The book, Individuals and Identity in Economics, by John Davis is the follow-up to Davis's previous work, The Theory of the Individual in Economics on the critical role and definition of the individual in economic thought. Beyond analyzing a conception of the individual as a collection of preferences, Davis seeks to resolve notions of atomistic, self-contained individuals with both post-World War II game theory and modem behavioral economics. The result is a well-developed, carefully constructed treatment giving food for thought for those interested in the philosophy of economics and the conception of the individual

Sprenger, Charles

English

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American Economic Association
 
 
Review
Reviewed Work(s): Individuals and Identity in Economics by John B. Davis
Review by: Charles Sprenger
Source: Journal of Economic Literature, Vol. 49, No. 4 (DECEMBER 2011), pp. 1250-1251
Published by: American Economic Association
Stable URL: https://www.jstor.org/stable/23071671
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 1250  Journal of Economic Literature, Vol. XLIX (December 2011)
 Nichols, Albert L., and Richard J. Zeckhauser. 1982.
 "Targeting Transfers through Restrictions on Recip
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 O'Donoghue, Ted, and Matthew Rabin. 2001. "Choice
 and Procrastination." Quarterly Journal of Econom
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 Paserman, M. Daniele. 2008. "Job Search and Hyper
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 Evaluation." Economic Journal, 118(531): 1418-52.
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 99-118.
 Thaler, Richard H., and Cass R. Sunstein. 2008.
 Nudge: Improving Decisions about Health, Wealth,
 and Happiness. New Haven and London: Yale Uni
 versity Press.
 Kory Kroft
 University of Toronto
 Individuals and Identity in Economics. By
 John B. Davis. Cambridge and New York:
 Cambridge University Press, 2011. Pp. x, 260.
 $90.00, cloth; $32.99, paper. ISBN 978-1-107
 00192-3, cloth; 978-0-521-17353-7, pbk.
 JEL 2011-0054
 The book, Individuals and Identity in Economics,
 by John Davis is the follow-up to Davis's previous
 work, The Theory of the Individual in Economics
 on the critical role and definition of the individual
 in economic thought. Beyond analyzing a concep
 tion of the individual as a collection of prefer
 ences, Davis seeks to resolve notions of atomistic,
 self-contained individuals with both post-World
 War II game theory and modern behavioral eco
 nomics. The result is a well-developed, carefully
 constructed treatment giving food for thought for
 those interested in the philosophy of economics
 and the conception of the individual.
 The treatment evolves in three broad stages. In
 the first, notions of atomism in individual decision
 making and individuation are revisited. Davis
 presents a view that economics initially posited
 an atomistic individual, defined around his or her
 own collection of self-interested preferences. This
 self-contained, stationary egoistic view of the self
 provided coherent structure for understanding the
 individual. An individual could be represented by a
 utility function, itself a construct of a well-behaved
 preference relation, itself an as-if representation
 of a choice correspondence. Psychology broadly,
 and particular elements adopted by behavioral
 economists, challenged this stationary atomistic
 view. What must one make of phenomena such as
 dynamically inconsistent preferences if individuals
 are so statically defined? Davis adopts the view that
 the definition of individual as atomistic must be
 incomplete. A dynamically inconsistent decision
 maker, by the development of the argument, is an
 example of multiple, nonatomistic selves, interact
 ing within an individual. Of course, one can model
 such behavior as arising from a single decision
 maker, but multiple selves clearly presents a prob
 lem for analysis one may be interested in such as
 making welfare statements favoring one self over
 another. Davis hints at a broad issue in behavioral
 economics—that it is potentially unclear whose
 preference ranking to favor in multiple-selved sit
 uations. Another situation highlighted by Davis is
 the placement of the utility of others in the utility
 function. He points to an implicit definition of the
 individual as being both self and other-regarding.
 Hence the individual cannot be atomistic if he is
 multiple, socially selved.
 The second broad theme concerns strategic
 interaction. Making allusion to fixed point theo
 rems in game theory, Davis notes that postwar
 study f trategic interaction has focused often
 on equilibrium notions of behavior. Hence, in the
 authors view, individuals are defined by the ratio
 n lity requirements of equilibrium. Interaction
 becomes part and parcel of the definition of an
 individual. Davis suggests that this muddies the
 waters of individualism as in indefinitely repeated
 games many outcomes are possible, from one
 sided to mutually beneficial given the multiplicity
 f equilibria. Davis points to experiments in game
 theory where "what individuals are depends on
 how their interaction was designed" (p. 109).
 Th  third theme links individuality to evolu
