Toward an Economic Theory of Philosophy: An Interpretation of Lucian's Satire on Philosophy

Abstract

Richard Posner's recent book, Public Intellectuals: A Study of Decline, is not the first attempt to economically analyze the intellectual marketplace. Eighteen hundred years ago, Lucian applied the same framework to the market for philosophers in the Roman Empire. Though widely seen as a satirist of limited philosophical acumen, Lucian's writings contain enough substance, at least when supplemented with the insights of contemporary economists, to generate an economic theory of philosophy.

In seeking to explain the features of the philosophy market, the theory identifies the cost or price of consuming philosophy as time, mental exertion, and money. The benefits sought include truth, firm conviction, status, solidarity, justice, freedom, equality, moral guidance, consolation, and reduction of environmental uncertainty. Philosophy is seen as a risky investment in human capital as well as a credence good. Consumers seek to control these risks in choosing among the available schools of thought by using quality indicators: the character, education, commitment, pedigree, and reputation of philosophic suppliers as well as third party testimony, market share, and price. Since price is taken as a quality signal, as well as a status symbol, competition tends to be over quality, a competition in which the winners for market share tend to be those teachings with attributes best satisfying the set of consumer preferences.

Lucian concludes that the philosophy market is imperfect from the standpoint of truth production. Reflecting a behavioral view, Lucian insists that cognitive biases lead consumers to take inordinate risks in following high cost, abstruse philosophies. Moreover, both consumers and suppliers have concerns beyond truth that they are trying to meet in the philosophy market. Further research is necessary to confirm Lucian's behavioral assumptions as well as the over-all model presented in this paper.

JEL Classification: A12, Z1