Originally posted by SkorjYou're not a sociologist are you? 🙂
I wasn't attributing a view to you in particular, but commenting on the influence this one social science has around the world today.
Just kidding. Anyway, no I don't think economic theory can be used to explain everything. And yes it does have an astounding influence, maybe too much in some cases. Of course, political philosophy, a discipline which I quite admire, also has astounding impact.
I understand that some of the basic assumptions about preferences which give rise to utility functions have been called into question. There are plenty of experimental economists working on the subject. This isn't to say that the assumptions have been proven false, but rather that they have been questioned with enough authority to make economists look into the matter.
The thing I find exciting about working in economics is that if I think other people are missing something so plainly obvious, then I can model it myself and go to the data and see for myself. Unfortunately, it seems in most other social sciences truth is merely a matter of eloquent persuasion, like literary criticism. There are very few psychologists and political scientists who really do truly rigorous empirical analysis.
Originally posted by SkorjI would not necessarily agree with that. Some actions can be deduced to be irrational with respect to any utility function whatsoever, so it is not important in all cases to know the agent's motivations.
Would you agree that, by what you've said here, that we can't judge whether another's actions are rational or not without knowing what they know and more importantly what motivates their actions?
As for your first clause, I'm not sure if you meant, "without having the same knowledge as them" or "without knowing what information they have available to them." If the first, then that is not a necessary factor for analyzing the rationality of their actions. If the latter, then as above, it could be one but is not necessarily, depending on the action in question.
For example, if the decision has one option with one logical consequence of it being chosen being a contradiction, while no other options entail a contradiction, then regardless of the utility function, that option can never be rational. Why not? A simple proof is like this.
Assume Bad Choice B is the choice in question.
We have by definition of B, "B is chosen as the rational action" => some contradiction.
But the only sort of true implication with a false conclusion is one with a false premise.
Thus, "B is chosen as the rational action" must be false.
Thus, either B can't exist, or if it does and is chosen, it couldn't have been chosen rationally.
In either case, it is not possible to rationally choose a course of action that entails a contradition.
Thus we can conclude that in some cases, namely those actions whose rational choosing entails a contradiction, it is unnecessary to know the agent's knowledge or motivation in order to rule out some actions as irrational.
Originally posted by SkorjThe utility function isn't taken as given. It is constructed from underlying assumptions about people's preferences.
Would you agree that, by what you've said here, that we can't judge whether another's actions are rational or not without knowing what they know and more importantly what motivates their actions?
To me it's a rather neat and clinical definition but it seems more than just a little problimatic that the utility function is taken as a given. Ultimately th ...[text shortened]... en are in people, then the "rational" persuit of them leads to attocities of the worst kind.
The assumptions that give rise to well-behaved utility functions are the following:
Let lower case letters symbolize bundles (combinations of goods)
Let X be the set of all possible bundles
"a >= b" means "the bundle a is at least as good as the bundle b"
"a > b" means "the bundle a is strictly preferred to the bundle b"
1) Completeness: For all bundles of goods x and y in X, either x>= y or y>=x or both.
This just says that you have some ordering over all the bundles in X
2) Reflexivity: For all x in X, x>=x.
This is pretty trivial. A bundle must be at least as good as itself.
3) Transitivity: For all x, y, and z in X, if x>=y and y>=z, then x>=z.
This may be one that you wish to question, but generally it is pretty innocuous.
These first three assumptions are necessary for maximization. The rest just make utility functions cleaner and easier to work with, but they can be dispensed with if necessary.
4) Continuity: For all y in X, the sets {x:x>=y} and {x:y>=x} are closed sets.
Ah continuity. Now we can use derivatives.
5) Strong monotonicity: If x "is greater than or equal to" y then x>=y.
Everything is the same in the two bundles except x has one more unit of at least one good. It is at least as good to have a bit more of a good thing (Note this doesn't mean you have to eat it.)
6) Local nonsatiation: Given any x in X and any e "greater than" 0, then there is some bundle y in X with abs(x-y) "less than" e such that y>x.
This just says that if you can alter your bundle even a little bit in anyway you choose, then you are better off.
7) Convexity: Given x, y, and z in X such that x>=z and y>=z then t*x + (1- t)*y >= z for all t an element of [0,1].
This basically says that agents prefer mixes of goods (average) as opposed to lots of a few things and almost none of others (extremes)
The above was produced with much aid from Hal Varian's "Microeconomic Analysis" 3rd Ed.
So after that long and pedantic post, what is my point? Well, I want to impress upon you that we don't just assume utility functions out of thin air. There is some basic philosophical thinking about the way people make decisions that underlies them.
The only really strong critique so far against these preferences is against (3). When I first showed up on RHP I ran a little test of Allais' Paradox which calls (3) into question. It basically tests whether the order in which bundles (in the test they are lotteries) mess up preferences. Maybe I should go back into that thread and explain it. As for criticisms of the other four, I can only state again that these assumptions are not necessary. To the degree that they seem safe they make the results much clearer and easier to achieve. It is not uncommon for authors to dispense with one or more of them if they think it necessary.
