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Who is Rational Economic Man?*

Published online by Cambridge University Press:  13 January 2009

Jennifer Roback Morse
Jennifer Roback Morse
Affiliation:
Economics, George Mason University
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Extract

There is, in Sarajevo, a man who comes out into the streets each day and plays his cello on the sidewalk. He does this at the same time each day, no matter how much shooting or shelling is going on, no matter how great the danger to himself. He describes himself as having decided to take a stand for beauty in the face of horror. Can the rational choice paradigm, as currently practiced in the various disciplines of economics, philosophy, political science, and law, offer an account of this man's decision and his behavior?

This admirable man seems to be a rebuke to the philosophies of calculated self-interest. Can we offer some account of his behavior, without descending into the tautological claim that he did what he did because he wanted to? Can we offer some insight into his wants that will make him intelligible? And not only intelligible, but can we account for him in a way that highlights his admirability, rather than suggesting that he is in some way an aberration, or perhaps even a fool?

There is a deep disorder within the human condition. All of the essays in the present volume point to this fact in one way or another. Some characterize the disorder as a conflict between virtue and self-interest. Others point to the dichotomy between the individual and other persons as being the source of the tension between morality and self-interest. Some of the essays attempt to resolve the tension by collapsing the two categories into each other.

Type
Research Article
Information
Social Philosophy and Policy , Volume 14 , Issue 1 , Winter 1997 , pp. 179 - 206
Copyright
Copyright © Social Philosophy and Policy Foundation 1997

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References

1 The literature on rational self-restraint is relevant to my analysis. See, for example, Elster, Jon, Ulysses and the Sirens (New York: Cambridge University Press, 1982);Google Scholar and Thaler, Richard and Shefrin, H. M., “An Economic Theory of Self-Control” Journal of Political Economy, vol. 89 (1981), pp. 392–406.Google Scholar

2 Smith, Adam, The Theory of Moral Sentiments, ed. Raphael, D. D. and Macfie, A. L. (Indianapolis: Liberty Fund, 1982).Google Scholar John Stuart Mill, Principles of Political Economy, with Some of Their Applications to Social Philosophy (1848; 7th ed., 1871), ed. Sir W. J. Ashley (London: Longmans, Green, and Co., 1909); cited in Schumpeter, Joseph A., History of Economic Analysis (New York: Oxford University Press, 1954), pp. 527–43.Google Scholar Alfred Marshall, Principles of Economics (1890), 8th ed. (London: Macmillan, 1964).

3 The confusion among types of errors is reminiscent of other information problems studied in economics. In macroeconomics, the confusion between changes in the real, underlying conditions of the economy can be confused with mere changes in the money supply. The theory of rational expectations explains business cycles as the results of this confusion on the part of otherwise well-informed people. Among the standard references are Lucas, Robert, “Expectations and the Neutrality of Money,” journal of Economic Theory, vol. 4 (April 1972), pp. 103–24;Google Scholar and Barro, Robert, “Unanticipated Money, Output, and the Price Level in the United States,” Journal of Political Economy, vol. 86 (1978), pp. 549–80.Google Scholar

4 See Frank, Robert H., Passions within Reason (New York: Norton, 1988);Google Scholar and Sen, Amartya, “Rational Fools,” Philosophy and Public Affairs, vol. 6, no. 4 (Summer 1977), pp. 317–44,Google Scholar reprinted in Sen, , Choice, Welfare, and Measurement (Cambridge, MA: MIT Press, 1982).Google Scholar

5 See Buchanan, James M. and Tullock, Gordon, The Calculus of Consent: Logical Foundations of Constitutional Democracy (Ann Arbor: University of Michigan Press, 1962);Google Scholar and Buchanan, James M., The Limits of Liberty: Between Anarchy and Leviathan (Chicago: University of Chicago Press, 1975).Google Scholar

6 For a fuller discussion of the content of the Longings, see Jennifer Roback Morse, Putting the Self into Self-interest: An Economist Looks at Values (manuscript in progress).

7 The utility function associated with this problem is:

U = U(L, A, X)

where

L = f(A)

This is an example of the home production model, pioneered by Gary Becker in “A Theory of the Allocation of Time,” Economic Journal, September 1965, pp. 493–517; and Ghez, Gilbert R. and Becker, Gary S., The Allocation of Time and Goods over the Life Cycle (New York and London: Columbia University Press, 1975).Google Scholar

8 The utility function associated with this problem is:

U = U(L,, L2, A,, A2) where

L, = f(Aj) and

L2 = g(A2)

9 Hughes, Philip, Journal of Political Economy, vol. 86 (1978), pp. 549–80.Google ScholarA History of the Church, vol. 1 (New York: Sheed and Ward, 1952), pp. 136–44.