 tionary forces, the economics of identity, and
 policy questions. Davis begins by suggesting
 that individuals, the market systems they face,
 and the nature of their interpersonal interac
 tions coevolve. Given this coevolution, how then
 can one understand individuals evolutionarily?
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 Book Reviews  1251
 Individuals may then be not a collection of static
 preferences, but a collection, in Davis's view, of
 individual capabilities responding to evolution
 ary forces. Stated in this way, the individual again
 disperses into multiple selves, leaving the atom
 istic definition of individuation unsatisfactory.
 The question then becomes can a self-organized
 individual be recovered? Perhaps not if different
 capabilities pull individuals in different direc
 tions. As such, an individual may be pulled by
 different potential capabilities or different iden
 tities in different situations leading to trade-offs.
 In this way, Davis makes the link to identity eco
 nomics, social issues of race discrimination, and
 normative analysis. On this last avenue, the point
 is made clear that without a clear notion of the
 individual, or a clear notion of which utility to
 favor, policy prescriptions and welfare statements
 are deeply complicated.
 The reading of this text provides the reader
 with a novel look into the philosophy of economic
 constructions and their relationship with recent
 developments in behavioral economics. The
 author clearly demonstrates a depth of reasoning
 and care for the subject that should make the text
 of interest to a broad audience. The most compel
 ling portion of the text, however, is often between
 the lines. Welfare statements for nonatomistic
 individuals are wrought with pitfalls and many
 constructions of individualism face nonatomism
 in the view of Davis. Recognizing this challenge,
 how then to move forward? Recent work dem
 onstrates that welfare statements can potentially
 be made with choice data alone, obviating some
 concerns. Of course, even with this caveat, the
 ability to parse definitions of individuation and
 individuals generates an important foundation for
 understanding the new economics of identity.
 Charles Sprenger
 Stanford University
 The Idea of Justice. By Amartya Sen. Cambridge:
 Harvard University Press, Belknap Press,
 2009. Pp. xxviii, 467. $22.95, paper. ISBN 978
 0-674-03613-0, cloth; 978-0-674-06047-0,
 pbk. JEL 2011-0483
 Amartya Sen's vision of justice is agreeably
 humane. He sees people as developmental crea
 tures whose well-being depends on achieving
 their potential in healthy and satisfying ways.
 This reflects something of an Aristotelian cast of
 mind, at least with respect to Sen's picture of the
 structure of human psychology. Whereas utilitar
 ians tend to focus on preference-satisfaction and
 egalitarians typically traffic in arguments about
 the distribution of resources, Sen operates with
 a more fully rounded idea of human well-being.
 But, as with other neo-Aristotelians like Alasdair
 Maclntyre (1984), Sen resists Aristotle's view that
 there is a fixed list of human purposes or virtues.
 Rather, he thinks that justice is to a considerable
 extent about enabling people to develop and fulfill
 their own capabilities. This means that, although
 he has strong egalitarian impulses and often
 recommends antielitist policies, Sen is strongly
 committed to the idea that human freedom lies
 at the core of justice. Despite his antipathy for
 preference-satisfaction as a moral yardstick, he
 resists appeals to externally identified "interests"
 that might trump an agent's sense of his or her
 priorities and purposes (pp. 376-79).
 Sen's vision of a better world is one in which
 more people have the freedom and wherewithal
 to achieve their best potential, and he thinks that
 a large part of the task of a theory of justice is to
 identify obstacles to realizing that vision—and to
 point the way to their removal. He has two main
 goals in this book. The first is to provide a syn
 thetic account of arguments about justice that he
 has been developing over several decades. The
 second is to establish this view as superior to John
 Rawls's A Theory of Justice, which Sen rightly
 judges (pp. 52-53) to be the most important work
 on the subject in a generation.1 The two projects
 are inextricably linked because many of Sen's
 major claims are defined as alternatives to—or at
 least against the backdrop of—Rawlsian claims
 that he finds wanting. My own philosophical pri
 ors and views about justice are closer to Sen's than
 they are to Rawls's, but I nonetheless think that
 Sen fails on both counts. His arguments against
 Rawls are less than telling and, given what he has
 said elsewhere, Sen's defense of his own account
 Rawls originally published A Theory of Justice in
 1971, but he had been developing the central ideas in
 journal articles for over a decade before that. He con
 tinued refining—and indeed revising—them in articles
 and lectures, leading to the publication of a substantially
 revampe  second and final edition n 1999.
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Individuals and Identity in Economics by John B. Davis [Book Review]

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