it isn’t.

    2. If something really were a rational astrology, one would be too fearful of the consequences ever to dare say in public that it were.

    3. If someone were to ask for an example of something I think is a rational astrology, they would be missing the point.

    4. No, I can’t think of any examples ;-)

    Timur Kuran, on preference falsification, said something like this.

  22. [...] interfluidity // [...]

  23. RN writes:

    Forgive me for raining on the SRW hagiography, but this seems to be an absurdly overcomplicated and very unhelpful way of stating the bleedingly obvious: with imperfect information, we do the best with what we have to work with.

    Um….duh.

  24. Viliam Búr writes:

    Nick Rowe: Rational astrology does not have to be “all or nothing”. We don’t have one monolithic society, but many social circles.

    In some circles it may be allowed to say that “X is a rational astrology” and people will agree with you. Yet in other circles people may politely disagree with you for saying this, and may socially punish you for not doing X.

    Actually, even the same person may think that “X is a rational astrology” is a cool opinion to express, but that you are insane if you avoid X in real life. People are not completely rational, but that does not prevent them from influencing you life.

  25. OGT writes:

    Great post. There are so many examples, one of the conundrums of EMH, for example, is that the more people believe it the more the market price becomes a ‘rational astrology,’ belief in EMH makes the markets less efficient.

    Nick- I don’t think that’s true. It’s one thing to opine that prestigious degrees are not worth much, it is quite another to hire a non-degreed candidate. I am sure plenty of nineteenth century people questioned the efficacy of medicine, but that doesn’t mean there wasn’t a social/psychological cost to bucking the convention and letting your wife or child die untreated. Decisions get made on the margin.

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  27. Dave Timoney writes:

    Re “If you knew with perfect certainty that a conventional cancer treatment had a 10% likelihood of success and a crazy unconventional “quack” treatment had a 10.1% likelihood, which one would you choose for a loved one?”

    If you knew this with perfect certainty, then the second treatment would no longer be “quack”. It would, demonstrably, be the new and (marginally) improved conventional treatment. This is a false dilemma.

    The first scenario you present (to bleed or not to bleed) also ignores a third option: pay the doctor, in order to keep up appearances, but keep him away from your wife. Quite a few businesses have historically adopted this approach with regard to credit rating agencies. In other words, a belief in a rational astrology may be quite cynical, without this producing a crisis of self-worth or the loss of integrity.

  28. ezra abrams writes:

    ya know, the difference between people who have impact and those who don’t ?
    proof reading
    quote
    he mainstream medicine of several centuries ago was what I think of as a rational astrology. A rational astrology is a set of beliefs which one rationally behaves as if were true, regardless of whether they are in fact. Rational astrologies need not be entirely fake or false. Like bullshit, the essential characteristic of a rational astrology is the indifference to truth or falsehood of the factors that compel ones

    I mean, writing about rational astrology with garbled me Tarzan you Jane prose…the jokes write themselves

  29. allis writes:

    An illuminating concept, Rational Astrology. Other examples of rational nonsense: Pascal’s Wager,
    Too Big to Fail, Weapons of Mass Destruction, “A Modest Proposal.”

  30. Your story about hiring doctors even though you know that the treatment is ineffective reminds me of the story of Louis XV of France in the early 18th century. He was born as the third son of the Dauphin (the Heir to the Throne). However, in the first few months of Louis XV’s life the Dauphin’s entire family caught smallpox, and the Dauphin and his two older sons were treated with the “best” technique of the day–bloodletting–and possibly as a result of treatment, they all died. In addition, his uncle died, leaving the sick infant Louis XV as the only remaining member of the royal dynasty (House of Bourbon) in the line of succession for the throne.

    Anyway, the point is that because the stakes had become so high, his governess actually hid Louis XV from the doctors to prevent them from treating him. Not only did she risk the emotional distress that you describe from failing to follow the “rational astrology,” but she actually risked high-treason, for if the new infant Dauphin had died, she could have been accused of murdering the heir to the throne in an attempt to overthrow the ruling dynasty.

