Microeconomics textbooks present the infamous “homo economicus” as an ideal of rational behavior. Those who study actual human behavior – in many different disciplines – have come up with overwhelming empirical evidence that we, homo sapiens, fail to live up to this ideal in many different ways. Unlike the homo economicus, we are not
- Cold: we let our emotions influence our behavior.
- Callous: concern for others causes us to share our good fortune with others, instead of keeping everything for ourselves.
- Cruel: We feel pain for the suffering of others, and sorrow for the extinction of species, or destruction of their habitat, instead of joy at the resulting profits.
- Calculating: We are not concerned with maximizing our monetary gains, down to the last penny.
The paper “The Empirical Evidence Against Neoclassical Utility Theory: A Review of the Literature” shows how each of these human failings causes us to deviate from the lofty standards of ideal rational behavior. The fact that all four of these characteristics are pejoratives in common parlance suggests that economists’ view of “rationality” does not agree with ordinary language usage of this word. Since the meaning of the word is contested, let us use E-rationality to denote what economists mean by rationality. In ordinary language, we would say that E-rational behavior is sociopathic. This is the framework for the question of the title: is it rational to be a sociopath, as economists claim?
Before we can discuss this question coherently and cogently, it is necessary to recognize and knock down some barriers created by the “Newspeak” which has been invented by Economists to prevent us from the badthink represented by the question under discussion. One barrier is the idea that there is no difference between E-rationality and ordinary language rationality, which prevents us from recognizing the dramatic conflict between the two. The second barrier is the claim that microeconomic theory is positive: it merely describes human behavior, and does not posit normative ideals of rationality which we should try to achieve.
Once we recognize that E-rationality describes sociopathic behavior, it is easy to see that this cannot be descriptively accurate. According to DSM-V, Antisocial Personality Disorder (ASPD) afflicts only around 2% of the population. Older economics textbooks would assert the descriptive accuracy of utility maximization without any discussion or empirical evidence. The overwhelming empirical evidence produced against this claim has forced modern textbooks to acknowledge that utility maximization is a normative ideal for rational behavior. For example, in Microeconomics, Krugman and Wells write that: “Of course, people are not always rational in the sense that they always make the best possible decisions given the information they have. But we assume that they try to be rational and that their attempts to do so provide a good approximation of their behavior.” This is the general stance of nearly all microeconomics textbooks – even though people fail at being rational, the assumption of rationality is sufficiently good as an approximation of their actual behavior.
Within our framework, economics textbooks are making the claim that assuming all human beings are sociopaths provides a good approximation to actual human behavior for practical purposes. If this claim was made in plain language, it would be immediately rejected by students everywhere. It is therefore of interest to understand the powerful and subtle rhetorical techniques deployed by economists to convince unsuspecting students around the globe of the validity of E-rationality as an approximation to actual human behavior. The key technique is switching the definition of rationality between the context of justification and the context of application. When textbooks are trying to justify the assumption of rational behavior, they talk in broad terms like “people make the best possible decisions”. But when it comes to applying the model to specific economic decisions, economists assume, without discussion or argument, that the best possible decision involves maximizing utility. In the context of justification, economic theory textbooks identify E-rationality with rationality, which makes it easy to persuade us that we should be rational. But when it comes to applications, they switch without comment from commonsense rationality to E-rationality. This bait-and-switch convinces unsuspecting students that sociopathic behavior is rational. Also, by conflating the opposites – E-rationality and ordinary language rationality – economists have created a “newspeak” in which it is impossible to see the truth. In the paper “Rational Fools” Amartya Sen makes the arguments that what economists call rational behavior would actually be very foolish in many situations. But this idea cannot even be expressed in the newspeak of Economists, because it involves saying that rational behavior is irrational.
Introducing the term E-rationality for how economists use the term in applications, and distinguishing between the context of justification and that of application, creates the language needed to see through the obfuscations of economic theory. Modern economics textbooks assert that E-rationality is a descriptively accurate approximation of human behavior. This is obviously false: sociopathic behavior is not descriptively accurate for most humans. Given that E-rationality fails as a descriptive theory, can it be defended as a normative theory?
Without distinguishing between rationality and E-rationality, the question of the title would be nonsensical: is it rational to be rational? But when we ask “is it rational to be E-rational” this is equivalent to asking is “it rational to be a sociopath?” The answer is: obviously not. While a host of arguments can be given, the Prisoner’s dilemma is most useful in the context of economic theory. In most families, children are trained that we should cooperate, and not cause harm to others for our personal gain. So, in ordinary circumstances, playing in a Prisoners Dilemma, both parties should be able to see that the win-win solution is to cooperate with each other. Causing harm to others for our private benefit is sociopathic. Massive numbers of behavioral experiments confirm this basic intuition: People cooperate with each other on a scale far greater than economic theory predicts. It may be amusing to note the enormous amounts of efforts spent over the decades by economists to try to figure out why sociopaths cooperate – a puzzle which they still have not been able to resolve. Despite all the empirical evidence to the contrary, it has never occurred to them to question the axiom that rational behavior is sociopathic. What is not amusing is the damaging effect of this toxic theory of rational behavior on the minds of students of economics. This has been described by Julie Nelson in “Poisoning the Well: How Economic Theory Damages Moral Imagination”. The idea that rational behavior is sociopathic – “greed is good”, in common parlance – justifies and normalizes corporate exploitation and destruction of the planet for private profits. Seeing through this deception may be the first step towards building a moral economy so desperately needed today.
One thought on “Is it Rational to be a Sociopath?”
Re “Microeconomics textbooks present the infamous “homo economicus” as an ideal of rational behavior.”
It’s the exact same reason why humans have officially labeled themselves “wise” — homo sapiens — despite that true reality proves they are insane (https://www.rolf-hefti.com/covid-19-coronavirus.html).
Unwise lunatic people are only “rational” within their insanity.