Is it Efficient to be Irrational?

Windschuttle_tablets2.jpg

An argument that Beckers belief

Forget about truth. It’s an airy-fairy philosophical concept that even the experts can’t satisfactorily define. In practice, what most people demand from an idea is that it’s useful for something. And like other consumer products, the supply of ideas depends on demand. The ideas that are most useful to large numbers of people fly off the shelves while the least useful ideas languish on the pages of unread books and unvisited web pages. Marketing can help but very few truly useless ideas will survive for long.

No doubt you’re thinking that this is one of those useless ideas that’s best left on the shelf. After all, don’t lots of people believe in idiotic ideas about astrology, UFOs, and pyramid power? What use are irrational ideas like that? Well… the only way to answer that question is to find out what people are using them for.

Back in 1973 economist Gary Becker published a paper titled ‘On the New Theory of Consumer Behavior.’ He argued that, in many cases, people didn’t derive utility directly from the goods and services they bought. Instead they combined their purchases with their own skill and time to produce the things that gave them satisfaction. For example, few consumers get satisfaction from their microwave ovens or vacuum cleaners just by looking at or operating them. What gives a consumer satisfaction is hot food and the confidence that if the Mormons were to show up on the doorstep they wouldn’t think she or he was a a slob.

Becker’s approach allows economists to extend the reach of their theories. He explains that:

Decisions about the allocation of a consumer’s nonmarket time and decisions about his choice of a religion, a marriage mate, a family size, a divorce, a political party, or a "lifestyle" all involve the allocation of scarce resources among competing ends. Yet these choices are related to non-monetary factors and have often been ignored by economists.

On Becker’s account it is possible to use economic methods to explain all these decisions. We just need to consider a broader range of costs and benefits.

Psychologist Robert P Abelson has an intriguing suggestion. In a 1986 paper ‘Beliefs are Like Possession’ he argues that it’s

naïve to think that people choose their beliefs solely on the basis of evidence and reasons. People can do all sorts of things with their beliefs in order to produce satisfaction. That’s why it’s so hard to argue people out their beliefs about religion, UFOs, and mandatory sentencing.

People use their beliefs the same way they use consumer goods like cars and breakfast cereal – to produce satisfaction and protect against dissatisfaction. For example, some beliefs are like small Korean hatchbacks – they are purely practical commodities. Similarly having a belief about the shortest way to the shopping mall or the consequences of adding too much chili to a stir fry have fairly direct effect on well being. But other beliefs are more like flashy urban four wheel drives. Although they look like they’re designed to tackle outback tracks their owners are actually using them to signal status, make them feel confident and comfortable on the road, and deal with anxiety about accidents. Consumers might not know exactly why they feel better driving their luxury hatchback-crushing living room on wheels, but they do know they feel better.

In the same way, consumers of ideas might find that they feel better consuming some rather than others. The idea that our boys at Gallipoli fought bravely in horrendous conditions might produce satisfying sensations of pride. But the idea that our settler ancestors massacred Indigenous people and stole their land is likely to produce unpleasant feelings of shame or guilt. Not surprisingly there is a demand among Australian conservatives for historical accounts which enhance the reputation of the ANZACs and reduce the culpability of the settlers.

Just as many four wheel drive consumers can’t bring themselves to admit that they bought their truck for the cup holders and the commanding view of the road, many idea consumers can’t admit to themselves or others that they belief things just because it makes them feel better. Four wheel drive owners are always planning to take the kids on an outback adventure just as people who consume dubious ideas from think tanks are constantly reassuring themselves with the copious footnotes and academic qualifications of the authors. Four wheel drive sales staff know better than to turn to the man of the house and say "You’re never going drive this thing off road are you?" and think tankers know better than to say to business people "You don’t really care if tax cuts and IR reforms help low income families do you?"

Consumers are constantly juggling the costs and benefits of their beliefs. Beliefs about the effectiveness of homeopathy or magnets might be produce a sense that you understand what’s going on with your body (without having to study difficult science subjects at uni) and have some control, but they may also provoke ridicule from skeptical friends and family. The consumer’s self image is at stake.

When most people talk about ‘truth‘ they’re thinking about ideas that help people predict and control their environment. For example, many ideas from the hard sciences are extremely useful for getting bridges to stand up and to keep satellites in orbit. Believing that an oncoming bus is just a relativistic social construct that can be wished away is likely to result in a trip to hospital. But how many of our beliefs do we use in practical ways like these?

When was the last time you saw a believer in the afterlife run a red light because they were impatient to get to heaven? How many fundamentalist Christians who read the Bible literally are keen to give up all their worldly wealth? People use their religious ideas in quite subtle ways. The inconvenient rough edges are smoothed away so that the beliefs can do what they are meant to do more effectively. It is often enough that religious belief reduces anxiety about death and the meaninglessness of life. When it provokes impatience for death most people think it has become dysfunctional. Heaven’s Gate style cults are not all that popular (demand is low).

For welfare economists this creates an interesting problem. If the satisfaction of preferences is the bottom line the many of the people who hold seemingly crazy beliefs are actually behaving perfectly rationally. They have found a way to maximize utility. Arguing with them would lead to inefficiency.

This entry was posted in Humour. Bookmark the permalink.
Subscribe
Notify of
guest
15 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Cameron Riley
2022 years ago

The biggest irony of the culture wars is that it is government that has given us the black armband history, and the culture wars are largely an effort to deny that responsibility and culpability.

It has become noticable that modern populist governments are indulging in alternate fear/crisis and then feel-good rhetoric. Bush’s inaugural speech was a good example of feel-good rhetoric designed to reinforce the American people’s view of themselves.