Originally posted by telerionOkay, it's 3:45 am here and my Economics texts are burried in the attic somewhere so I'll just make a couple quick points and maybe come back and clarify later.
The utility function isn't taken as given. It is constructed from underlying assumptions about people's preferences...
First, we make a lot of choices in life and they do not all involve choices between bundles of goods. The thread began with the question of should a starving person steal. I don't see how that relates the academic definitions of rationality you're talking about.
Lastly, perhaps I should clarify what I intended by voicing concern over the utility function being taken as a given. In very simple terms if someone prefers a to b and they choose a over b, we can say that, by the definitions that have been set out, the choice is rational. If they instead chose b the choice would be irrational. That is what is taken as a given. My point is perhaps a involves torturing furry woodland creatures; something I hope most folks reading this post would deem irrational without having to give it much thought. Thus, chosing the best available course of action that can logically be deduced to satisfy one's utility, which is to say our preferences or values, is one way we can judge that an action is rational, but we can run into trouble quick if we think it's the only way.
So after that long and pedantic post, what is my point....
I don't so much mind you're long pedantic posts. At least I'm not hearing the words in my head in Chef's voice.
Originally posted by SkorjI agree with you Skorj..
Okay, it's 3:45 am here and my Economics texts are burried in the attic somewhere so I'll just make a couple quick points and maybe come back and clarify later.
First, we make a lot of choices in life and they do not all involve choices between bundles of goods. The thread began with the question of should a starving person steal. I don't see how that rel ...[text shortened]... you're long pedantic posts. At least I'm not hearing the words in my head in Chef's voice.
This thread was started based on DrScribbles unqualified statement that thievery is irrational.. see the taxation thread..
And i guess from the economic viewpoint that he has since taken then he is possibly right in his argument.. The problem is that there are 101 other viewpoints that map a lot more closely to the real world where stealing can be seen as quite rational behaviour (as in the case of food when hungry).
I think its a moot point to argue really unless its decided from which viewpoint we are trying to prove/disprove the statement.
Originally posted by SkorjOh children, no, it didn't. It never posed the questions of what a starving person ought to do. It posed the question of whether a starving person who steals is acting rationally,
The thread began with the question of should a starving person steal.
not whether he is doing what he [i]ought to do.[i]
Originally posted by dk3nnyIt was not unqualified. He was speaking in context of the rationale
This thread was started based on DrScribbles unqualified statement that thievery is irrational.. see the taxation thread.
about being taxed proportional to one's income (i.e., an economic
rationale). It was perfectly clear that his comment that theft is
irrational within the context of the economic frameworks being
discussed, or at least irrational if you want to have a successful
economy.
Nemesio
Originally posted by NemesioSo the question can not be answered without first defining or understand some framework.
It was not unqualified. He was speaking in context of the rationale
about being taxed proportional to one's income (i.e., an economic
rationale). It was perfectly clear that his comment that theft is
irrational within the context of the economic frameworks being
discussed, or at least irrational if you want to have a successful
economy.
Nemesio
A framework implies some sort of criteria, basis, axioms, etc, from which to analyze the situation. It could be viewed within an economic framework, a particular ethical framework, a legal framework - and all of these may come to different answers. And that still would not tell us if the person stealing was thinking rationally without know his personal presuppositions (his personal utility function) and the facts known to him.
Originally posted by DoctorScribblesIt is so. I must have pulled some of the context from what others posted in the original thread.
Oh children, no, it didn't. It never posed the questions of what a starving person ought to do. It posed the question of whether a starving person who steals is acting rationally,
not whether he is doing what he [i]ought to do.[i]
Ok a few responses to the posts of everyone here convened:
Skorj - When I say a "bundle of goods," that doesn't mean I'm talking about a bag full of groceries. A good could be almost anything you desire (e.g. children, bread, leisure, torturing small animals). We can even consider things that might more appropriately be called "bads" (e.g. pollution, bad music, drugs?). These goods (here I mean the union of both "goods" and "bads"😉 can be used to capture things which first seem intangible (e.g. the smile of a child, the excitement of learning something new, the pleasure of hearing a good story from an old friend, the horror at seeing a child who has been marred by ordinance).
As has been stated/implied by some others here, and you as well I believe, the lens of economics is not the only way to study the world.
The big problem is that we can't view peoples utility functions directly. We can make inferences about their preferences from their behavior, but in economics we always start from the position that the agent is acting rationally. From an economic perspective, if you choose to do a you must have done it because you wanted to do it more than to do another feasible action b. If later you choose b when a
is available, an economist will look for some difference in the agents situation that would rationalize the choice b.
