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April 4, 2007

too sane to be rational?

Filed under: Haiku or Senryu,lawyer news or ethics,viewpoint — David Giacalone @ 10:12 am

abacus ACS guest weblogger, and Boston College law professor, Kent Greenfield, had an entertaining and enlightened posting two days ago at the American Constitution Society Blog, titled “Brain Damage and Economic Reasoning” (April 2, 2007; via Ambrogi)  As Prof. Greenfield puts it: “News from the world of science: a symptom of a certain kind of brain injury is that the victims end up thinking like economists.” Greenfield heralds the decline in academic circles of the law-and-economics movement, explaining its roots in the neoclassical school of economics, “which bases its predictions on the so-called “rational actor” theory of human behavior.”  Under the Rational Actor or Economic Man theory: 

“Humans are assumed to make choices based on a cost/benefit analysis, maximizing their own utility.  Adherents to law-and-economics theory have applied that assumption in crafting rules in areas as diverse as criminal law, corporate law, and family law.” 

Greenfield notes: “The problem, of course, is that the economists’ view of rationality is ridiculously narrow.”   The rational actor theory has been under attack:

ProfPointer“So-called behavioral economics has been especially influential, deconstructing the rational actor theory using insights from psychology, providing a much more sophisticated (if messier) account of human behavior.  These more sophisticated models of human behavior take into consideration bounded rationality, limited willpower, as well as a richer definition of self-interest.”

With that background, Greenfield discusses two recent New York Times articles, Jeffrey Rosen’s March 11 NYT Magazine piece on “Neurolaw” and Benedict Carey’s March 22 article “Brain Injury Said to Affect Moral Choices.”  As Greenfield states, Carey wrote that scientists studying people who have suffered brain damage to a part of the prefrontal cortex have found that they make decisions with less compassion and with more utilitarian “rationality.”   His discussion of the article is well worth reading, no matter how rational you’re feeling today.  I wholly endorse his conclusion:

“Those humans who think and act like economists predict are those who suffer from brain damage, or those for whom brain damage can be temporarily simulated.  To be fully human is to act with spite, compassion, confusion, love.  Economists may not understand this, but the rest of us do.”

If you want to read more about economics finally discovering the irrational, I strongly recommend “The Marketplace of Perceptions: Behavioral economics explains why we procrastinate, buy, borrow, and grab chocolate on the spur of the moment,” an 11-page cover article in the March-April 2006 edition of Harvard Magazine, by Craig Lambert, which we discussed at length in a posting last year. 

 Ulysses-sirens-Draper Graced with a cover illustration of Draper’s Ulysses and the Siren’s (copyright Bridgeman Art Library), the article gives a brief history of the rise of behavoral economics and its arguments against Economic Man — the human actor who “makes logical, rational, self-interested decisions that weigh costs against benefits and maximize value and profit to himself.,” and who simply does not exist outside classical economic theory.  It notes that behavorial economics is “a young, robust, burgeoning sector in mainstream economics, and can claim a Nobel Prize, a critical mass of empirical research, and a history of upending the neoclassical theories that dominated the discipline for so long.”

river boat–
on a night of fireworks
still selling fireworks

…………………………. by Kobayashi Issa, translated by David G. Lanoue

In our prior post, we asked “How often have you been annoyed or bemused by economic purists, who praise or pan a proposed idea based on whether it fits their model of economic logic, no matter what appears to be happening in real life?” and rejoiced that The Marketplace of Perceptions “has some ammunition (or solace) for those of us who prefer to deal with the real world and real people, instead of homo economis.”  Here are two excerpts from the article: 

  1. fencePainterS   Economic Man makes logical, rational, self-interested decisions that weigh costs against benefits and maximize value and profit to himself. Economic Man is an intelligent, analytic, selfish creature who has perfect self-regulation in pursuit of his future goals and is unswayed by bodily states and feelings. And Economic Man is a marvelously convenient pawn for building academic theories. But Economic Man has one fatal flaw: he does not exist.
  2. When we turn to actual human beings, we find, instead of robot-like logic, all manner of irrational, self-sabotaging, and even altruistic behavior.

