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Reading Montaigne’s essay “On Rewards For Honour” the other day (that’s an early translation, pretty unreadable, but the best I can do) reminded me what I dislike so much about behavioural economics / social psychology. Montaigne says:

If you introduce other advantages and riches into a prize which should be for honour alone, instead of increasing the prestige you prune it back and degrade it.

This is exactly the point made by two of the most commonly (read: interminably) quoted social psychology experiments: the Israeli day-care parents and the Swiss nuclear waste dump residents (at roughly 11.00 in that video). But the way these studies are presented you would think it was the first time anyone had had the idea.

What seems to give behavioural economics this feeing of superiority is its claim to be making these notions “scientific”. Not to put too fine a point on it, but this is bullshit. Behavioural economics is no more scientific than traditional economics: it can’t make accurate predictions either. When it comes to understanding the world, it has no more validity than Montaigne.

You might say: so what? Well, this gets important when – as is increasingly becoming the case – models from social psychology are used to direct policy-making. Its real danger is the way it gives politicians a false sense of legitimacy.

If you’re sitting in Westminster or Washington reading Montaigne, then you’re a figment of my imagination. But say you are – if you are, then you won’t be taking him too seriously. Why would you? After all, he just one one bloke, and this is just his opinion. You are aware that any policies you derive from his writings will be flawed and fallible, so you act cautiously, letting practice guide your theories.

Social psychology experiments – note the scientific language – encourage politicians and civil servants to think in exactly the opposite way. They encourage certainty. And certainty – or faith – is the last thing you want in someone making policy.

The models of behavioural economics – like the models of traditional economics, like Montaigne – are helpful for thinking. But nothing more. When people start taking models too seriously they make serious mistakes. The financial crisis is only the latest proof of that. Intelligent people are heralding behavioural economics as the solution to our woes. When the next crisis comes, it will be of their making.