Personal: Adler vs. Becker

This is a personal post reflecting on a book I’m reading, but before I get into it, let me share the outcome of the coin flip simulation that Cosmos just ran for me. I asked him to flip a coin 9 times using a Bernoulli distribution. Heads I paywall the post, tails I don’t. It came up heads 4 times and tails 5, so it won’t be paywalled. Here’s that graph:

Let me now get started. The post is explained below the divider and was written in one sitting without any editing. Cosmos said it might take someone 20-25 minutes to read this entire post and suggested therefore I break it up into parts. So I’m going to do that.

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Studying the Courage to be Disliked as a Substack Series

As I said last weekend, I have been thinking that since I am committed fully to learning all that I can from this book, The Courage to be Disliked, which is a Socratic dialogue between a philosopher and a student about “living the philosophy” of Alfred Adler, an early 20th century psychologist and contemporary of Sigmund Freud’s, I thought I would use the substack to share what I understand and share my own reflections. While I wanted to talk about chapter 45 from the book, entitled “The Difference Between Trust and Confidence”, I felt like I needed to just start out and lay what I understand so far as to be the differences between economics and Adlerian psychology.

Let me start by saying that I find the Audible to be much easier to digest this material than reading it. This could be due to my struggle to focus on reading tasks. I am still working on that, and won’t excuse it. I will just say that it is an ongoing struggle and that to read I have to have a way to block out all distractions, and the only time I am successful doing it fully is when I prepare for class or am working on understanding something on causal inference. I highly recommend the Audible version of the book because the voice actors are great. The philosopher speaks with a soothing, calm, and dignified English accent. The student is intense, prone to outbursts, moody. Putting it direct — the student therefore reminds me of myself; the philosopher not so much.

The second thing I will also say is that it has become very clear to me as I’ve been working through the book that Adlerian psychology is a complete system. There are many ideas that have separated from it and become popularized items within popular culture — so much so that I think one will probably, like me, be surprised to even learn it is some lynchpin idea within Adler’s system. But, this is also what I find to be challenging about him. It often has the feeling that to understand one thing, you must understand first something else. And so drilling down to some core set of axioms can be quite challenging and there is a feeling often that the ideas are recursive. I do not think in terms of systems naturally, as I am more of an inductive thinker than a deductive one. But I do have some basic ideas that I wanted to share. And please keep in mind that when I say “Adlerian psychology”, it will always be shorthand for the ideas in this book, as I am not familiar with Adler otherwise.

Becker Framework Seems Practically Orthogonal to Adler’s Framework

The first thing I wanted to share is that the contrast between what I’ll call “Adlerian psychology” and the “economic way of thinking” could quite honestly not be more dissimilar. Why is that? Because the economic way of thinking, in 21st century United States, is neoclassical. It emphasizes production and exchange. It emphasizes cooperation coming from social interactions, and recriprocity is often implied, particularly in game theory and the concept of Nash equilibrium where actions are contingent on the actions of others. People in economics take actions rationally in anticipate of the returns. They make calculations based on whether actions will yield positive expected net benefits. The Roy model, so often highlighted by Heckman, emphasizes the natural sorting patterns that happen in human society based on what he calls “essential heterogeneity”, or what I interpret as “selection on treatment gains”. Doing that which benefits you on net, means doing things for which the treatment effects are positive.

That is not the case in this Adlerian framework best I can tell despite Adlerian psychology being quite literally a fully developed theory of human nature and meaning. The closest I could possibly say to where I’d even dare to connect Adler to economics would be to pin it on Acemoglu’s tendency to describe economics in terms of labor tasks. In fact Adler’s ideas uses that same phrase — tasks. Over and over, Adler calls for people to separate out our life tasks from the life tasks of others. Thus Adler does pin a great deal of these ideas in terms of work, but that’s it. It is work, but it is not work done in anticipation of gains. The labor supply curve of Adlerian tasks, in other words, does not slope upward — rather, it is a vertical line.

Which brings me to a second point. It is also because of how strongly expressed is the responsibility of each person to live out their own life tasks that one realizes that were Adler to read De Gustibus non est Disputadum by Stigler and Becker, he would profoundly disagree with all of it. By the way, this is the first time I have ever notice the ordering of the authorship with Stigler appearing before Becker, and thus out of alphabetical order. Interesting — I wonder if I should take that to mean that this was less Becker’s project than it was Stigler’s. I suppose I should to some degree, and I suppose it would have to be pretty imbalanced in order for them to signal that with a reversal of the economics convention of only alphabetizing by last name.

