Wednesday, October 27, 2010

Psychiatry and Economics

I've alluded to the field of "behavioural economics" in other posts.  I think this is a very interesting extension of social and motivational psychology.

I think that a broad analogy can be made between economics and psychiatry:
the phenomenon of an economy is similar to the mind, or to one's life, in a variety of ways:
1) there are engines which drive the economy, in the form of productivity.  Economic productivity may be measured by goods or services generated by the population.  Life productivity includes various tasks of developmental "work".
2) There is a relationship between "supply" and "demand" which changes the valuation and flow of productivity.
3) Currencies become symbolic short-cuts to exchange goods or services; emotional or behavioural "currencies" can be short-cuts in to obtain needs in the community or in relationships.
4) Problems in an economy could occur at many different levels in the system:  productivity failure due to a technical, external problem (e.g. a natural disaster), a failure to exchange or trade freely, a symbolic or regulatory system which goes out of control despite integrity in the rest of the system (e.g. stock market crashes).  In the economics of mind, there could be core external problems (e.g. a neurological disorder), but there could certainly also be problems "trading freely."  Heightened neurotic defenses could be compared to a lack of "free trade," where healthy inner resources cannot be shared, not with other parts of oneself, nor with others.  Such phenomena stunt an economy, even if the core capacity for productivity is strong.  A "stock market" crash, similarly, could occur in the mind, if regulatory mechanisms in one's mind run wild, while losing touch with a moment-to-moment sense of self or present. 
5) Borrowing could, one the one hand, be a powerful means to accomplish tasks that would otherwise be impossible (e.g. buying a house).  Refusal to borrow limits capacity for growth.  But if debt cannot be managed, it leads to an economic instability, reduced autonomy, and ultimate failure (bankruptcy).  Similarly, in one's mind, risks need to be taken to grow, and one needs to borrow from others and from the community in order to develop oneself.  Refusal to borrow limits what is possible.  However, over-borrowing, and accumulation of social & emotional debts, leads to a cascade of chaotic effects. 
6) Investing is a means of taking a risk of giving one's resources away, with the hope that the community will prosper as a result, and return the investment prosperously.  Emotional and social investments are risks taken which, on the one hand, are immediately depleting, and which may cause permanent losses (e.g. with unfruitful actions are relationships) but which permit the possibility of substantial growth in one's own life, while also allowing resources for the community to grow (emotionally or socially) around you. 

Much in the field of economics include sophisticated mathematical analysis of the energy dynamics in an economic system, accounting for the many variables at play.  It would be interesting to apply some of this analysis to psychological dynamics.  Behavioural economics is more psychology than economics, at this point.  It would be curious to have more of the leaders in the study of mathematical economics apply some of their ideas to "psychological economics."  

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