[quote]The Mage wrote:
No, economics has nothing to do with psychology.
If you have a bank account with no money in it the economy does not give a wit how manic or depressed you happen to be. You still cannot spend any money you do not have. If you spend credit over and above what you can pay back anyway there will be consequences. The economy does not care how happy anyone is.
Economic law prevails over psychology.
And I never stated economics wasn’t a social “science”. Though it is not strictly a science. Psychology is neither a science nor social.
If you have no money in your bank account, more often then not it means you either did stupid shit, or didn’t work. It is a result of your behaviors, and actions.
Your examples are actually great for showing this. People spending more then they make is a bad economic decision. The result is caused by the action that was caused by the personality of the person.
Right now we are experiencing the consequences of idiots buying houses they could not afford, idiot bankers giving loans to people who could not afford them, the idiot government requiring banks to make loans to people who could not afford them, and idiot investors who thought if you took a lot of bad investments and pooled them together, they somehow suddenly became good investments.
The most basic economic rule that everybody has heard is buy low and sell high. When the market dropped, suddenly people were clamoring to get out. I personally pointed out this rule to people who knew it, and still took their money out. Their fear overrode their logic.
I am not saying just being happy or unhappy makes or breaks the economy, but the attitudes, beliefs, fears, and self control of the populous effects the economy, because that controls their economic decisions and actions.[/quote]
I kind of agree with you and then I dont.
I would be very careful to discern the underlying economic reality from peoples often very emotional reaction to it.