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.