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Vernon L. Smith

Vernon L. Smith Quotes

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Famous Vernon L. Smith Quotes

“Gregg: What do you think is the most significant thing that people of faith can offer to the world of economic science? Smith: It’s that virtue must be part of the way we approach everything. In Adam Smith, virtue was self-command. That idea is that in maturation, people are always marking. When we cross their space, they are marking to us what they resent or the things that they like. We learn, then, these forms of virtue that all have Christian roots. In a time of chaos and violence and evil the ultimate answers to our society’s problems must come down to individuals and their moral responsibilities. Yes, it is important that there are rules of society and that our laws be consistent with that, but law only works if you enforce it. But there is no way you can enforce everything. The nice thing about a country like the United States is that you can still pick up a newspaper form in front of the drug store before the store opens and just leave the money for it: You can go to a farm vegetable stand when no one is there, see the vegetables with the prices, take your vegetables and leave your money. That’s self-command.”

LawWealthMoralityEconomicsProsperityAdam SmithSelf Command
Book:The Evidence of Things Not Seen: Reflections on Faith, Science, and Economics
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“I think we have put a lot of emphasis on, of course, material wellbeing. By human economic betterment we mean material betterment. That’s economic enterprise, and that’s what Adam Smith worked out in his second book. But the first book had to do with human social betterment—all the things we do to make our lives better because we grow up in a social world. We learn in growing up that some actions are hurtful to others and they resent it, and some actions are beneficial to others, and they feel good about that and they tend to reward the beneficial actions. Those two sources account for a lot of the norms that we live by. Also, Adam Smith understood that—and I think this is remarkable—he understood that the downside was potentially far greater than the upside. So there is a fundamental asymmetry between gain and loss. And he didn’t just postulate that; he derived it from the idea there is an asymmetry between our joy and our sorrow. He got it from more fundamental considerations. Psychologists did not discover that until some 150 to 200 years later.”

PsychologyEconomicsBettermentAdam SmithAsymmetryProspect Theory
Book:The Evidence of Things Not Seen: Reflections on Faith, Science, and Economics
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“In his 2001 book, Economics as Religion, economist Robert Nelson recounted the ways in which economics came to operate in society with its own religion-like structure. Nelson argues that modern economics has operated in many ways as a secularized version of Protestant theology in which the primary evil is economics scarcity and in which deliverance from this evil (and the attainment of heaven on earth) will come through application of economic science to promote efficiency (and fairness) in production and distribution. In this worldview, economists, as technical advisors to governmental managers, serve as a new “scientific” priesthood effecting a secular salvation of human society through the application of constructivist reason, the sort of reasoning that seeks to deliberately design choices and institutions to generate what are perceived as “optimal” outcomes. Here, then, within the very discipline to which Vernon Smith has devoted his life’s work, there seems to be a persistent tendency if not to outright materialism then to a reduction of human rationality within constructivist constraints. As Smith acknowledges, “predominantly, both economists and psychologists are reluctant to allow that naive and unsophisticated agents can achieve socially optimal ends without a comprehensive understanding of the whole, as well as their individual parts, implemented by deliberate action. There is no magic.”

ReligionEconomicsOptimizationAdam SmithRobert Nelson
Book:The Evidence of Things Not Seen: Reflections on Faith, Science, and Economics
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“Gregg: I notice you did not use the word greed in that answer. When many people hear “self-interest,” they think “greed”. So are you suggesting that a Smithian approach actually has nothing to do with greed at all when it comes to self-interest properly understood? Smith: It’s not a matter of greed. It’s a matter of, as Smith says, the individual being fitter than anyone else to take care of himself or herself in terms of knowing what he or she wants and in making judgments about that. And so, knowing that other people are also self-interested, I know what action I take would be hurtful to them. And then I take that into account. In other words, being self-interested is an input to our socializing process. There are many experimental economists and behavioral economists who want to explain that with a utility function so that if I am other-regarding, it’s because I am taking into account your reward as well as mine. Adam Smith says no. Adam Smith is right. It is not in the utility function. That’s the difference between an emphasis on outcomes and process.”

EconomicsGreedSelf InterestAdam Smith
Book:The Evidence of Things Not Seen: Reflections on Faith, Science, and Economics
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