Joseph E. Stiglitz, one of the most influential people of the 21st century

Joseph E. Stiglitz is an economist born in Indiana (United States), in 1943. In 2001 he won the Nobel Prize in Economics for his extensive work on globalization. Stiglitz is a bitter critic of it.

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Joseph E. Stiglitz is an economist born in Indiana (United States), in 1943. In 2001 he won the Nobel Prize in Economics for his extensive work on globalization. Stiglitz is a bitter critic of it. His theses clearly indicate the great changes and the great deficiencies that this has generated in the quality of life.

In 2008, Joseph E. Stiglitz was the most cited economist on the planet. This gives us an idea of ​​the dimension that his theses have reached and of his relevance as a thinker. In fact, we are talking about one of the most influential intellectuals of the 21st century.

One of the most interesting aspects of Joseph E. Stiglitz’s theory is that it integrates a fundamental fact: the globalizing model generated greater inequality and greater discomfort. The quality of life, on average and taking into account the entire planet, has decreased. Still, many do not perceive it that way. This is the reason why Stiglitz has also emphasized some elements of psychology that facilitate the support of the current model. We will refer to this last aspect immediately.

“The fierce individualism model combined with market fundamentalism has altered not only the way people see themselves and their preferences, but also their relationship with others. In a world of fierce individualism, there is little need for community and there is no need for trust. Government is a nuisance, it is the problem, not the solution.”

-Joseph E. Stiglitz-

Joseph E. Stiglitz and behavioral economics

Behavioral economics or behavioral economics is a new branch of psychology that applies to economic issues. It starts from the idea that, although the behavior of human beings is not rational, it can be predictable in many cases. This is the foundation that allows to create mechanisms, from the economy, to condition it.

The observations of behavioral economics establish that in our minds there are constant biases and recurrent errors of perception. One of them is the “framing” or frame. That is, the environment. The human being tends to interpret the realities according to the environment in which it is located or considered.

An example of this is an old experiment. The victim of a crime is asked to identify his assailant in a police station. Most of the time they end up identifying it, even though none of the people who are within sight are really suspicious.

For Joseph E. Stiglitz, much of the current political debate ends up being defined by the frame. The sectors of power make attention focus on certain focuses. From this, everything else is interpreted. An example of this is the fight against terrorism. It is some power centers that define what terrorism is and who are the ones who practice it. The public is often not able to see that there are other actors who engage in similar behaviors and could also be called “terrorists”.

The malleability of convictions

Another aspect to which Joseph E. Stiglitz refers is the fragility of convictions. These are highly influenced and modifiable. Stiglitz refers to several experiments in which this becomes palpable. For example, it indicates that people change their answers depending on how the question is asked. People tend to choose the answer that they agree with most, not the one that is more true or adjusted to their supposed convictions.

person choosing a path representing the theories of Joseph E. Stiglitz
Another important bias indicates that people process information differently if it is consistent with their previous convictions. If it is, it is considered more relevant. On the other hand, when it contradicts or puts into question those previous “certainties”, we tend to ignore it. This distortion is known as the “confirmation bias”.

From the above comes what Joseph E. Stiglitz calls “fictions about equilibrium”, a conviction according to which there is no objective inequality. In this regard, a survey found that up to 42% of Americans do not believe that inequality has increased in the world.

A conditioned world

Joseph E. Stiglitz reiterates that the main task of marketing and advertising is to condition perceptions. Molding the way in which each human being sees the world and the reality that surrounds it. In some cases, this conditioning is individual, but also in many others becomes a collective phenomenon. Stiglitz emphasizes that this way of perceiving the world, in turn, causes reality to be one way and not another.

The perceptions of people make the market change, the economy changes. If, for example, the conviction that the State is an obstacle for companies is established, it is possible that the State ends up managing someone who thinks that way. That figure will act accordingly with this and thus determine the course of everything. Whether that principle is true or not.

The theory of Joseph E. Stiglitz goes much further. However, the important thing is to make clear here that it is a thinker worth knowing. The economy crosses us and commits us all, whether we want it or not. The policy too. The better we know their logic, the more autonomous we will be in front of them.