Proponents of ‘rational actor’ economic theories advance a simple premise: If you did something, you did it because it increased your happiness. The problem with this (as with all ‘rational actor’ theories), is that humans generally aren’t very rational beings. So while we may do things that make us temporarily happy, we don’t have a good sense of what will make us happy in the long term and in a broader social context.
For many people, the fact that we aren’t very rational (despite thinking we are), is quite a confronting thing. But psychological research has been investigating the rationality of our behaviours for half a century at least, and the results are replicated and indisputable. (here’s a link to a summary of some of the more common biases)
The interesting question for me is: Do the proponents of ‘rational actor’ economic theories know this and prey on the general popular belief that we make decisions that are always in our best interest, or are they guided by the same mistaken belief? However, that’s not really what I am going to discuss in this post.
Aside from the common non-rational biases all of us have to one degree or another, there’s another angle to this ‘rational actor’ stuff. And that is – addiction. Looking at various surveys, some I’ve highlighted elsewhere on this page, it’s clear that many of our social behaviours are at odds with what we report we want when we sit down and somewhat rationally think it out. The most obvious example is that of general happiness. Despite the (superficial) level of prosperity in our western societies, we have never been less happy in the modern era. When asked what would make us happy, most people respond along the lines of ‘more time with family’, ‘less work hours’ and ‘more community/neighbourly engagement’. There’s endless studies which show that happiness mainly increases at low levels of wealth, and after a certain point (it’s only in the $30,000 region), those increases rapidly diminish. Same with material goods. Yet we are all on a treadmill of working more hours to pay for our more extravagant lifestyles.
This is where the concept of addiction comes in. If I was a cocaine addict and you told me that I wasn’t acting in my best interest by taking cocaine, most people wouldn’t find that the least bit controversial. But if we put that in the context of ‘rational actor’ theory, we are expected to conclude that I am indeed acting in my best interest, as taking cocaine is making me happy (otherwise I wouldn’t do it). It’s clear to me (and many others), from the stats available, that we are addicted to a consumerist lifestyle, and it’s definitely not in our best interests. Yet we are continually told via the “theories” of economic rationalism that we must be acting the way we act because we genuinely want to.
From this point on, I vow never again to be dissuaded in a debate when an economic rationalist says “who are you to tell people what should and shouldn’t make them happy”. It’s not about ‘shoulds’, it’s about rational analysis and what people ACTUALLY say, in quiet reflective moments, what they want. Government should never tell people what they should be wanting, but it should help people to assess what they want by encouraging an ‘information environment’ clear of deceitful and objectively harmful advice (i.e. consumerist propaganda).