    Could it be said that, even though she was absolutely right, Madame de Ventadore (Louis’s governess) behaved irrationally?

  31. [...] interfluidity » Rational astrologies [...]

  32. Steve, you should read “Purity and Danger” by Mary Douglas if you haven’t already. It’s a short book and it’s beautifully written (her style reminds me of Joan Robinson’s).

    http://www.amazon.com/Purity-Danger-Analysis-Pollution-Routledge/dp/0415289955/ref=sr_1_1?ie=UTF8&qid=1347471291&sr=8-1&keywords=purity+and+danger

    Douglas and co. (the structuralists) believe that convention (rational astrologies) shape everything — from our perception to our beliefs to our actions. I think she’s spot on. But I’ve come to view these constructions more in terms of power relations ala Michel Foucault. Beneath every rational astrology there lies brute force. Foucault used to highlight this very well with regard to psychiatry (a rational astrology [pseudo-science?] extraordinaire), but he expanded it to medicine and then to most social sciences. I also think that economics is perhaps the Queen of the rational astologies among the social sciences. Everyone thinks they’re an economist these days — and I don’t think that’s a coincidence. It’s our modern day mythology.

  33. Scott Sumner writes:

    Robin Hanson talks a lot about how medicine is a way to “show that we care.”

  34. Phil H writes:

    I don’t have any comment on the sociology or economics of this. I was just struck by the first example, because I have lived it.
    I live in China, with my wife and her parents. When our kids get colds, my in-laws want to a) stuff them full of Chinese medicines (which I dislike because they make the kids cry, though they’re harmless) and b) take them to hospital and get them blasted with antibiotics (which I object to on medical grounds). We had stand up screaming rows about this, but my wife got it much worse than me – they would abuse her for letting me be such a monster.
    My in-laws are semi-literate; there is probably no way for them to “unlearn” what they think they know about medicine. I have my own certainties, of course.

    I’m a bit more hopeful than the OP: I think over the years we accumulate areas of known bad practice. We know today that war is bad, and we do it less. We know today that the gold standard is bad, and we do it less. We know that centrally planned economies don’t work, etc., etc. Within the bounds of the acceptable – yeah, it’s pretty much random fashion. But I do believe in progress, and I think we’ve curbed some of the worst policy excesses.

  35. I’m wondering if this applies to demand management policy.

    The current orthodoxy among non-Australian central bankers and their sycophants in the talking-head econonmist community appears to be that monetary policy is appropriately loose. Scott Sumner and others (example) have pointed out that this belief has a number of the characteristics of a rational astrology.

    But the interesting point is that this only became orthodoxy after the crisis. Before 2007, orthodoxy among non-Japanese monetary economists was that even Gideon Gomo could shove on the string with sufficient vigour to trigger inflation if they really wanted to (and said so), and that the Japanese lost decade was substantially due to culpably tight monetary policy.

    The speed of the change in conventional wisdom appears to be a case of “elites with the power to control conventional wisdom use it to rationalise their previous decisions” – with the speed of the change in conventional wisdom indicating that this isn’t a rational astrology as defined above.

    But almost all cases of rational astrology could also be understood as elites controlling the conventional wisdom to rationalise their own bad decisions – the pols writing regulations which continue to require the use of ratings are bought, paid for, wined, dined and advised by bankers who lost large amounts of OPM relying on ratings. It is junior and mid-career bankers (despite their mammoth stake in appearing conventional) who want to ditch the use of ratings, and are willing to say so.

    Is rational astrology really different from elite deception, and if not how do we tell them apart?

  36. crystal david j writes:

    If you knew with perfect certainty that a conventional cancer treatment had a 10% likelihood of success and a crazy unconventional “quack” treatment had a 10.1% likelihood, which one would you choose for a loved one? I’d like to think I’m good enough and courageous enough to choose door number two. But I like to think a lot of things. In the real world, of course, we never know with perfect certainty that conventional beliefs are wrong, and we can always console ourselves that we are imperfect judges and perhaps it is the best strategy to defer to social consensus. In any given case, that may be true or it may not be. But it is certainly convenient. It allows us to collect a lot of extremely valuable put options, and compels us to believe and behave in very conventional ways.

