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Pop Rationality

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The pop wisdom on what economists (real economists) mean by “rational actors” or “rational decision makers” is ostentatiously misleading. That view basically suggests that rationality = “correct choice” or perhaps something like “omniscient beings.” This is of course silly not least of all that Hayek won a Nobel Prize in part for demonstrating how important prices are precisely because humans are not omniscient beings.

But good economics uses the idea of rationality far more subtly and effectively. What we mean by rational behavior is that individual actors using their best available means, given their information and cognitive constraints, to achieve their desired ends. You see, nowhere does “correct” show up in such an assessment. It would in fact be preposterous to suggest that this is essential. What I find incredibly ironic is the subtle distinction here between “intentions” and “results.”

Long-time readers of this site know that I have almost a state of contempt for the literati/intelligentsia/students/professors/etc. who celebrate and elevate intentions above all else. “So what if ethanol is starving Guatemalans, we are showing that we care about the planet by trying to do something! That’s more than you do nothing folks!” You know what I mean. But these folks are typically the anti-capitalist/behavioralist/statist leaning folks that denigrate individual decision-makers. Yet this makes little sense to me.

So while the greenies and lefties and “progressives” of all stripes argue that intentions matter and that results do not, and that focusing on results is “too economisticy” when they make their behavioral criticisms of markets they flip the switch. Suddenly results DO matter. And mind you, the results that matter are not even important social ones – but rather individual ones. The Nudgers don’t want you to drink soda because it makes YOU fat, not because there is some social problem with your fatness. Empirically it is neutral as an impact in terms of health dollars spent by others.

So let’s review. We cannot apply the economic way of thinking to the environment and most social movements, well, because intentions matter and not results. But then economics sucks as a discipline and should be rejected or lowered in status because despite the best intentions of actors, they can sometimes get results they don’t like.

Curious.

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4 Responses to “Pop Rationality”

  1. Scott says:

    Speaking of hypocrites, I watched our neighborhood planner yesterday. He declared a commitment to the constitution, briefly highlighting some of the values it has produced for the world, and then declared that we needed “fidelity,” and suggested we do away with the stupid thing.

    I wasn’t insulted that he wanted to throw it away. I was insulted that he thought we were under the impression that he hadn’t already.

    If there exists a moment in American history in which good men should feel compelled to act, is it this moment?

    • Scott says:

      ttp://www.theatlantic.com/politics/archive/2013/01/theres-no-room-for-civil-liberties-in-obamas-inauguration-view-of-america/267422/

  2. blink says:

    I think you have defined a religion: An institution that proclaims only intentions matter. Yet war, famine, and pestilence march on, oblivious to even the most pious thoughts and fervent prayers.

    The brilliance of the Nudgers is that they have devised a brilliant relative status move: we now have a socially acceptable way to look down on others! I can expound on the need for tax, hassle, regulate, and restrict the behavior of those myopic souls who — very much unlike myself, mind you — cannot control their baser urges without a few pokes and prods from their betters (namely, me and my ilk). One can no longer tell fat jokes in polite company, but this is even better. And more insidious.

  3. Harry says:

    I can see where you are going (presumptively!), I think from your posts above. They want it not just both ways, but whenever the urge of the moment suggests something marginally desirable.

    Thus, they are consistent in protesting any price they do not like, unless what they want is given to them by Big Brother, daddy or mommy, or Obama. I want my boppa.

    Speaking of being infantile, I bought four boxes of Girl Scout cookies the other day. The cost was four dollars per box.

    The mother of the Brownie tried to prompt her daughter to tell me what to pay, and the poor kid could not answer, so I, the wise teacher, asked her, “What’s four times four?”

    The mother tried to help her by using the math I assume SHE learned, by saying, “Four plus four is eight, right? Plus four is twelve, plus two is fourteen, plus two is sixteen.” The little girl said, “I know what four times three is — it’s twelve!” And I said, “That’s enough for three boxes, so how much more for four boxes?”

    And then the mother tried to help her out , asking, “What’s twelve plus two plus two?”

    I handed over a twenty dollar bill, and, after some mommy prompting, got four singles back. The mommy had to think a bit.

    Now, I know you have to be better at math than that to get into the U of R, but I had the good fortune to attend one of professor Wintercow’s classes once where to get anything out of it at all, you had to have your mind turned on, the same way you do four times four is sixteen, not twenty, or twelve, and nearly everybody in the classroom took notes on their laptops, good keyboarders, not wondering at all about why Zimbanwe was going to ruin.

    Well, Zimbabwe and we are going to ruin because most of our adults and their children do not know their times tables. When their calculator yields them a result in scientific notation, they think it is an error message. They are on the aborigine level of “one, two, three, many.”

    My daughter had times tables races, which she won, in second grade. This may have given her self-esteem, but also may have diminished the self-esteem of the losers. (She did not win every race!)

    Wintercow, being both an eminent father and educator, and a math guy, should appreciate this.

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