Now, in many respects, that paper is not normative about behavior in the way that I think its influence has been. But as with so many things in economics, these influential ideas, such as reframing all human behavior as constrained utility maximization and equilibrium, which is the opening paragraphs too of Becker’s Nobel Prize speech, do tend to become suggestions of a way of living if they are the only things that we know about human nature or ethics. So let me just explain a couple things and contrast it with what I’ll just call “Becker” but by which I really just mean the exchange based approach to living our personal lives that I think is what we identify in economics with rational choice.

Utility Goals versus Interpersonal Goals?

For Adler, every problem in our life is an “interpersonal problem”. Every problem. It’s as universal as statement as you can find. Maybe as universal as when Milton Friedman once said that inflation is always a monetary phenomenon. Just like Friedman makes no exceptions for any other driver of inflation, Adler seems to make the same claim.

You see, in Adler, we have goals. I spent a decent amount of time, because of how so very different the ideas in the book felt from economics, trying — not to find any correspondence between it and Becker, because there is none — to find an equivalent set of axioms to what the kinds of axioms that we call the axioms of choice in economics. Decision theory starts with preferences and defines preferences foundationally as having three properties:

1. Transitivity. If A is preferred to B, and B is preferred to C, then A is preferred to C.

2. Completeness. A person can rank their preferences over all things as either A is preferred to B, B is preferred to A, or indifference between them.

3. Continuous. If A is preferred to B, and you added epsilon to B, A is still preferred to B.

The last is a mathematical necessity to take derivatives of utility functions, but the other two are basic statements that are often thought of as fairly noncontroversial descriptions of preferences.

From that we build utility functions and all utility functions are are placeholder numbers that rank preferences over different objects that we could hold, or “bundles of goods and services” to use economics jargon. So let’s say there are two objects: a bucket with 10 bottles of wine, and 3 loaves of bread called A versus another bucket with 3 bottles of wine and 10 loaves of bread called B. If one prefers the A bucket to the B bucket, we might assign to A the number 2 and to B the number 1. This would capture the natural original ranking of A over B, but then it becomes a number, from which we get functions that are thought to satisfy the axioms of choice. While it is not required that utility functions always be represented by quasi-concave functions, it is the most common one.

Utility maximization is not a property of the axioms of choice, though. So that is interesting in and of itself because the pure description of preferences in the way the I just did would not itself violate any of the system of thought laid out in Adler. But it almost seems that once one introduces utility functions and requires that people maximize them in markets with income and prices, it creates some of these issues. People often don’t realize that little detail — that utility maximization in economics is almost always taught as constrained optimization where the constraints are resource constraints that come from having to purchase the goods in questions on markets at market prices with income earned from work, bequeaths, or whatever else. The demand curves are market phenomena.

Complete rationality was not originally Becker’s behavior paradigm

It’s interesting that an early paper by Becker, which predated that work with Stigler at Chicago, showed that rationality was not required, though, for demand curves to slope downward. The paper was entitled “Irrational Behavior and Economic Theory” and was published in the JPE in 1962. It is one of his deeper cuts that only true fans probably know about. Becker showed that demand curves do not even require rationality, and thus do not therefore even require the axioms of choice which recall are the foundation of utility functions and therefore utility maximization. All one needed was the budget constraint. The budget constraint alone would give you the downward sloping demand curve.

My understanding, though, is that Stigler was not a fan of that, and much preferred and encouraged Becker to focus on utility maximization under price and income constraints, interpreted very broadly, as the dominant paradigm that would define the Chicago approach. But it is still interesting to me that Becker was early open searching for ways to talk about behavior that did not depend exclusively on utility maximization.

Where am I going with this? Because I think buried in the deep wood of consumer theory, particularly this “new household economics” that we associate with Becker and other work on the household in the 1970s and on, which became dominant as a way of thinking about all of human behavior, is the germ of seeing all human relationships as exchange-based. Even consider in Becker’s “rotten kid theorem” that payments are made from parents to child in order to create order in the family, and how even that is not really all that terribly controversial to modern economists who see economics almost entirely in terms of the idea of “people respond to incentives”. Which is to say, people do things because of expected gains, full stop.

Concluding Remarks

Cosmos suggested I stop here to make the series more readable. And I think that’s probably sensible so I will. This concludes my thoughts about Adler vs. Becker as I start to process the book I’m reading and which I highly recommend, The Courage to Be Disliked. It was a best seller that sold 10 million copies apparently. I will follow up with another post where I finish these basic thoughts another time. Thank you for reading.