Thursday, 16 May, 2024

Ethnic Demography

As contemporary behavioral economists have so often shown, people tend to grossly overestimate their chances for success in economic ventures. This overconfidence underpins the very functioning of capitalism— and is a far cry from the rationality assumptions of neoclassical economics. Keynes also coined the term “liquidity preference” to express the consequences of actors’ lack of confidence in the potential profitability of new investments, which shrinks their time horizons, reduces investment and consumption, and leads to the underemployment of economic factors—in other words, to economic crises. Capitalism needs the evocative overload of fictional expectations in order to operate.


If they cannot be formed from information alone, then where exactly do expectations come from? Contrary to behavioral approaches in economics, images of future outcomes and the confidence to act in the face of uncertainty or, conversely, the sudden collapse of this confidence cannot be comprehensively understood by focusing on cognitive regularities expressing themselves through overconfidence, loss aversion, or decision heuristics. Instead, expectations are social phenomena, in the sociological tradition of Emile Durkheim and American pragmatism.


The idea that expectations are social and not individual phenomena has important roots in the sociology of Emile Durkheim, who, in his sociology of religion, set out to investigate how religious belief systems are formed and reinforced (Durkheim [1912] 1965). Durkheim argues that religious beliefs are collective representations shaped and renewed through ritualistic practices in which the members of a clan come together and experience situations of collective effervescence.