Nietzschean Economics

Nietzsche described the universe as the manifestation of an underlying force which he called will to power. For him, an “insatiable desire to manifest power” is the essence of the universe, and all living things have the same goal, growth. He wrote: “every living thing does everything it can not to preserve itself but to become more.” And to grow and expand, individuals establish for themselves lofty goals that they will (probably) never reach. Aiming high requires overwhelming efforts and the willingness to “risk every danger”. Pain, suffering, and being thwarted in one’s attempts to accomplish a goal are the preconditions for growth and hence an increase in one’s power. [Link to the book] 

I have always been fascinated by this idea that individuals are living in a constant desire of self overcoming and yesterday I had the chance to read an interesting debate between Richard Robb and James Heckman. In three articles (see below) they discuss if will to power is compatible with our rational choice theory.

Robb claims that economic models cannot incorporate the Nietzschean concepts and give some examples of individuals getting “utility” not only from the output of an activity but also from the exploration and the effort exerted in that activity. Agents have a “preference” for struggling. For instance, if people go to the gym, if they suffer below cold metallic machines, and they feel pain in all the parts of their bodies is not (only) because they expect a health benefit in the long run, but because they enjoy the experience. Robb also discusses the unconscious nature of human motives and the capacity of humans to rationalize the consequences of choices after a choice is made.

Heckman replied by showing how “overcoming” might be incorporated into standard utility functions and challenge Robb asking what may be the benefit for economics from investigation into the motives underlying human action.



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Notes from Underground

In June 2020 I was preparing the material for my summer school “Economics of Misbehavior[Link] and I decided to read Dostoevsky’s short novel Notes from Underground [Link]. The principal character is a retired mid-level government bureaucrat living in St. Petersburg that cannot stop humiliating himself and embarrassing others. I love this book and I think it is a masterpiece of the literature and a must-read book for behavioral economists. In the first part of the novel, the underground man says that human beings are inconsistent and unknowable. They have no logic and their actions make little (or no) sense. In short, Notes from Underground describe human perversity and illogicality.

This novel is a nice contrast to “our” Rational Choice Theory that provides precise theoretical models to understand and predict human behavior. We assume that humans are rational beings and capable of conducting ourselves in logical ways. Dostoevsky hates the idea that if we strived to be more rational, we would stop acting in ways that harmed ourselves and society. He wrote that there are millions of instances where people have knowingly gone against choices that would bring them the greatest “utility” and well-being. To understand human (mis)behavior we need to understand that an individual is not a “sort of piano key or a sprig in an organ”. It is something more complex. 

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