Policy implications of socioeconomics.

A fair number of social scientists, several journals such as the Journal of Economy and Philosophy, the Journal of Behavioral Economics, and the Journal of Economic Psychology, a new section of the American Economics Association, and several symposia (such as the one published by the Journal ofBusiness in 1086) are attempting to develop a new paradigm tha t will expand the range of sociological, psychological, and institutional factors included in the analyeis of economic behavior, above and beyond the variables typically covered by the neoclassical economic paradigm. The new approaches take one of two basic tacks: The first tr ies t o integrate noneconomic variables in to the "orthodox" neoclassical economic paradigm. Major examples include Akerlof s works on dissonance (1982); Frank's work on reference groups (1985) and, before that , Harsanyi's work on two utilities (1966). The other major tack is to develop a new encompassing paradigm tha t includes both economic and other social (including psychological, cultural, and political) factors. Among these efforts are studies that conceive of the market as a subsystem that follows i ts own logic within a broader society, culture, and polity (Parsons & Smelser, 19561, and studies that embed rational decision making within a context of values and emotions (Etzioni, 1988). A third approach is not explored here. I t tr ies to formulate an alternate paradigm, one that studies economic behavior largely using concepts from other social sciences, for instance, the work by Lutz and Lux that builds on humanistic psychology (1988). Rather than asking which of the two basic approaches cited above is the more productive, or discussing at length the different social philosophies involved, we explore here the policy implications of adding key noneconomic variables to a paradigm that attempts to model economic behavior, a paradigm we call socio-economics. (For additional discussion, see Eteioni, 1988. For similar approaches, see Swedberg e t al., 1985; Hirsch & Friedman, 1986.) This pragmatic stance assumes that paradigms are used as heuristics, to call attention to those factors we take into account in policy anelyeis and policy formation. Because i t i s impossible to consider all or even most of the factors that have been identified, paradigms (and theories) are used to emphasize some factors to the neglect of others. Here, we explore the differences in policy analysis that result from employing a socio-economic set of variables, disregarding more theoretical issueswhether t h e s e var iables can be accommodated by t h e neoclassical paradigm, without undue assumptions and strain, or whether they require a new paradigm.