Wednesday, October 14, 2009

Freedom of Rational (or Irrational) Choice

For years my darling wife has graciously packed me lunches for work, Scouting events, hikes, etc. She has put up with all of my food idiosyncrasies and various approaches to healthy eating. My wife does this because she loves me, despite my many flaws.

Years ago when we lived on a pretty tight budget, my wife explained that we could save some money if I would wash out and recycle the re-sealable plastic bags in which she packed my food items. It was something she had learned at home. Dutifully, I took to washing out and then drying these small bags on a daily basis. They would be reused a number of times.

One day a friend observed my behavior and asked what I was doing. When I explained the basis for my actions, he responded in a friendly manner that the total savings I could achieve in a year by reusing my food bags could amount to only a few dollars; probably less than five and certainly less than ten. He too liked to save money, he said, but he tried to focus on actions that would maximize savings for the least effort.

My friend was correct, of course. To him my actions appeared illogical — or irrational they would say in some circles. But rationality does not imply that each person’s actions must make sense to others. Indeed, rationality postulates that only the individual making a particular choice can fully appreciate and weigh all of the inputs upon which a choice is based.

We employ such a broad range of inputs in most of our choices that it would be impossible to fully quantify these factors. In fact, many such elements never even make it to the level of general consciousness. We are so quick to employ deeply ingrained knowledge and assumptions that we call it instinct. We probably couldn’t explain all of these dynamics to others even if we wanted to.

In the case of my baggie washing, my love of my wife certainly was an input that my friend either didn’t grasp or to which he ascribed less weight than I did. However, humans are learning machines. We are fully capable of including additional inputs in our decision making within our capacities. Although behavioralists know that we usually try to minimize the education and other inputs necessary to make a choice. Indeed, pretty much all of our choices are made on imperfect bases.

My friend’s observations caused me to question the value of my baggie reuse activity. When I shared my concerns with my wife, who is very intelligent, she was quick to agree that the procedure made little financial sense. And that was the end of our family’s baggie recycling program.

We can never fully understand another’s decision making process. (Indeed, we probably can’t even fully explain our own choice processes.) With each choice we weigh a myriad of factors of various priorities based on specific conditions. We constantly attempt to maximize our benefits while minimizing our costs.

Each of us is uniquely qualified to make the choices with which we are faced because only we face the precise set of circumstances and have the broadest knowledge base of the intricate ways in which a certain choice will affect us, even if we act on imperfect information. We can never judge with complete accuracy another’s assessment of the costs and benefits of a given decision.

Each of us can do much to educate ourselves to improve our basis for making choices. And sometimes we can help educate others so that they can achieve better decisions, as my friend did with me. But in most cases, we simply cannot with certainty prove that our vision of what a person’s choice ought to be is demonstrably better than the choice they make instead.

It is with this sense of humility that we should approach all public policy issues. This kind of modesty is cause for a default strategy of minimizing coercive restrictions on choices that people may make. I am not here calling for anarchy or for lack of care and concern for others.

A healthy appreciation for public choice theory ought to give us pause when contemplating the ‘good’ that we suppose can or should be accomplished through the instrument of government.

The best statesmen — and the best citizens — will understand that arrogance is incompatible with good government. They will comprehend that government; whether that be the ruling class or even the majority, does not generally have better answers to society’s problems than leaving people free to govern themselves as much as possible, so that its scope must be restricted to those few areas where it must intervene and where it has a track record of overall superior performance.


Charles D said...

"People free to govern themselves as much as possible" often choose to have their democratically elected government representatives provide universal health care, a strong social safety net, and strong regulation of businesses and banks. When they fail to do things that are obviously in their best interests, one has to assume that either they are systematically misinformed or they are simply not very intelligent.

Scott Hinrichs said...

No. This is people being free to govern others, not people being free to govern themselves.

Charles D said...

People is a collective noun. The sentence does not read "A Person free to govern himself as much as possible". In fact for a person to be free to govern himself, the people - the community, the nation - must have secured for him the blessings of liberty, something he is unable to do on his own.

The government in a democratic society, ideally, is the mechanism by which the people take on and solve problems that they cannot solve as individuals or small groups. The problem in our country is not too much government, but that our government is unresponsive to the people. Our government is the captive of the big banks and big corporations and does their bidding with our money.

Scott Hinrichs said...

All behemoths are lethargic and unresponsive. That is their nature.

Charles D said...

True, but we don't seem to mind when the behemoths are Citibank or Boeing or Lockheed or Walmart. If it is size that causes inefficiency, then we ought to ramp up our enforcement of the anti-trust laws and bust up these huge behemoths. (As a consultant who sees the inside of some of these huge corporations, I can assure you that they are as inefficient and wasteful as any government agency.)

Scott Hinrichs said...

Actually, some of us DO mind when the behemoths are Citibank, et al. But it is not ramping up regulation that will cure that problem. Indeed, much of the regulation has been specifically written and designed BY the likes of the industry giants for the purpose of enhancing government protection and favors and for damaging competition.

Big business is not our friend. But the only way businesses get and stay so big is when government is complicit in creating an unlevel playing field.