    I see rational astrologies everywhere. I think they are the stuff that social reality is made of, bones of arbitrary belief that masquerade as truth and shape every aspect of our lives and institutions.

    YOUR ARTICLE IS REALLY AN INSIGHT AND IF U ASK ME (MY MOM HAS CANCER) I WILL CHOOSE THE 10% ROUTE FOR AT LEAST IF IT GOES WRONG I WILL GET AN EXPLANATION OR A REROUTING TO SOLVE THE PROBLEM OR AT LEAST TO GET RELIEF. IN THE LATTER CASE IE 10.1% THE PERSON WHO DOLES OUT THE TREATMENT WILL HAVE NO RESPONSIBILITY PER SE AND NOR WLD THE LEGAL SYSTEM COME TO MY ASSISTANCE. YES INDIA WHERE I LIVE IS FULL OF SUCH SOLUTIONS. SOME OF THEM DO WORK AND HAVE BEEN RESEARCHED AND RE RESEARCHED MADE INTO ACCEPTED ROUTES OF TREATMENT BUT IN THIS BANDWAGON OF NATIVE CURE THERE IS ALSO A WHOLE LOT OF BS…WE NEED THE ABILITY TO DRAW OUT THE DIFFERENCE!!

  37. Justin Cidertrades writes:

    We can hardly complain over what the Fed Governors did today. They simply did what we hired them to do — rational astrology !

  38. [...] good) A Quick Peek at How Chicago Students are Performing Scabtackular Rahm plays the blame game Rational astrologies The Deafness Before the Storm Share this:TwitterFacebookStumbleUponRedditDiggEmailPrintLike [...]

  39. [...] Astrologies (interfluidity). ”The mainstream medicine of several centuries ago was what I think of as a rational [...]

  40. [...] How “rational astrologies” end up serving as safe harbors for society.  (Interfluidity) [...]

  41. [...] Source [...]

  42. mere mortal writes:

    Loved the article, thanks for the insights. Delineating rational reasons for a second or third best (or even destructive) action was quite interesting.

    I would like to defend your overworked, talented human resources employee, though.

    The hiring of candidates from prestigious institutions can serve as what I would call a sort of “judgment of judgments” decision. Which is to say, you can suspect that, all else equal:

    1. High schools will give the best grades to the students who perform best.
    2. Prestigious colleges will grant admission to the best students among those performers.
    3. Those same colleges will grant diplomas to students who are diligent enough to complete the coursework.

    So, on some level, hiring from prestigious colleges is a task of outsourcing the vetting process. You did explain that your HR hero had a method of understanding good candidates from bad, and I’ll have to think about that more, but generally it’s a tough call to judge the quality of work that a complete stranger is liable to perform for you.

    Again, though, a great read, and a mechanism for explaining seemingly irrational behavior I will be on the lookout for going forward.

  43. [...] Rational astrologies (Interfluidity) [...]

  44. [...] Rational astrologies (Interfluidity) [...]

  45. DD writes:

    You coined a term as “rational astrology”, really?

  46. Gso writes:

    You should add a dose of “Cargo Cult Science” after being exposed to the “rational astrology” syndrome , and you will find it here: http://www.lhup.edu/~DSIMANEK/cargocul.htm

  47. [...] Rational astrologies [...]

  48. Lenny writes:

    Is this why the “Brand” is so important? I worked in a factory where they put different Labels on the same product. Whether it is college or toothpaste is not the “Brand” important. If I am not 100% sure I will pick a “Brand” and buy it from a “Good” store even when no one is looking? Am I nuts? Superstitious? Watched too much TV when young?

  49. SheetWise writes:

    While reading your medical example I was thinking of “The Noble Lie” by Greenberg (also, “Manufacturing Depression”), and separately recall reading that many doctors who practiced “bleeding” knew it was ineffective, but also knew their patients demanded that they do “something”. It seems that a rational astrology is an expert response to consumers demand for a narrative, where there is no foundation for one. It originates with a lie, and the person who originates it knows it’s a lie.