This sounds all very ad hoc, but again from an economic perspective, calling actions irrational basically says that an agent, given situation, S, and information, I, did something that the agent would not want to do in situation S with information I. This is equivalent to throwing your arms in the air and saying, "This can never be accounted for." Or maybe even "Goddunnit." Accounting for things with irrationality explains nothing at all.
dk3nny - Theivery can definitely be rational. Assume the following:
1) The marginal cost of stealing is lower than the marginal cost of obtaining the good legally,
2) The agent knows that (s)he won't be caught,
3) The agent does not care about how theivery will hurt the victim
We can even abstract away from 2 and 3. Without 2, the agent simply weights the payoff of theft by the expectation of getting away with the crime. Without 3, the agent will not steal if the marginal cost of hurting some one plus the other marginal costs is greater than the marginal benefit.
In real life, we have enforcement constraints that make theivery less profitable. By considering the costs from being caught and punished, the potential theif internalizes the hurt that his/her action would cause the victim. There are also indoctrination pressures which make some agents more socially conscious than others. Social considerations would help deter some potential theives as well.
SCribs - It posed the question of whether a starving person who steals is acting rationally,
not whether he is doing what he ought to do.
Exactly, as you're aware, often in economics we encounter situations where decentralized solutions (that is where individuals independently maximize their individual utilities) do not lead to the first-best outcome (one where a theoretical omniscient 'social planner' directs the actions of each agent so as to maximize aggregate utility.)
A starving person is acting rationally by stealing to eat. This may or may not be what he ought to do.
Originally posted by telerionIf you maintatin that theft can be rational, can we at least agree that it is only rational in the immediate short term, and that the agent is preparing for himself a long term of misery in which his current problems will be exacerbated? That is, in the future, stealing will become more difficult for the agent, and his opportunities for voluntary exchange with other agents will become more scarce?
SCribs - It posed the question of whether a starving person who steals is acting rationally,
not whether he is doing what he ought to do.
Exactly, as you're aware, often in economics we encounter situations where decentralized solutio ...[text shortened]... ly by stealing to eat. This may or may not be what he ought to do.
Generally, no (At the bottom I have a yes case.). Assume it is rational for an agent to steal in this period, but that this theft will induce others to steal as well and the long run equilibrium outcome will be one in which stealing will be difficult and exchange will be difficult as well. Then the agent will realize that No One Steals is not a sustainable equilibrium. Some one is going to steal now because it is rational ,and things will get bad in the future. Therefore the agent will want to steal now before it gets harder later.
Now we could come up with a rational strategy which specifies Do Not Steal off the equilibrium path. Say the agent uses strategy "Do Not Steal if no one has stolen in the previous period, Steal otherwise" If some how no one steals initially and every agent follows this strategy, then no one will steal. Unfortunately, since it is rational to steal in the first period, everyone will steal and will continue to do so in every period afterwards.
Ok here's the yes case.
There is another mechanism besides enforcement and altruism in our economy that helps prevent this crappy outcome: credible commitment. We have mechanisms (sustained by the enforcement and altruism) that allow us to credibly commit to a strategy. If I know for certain that every one will not steal as long as I do not steal, then, depending on how much I value the future relative to the present, it may be optimal for me not to steal.
Originally posted by telerionI know that this thread is not about what one ought to do, but I would like to present a side note in that vein.
Generally, no (At the bottom I have a yes case.). Assume it is rational for an agent to steal in this period, but that this theft will induce others to steal as well and the long run equilibrium outcome will be one in which stealing will ...[text shortened]... l steal and will continue to do so in every period afterwards.
It is interesting to note that your conclusions requires assumption (3) from above: The agent does not care about how theivery will hurt the victim.
If the solution you present is correct, then you have presented a very compelling argument based on economics and mathematics that one ought not disregard how using force upon his fellow man hurts his fellow man. Since doing this necessarily leads to an awful universe in which everybody is rationally compelled to steal as soon as possible before the stealing gets any tougher, and since rejecting your required premise avoids this fate, it seems to be that anybody who doesn't value the equilibrium you describe should value not using force against his fellow man; that is, should realize that he ought not allow himself to be an instance of (3), although it may be rationally correct for him to.
Dr. S
Originally posted by DoctorScribblesI think that is part of it. I agree that agents ought to consider how theivery hurts others in part because if it does prevent stealing then this is generally good for everyone.
I know that this thread is not about what one ought to do, but I would like to present a side note in that vein.
It is interesting to note that your conclusions requires assumption (3) from above: The agent does not care about how theivery will hurt the victim.
If the solution you present is correct, then you have presented a very compel ...[text shortened]... w himself to be an instance of (3), although it may be rationally correct for him to.
Dr. S
Of course, when we look at the world we don't find that everyone steals. Some people do in certain situations or others do not in similar situations.
Unfortuanately, some people place little value on altruism. For these people, we can only hope that enforcement constraints will be strong enough to maintain "good" behavior.
Even with both of these mechanisms in place, stealing still occurs. Economically, we could say that in some situations certain agents found the costs of the loss in value of altruism plus expected payoff if caught less than the benefit from seizing the good. In this way we can have an equilibrium in which some people choose to steal and others do not.