The article explains that human being are in actuality quite vulnerable to how the decision-maker describes the choices to himself and, therefore, to how they are framed by the presenter.  It ends with the hope that “The models of behavioral economics could help design a society with more compassion for creatures whose strengths and weaknesses evolved in much simpler conditions.”  As discussed in our posting, the Sidebar piece in the Harvard Magazine article Games of Trust and Betrayal is especially interesting.  In it, associate professor Iris Bohnet explains  that humans are not merely risk averse, they are trust averse — and, therefore, very vulnerable to betrayal, and more willing to trust nature than humans. “Feeling betrayed is a deeper hurt than suffering an economic loss.”

the katydid–
even while they sell him


I entrust my home  abacus
for the night
to mosquito-eating bats

………………………….. by Kobayashi Issa

Another sidebar worth exploring is titled Neuroeconomics, which explains that “Certain patterns of response to rewards seem to be biologically embedded in the human brain.”  A branch of behavioral economics called neuroeconomics looks inside the brain with scanning tools like magnetic resonance imaging (MRI) to investigate patterns of motivation.  While “an interaction of the limbic and analytic systems governs human decision-making:”

The limbic system seems to radically discount the future. While the analytic system’s role remains constant from the present moment onward, the limbic system assumes overriding importance in the present moment, but rapidly recedes as rewards move into the future and the emotional brain reduces its activation. This explains impulsiveness: the slice of pizza that’s available right now trumps the dietary plan that the analytic brain has formulated. Seizing available rewards now might be a response pattern with evolutionary advantages, as future benefits are always uncertain.”

We also explored the folly of Economic Man this time last year, in the post “poor steve bainbridge” (April 20, 2006), which focused on Steve’s posting “Drum on the Minimum Wage” (April 11, 2006).  Using “rational man” assumptions, Steve’s contribution to the minimum wage debate was to ask whether raising the wage is likely to cause more youths to drop out of high school.  We noted that “Steve believes that teens actually will base their decision to stay in school on marginal differences in the minimum wage.” Thus, he recommended “a differential lower minimum wage for those who have not completed a high school degree, [which] should result in a lower dropout rate.”  My response to Bainbridge, having been a teenage, represented scores in Family Court, and lived with a few ,was:

NoYabutsT  As for reality, assuming rational, price-theory behavior by teens in California, or any other state, when deciding whether to drop out of school, is the kind of maddening Economic Man fetish that we decried last month in a blurb pointing to the article “The Marketplace of Perceptions” (Harvard Magazine, March-April 2006).

The “Economic Man fetish” would be simply amusing if it were only used in academia.  Because it so often continues to be an excuse for creating programs based on the faulty Rational Actor theory (as well as the related worship of marketplace forces or greed), and for blocking or reversing legislation that takes into account the emotional and “human” needs of human beings, the theory is dangerous, damaging and divisive.

bainbridgePix  Extra credit question: Was Steve Bainbridge acting with his limbic or analytic system, when (as decribed in our post) he repeatedly removed trackbacks to poor steve bainbridge from his website?  Will he do it again?  


they even sell    
the swamp’s lotuses…
leaf and blossom


selling morning-glories  abacus   
wet with morning dew…
a tough character


spring departs–
the old clothes buyer
ignores me

while selling his dumplings 
and such…
blossom viewing

morning frost– ProfPointer
yet still a child
sells flowers


they even sell tea
not worth a fart!
summer trees

first winter rain–
going out to buy

simply trust,
simply trust!
cherry blossoms in bloom

………………………….. by Kobayashi Issa, translated by David G. Lanoue


blossomBranchF  Even Economic Man must be loving the cherry blossoms in D.C. this week. Click for our tribute to cherry blossoms festivals and haiku.


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