The culture wars and much of the vox populi rhetoric that comes from the Howard government is the same. I think the “1 billion” mark for the tsunami comes from this. Australians like to think they over-achieve on a per capita basis. The government giving out tsunami money on a disproportionate basis fits this feel-good pattern.

It appears to also be aimed at instant satiation, kind of like junk-food is.

Andrew Norton
Andrew Norton
2022 years ago

” If the satisfaction of preferences is the bottom line the many of the people who hold seemingly crazy beliefs are actually behaving perfectly rationally.”

I don’t think this is quite your argument. Rather, it is that beliefs and possessions have meanings and purposes that may not be the meaning or purpose originally attached to them by their inventors or manufacturers, or the purposes and meanings that outside observers attach to them.

Whether they are rational or not is, I think, another matter, even from a satisfaction of preferences perspective. I have a friend who has just made some major decisions based, in part, on what a tarot card reader and a clairvoyant told him. This is in order to satsify a preference that is a perfectly normal one shared by most of the population. As it happens, despite the extremely dubious (from my perspective) basis of his decisions, I think they are defensible on other grounds. But it could easily have been the case that he chose an irrational means of satisfying a rational preference.

Geoff Robinson
2022 years ago

Revealed preferences are significant. Richard Posner makes the point that although many Americans are religious their behaviour does not reflect these values. This is relevant to the left moral panic about American fundamentalism and foreign policy, some see US support for Israel as theologically driven. However many American conservatives and the Christian right used to be anti-Semitic, their current support for Israel shows that theology follows policy rather than vice versa. Locally the revealed preference of Asian-Australians in voting Labor is a better evaluation of Australian conservatism than Tony Abbott’s recent claim that conservatives have discovered tolerance. Ditto for Jewish voters in Melbourne Ports and Wentworth whose revealed preference shifted to the Coalition.

Geoff Honnor
Geoff Honnor
2022 years ago

“The culture wars and much of the vox populi rhetoric that comes from the Howard government is the same. I think the “1 billion” mark for the tsunami comes from this. Australians like to think they over-achieve on a per capita basis. The government giving out tsunami money on a disproportionate basis fits this feel-good pattern.”

So …..the government dealt out this disproportionate Tsunami aid – what would be proportionate in this context I wonder? – in order to lull us into “feel-good” compliance with a totally erroneous perception of ourselves.

Those evil bastards will stop at nothing.

Rafe
2022 years ago

What is the point that Don is making? That the truth does not matter? (false) That the truth can be hard to find? (true).
Theories can be selected on the basis of the visceral satisfaction that they give, they can also be selected on the basis of their capacity to solve problems and stand up to criticism. Investigation is required to find which mode of selection is being used in any particular case.
Let me end with a question: what is the problem that welfare economists are trying to solve? For a long time I thought they were concerned with welfare but then it dawned that they were actually talking about something else that involves a lot of mathematics. Help!

Cameron Riley
2022 years ago

Geoff, It is also important when doing “feelgood” politics to do it an area that if anyone questions it, it makes them look callous. Hard to argue against “freedom and liberty” right? Hard to argue against giving money for the tsunami right? Makes you look like a complete a**hole.

The fact remains it is done and it is done for that reason. Giving government money to tsunami victims was done in the same manner Australians expect their gold medals to come in – divided by population.

There was no doubt that the government would give money that would ensure we were atop of the per capita tables in the city and international newspapers.

Personally I think it cowtows to the anglosphere principle of Australia being a small and geo-politically isolated nation. The tsunami if anything showed the opposite. We are an economically, geographically and politically important, and powerful nation. I hope the per capita thing gets buried as the political cringe.

Chris Rolliston
Chris Rolliston
2022 years ago

“Believing that an oncoming bus is just a relativistic social construct that can be wished away is likely to result in a trip to hospital.”

‘Relativistic’? Don’t hedge! Surely you wouldn’t deny that ‘being killed by an oncoming bus’ is a ‘social construction’ in the sense that such a death may be culturally seen as (for instance) ‘an innocent loss’, or ‘shameful’, or ‘tragic’, or a sign of God’s wrath upon the family of the person killed, etc. Furthermore, surely you wouldn’t deny either that the culturally-defined value judgement implicit in the ‘statement of mere fact’ that a person was killed by an oncoming bus may well depend on the ‘kind’ of person who was killed, e.g., the attributation of ‘an innocent loss’ being far more likely if the person was a pubescent girl from a middle-class family?

Also, playing devil’s advocate, surely the only ‘relativistic’ stance here is that of the argument that the choosing agent is somehow outside of her or his fundamental beliefs, the argument that denies that the self is consituted precisely by the fundamental beliefs it holds?

Rafe
2022 years ago

Don, do you really think that the notion of the trugh is as vague and unhelpful as implied at the head of your post?

Rafe
2022 years ago

Don, do you really think that the notion of the truth is as vague and unhelpful as implied at the head of your post?

Fyodor
2022 years ago

Very entertaining piece, Don. It may be because ideas have subjective value in themselves that people often refuse to accept that they are untrue or incorrect. This is my preferred explanation for the US phenomenon of the “creationist” scientist who can function as a physicist so long as he doesn’t tackle the cosmology question.

It may also explain why debate between “rational” people is so often inconclusive: neither side is psychologically prepared to reject a long-cherished idea. A truly open mind is a very rare thing, and the world is full of happy fools.

Francis Xavier Holden
2022 years ago

Interesting Don. It has always fascinated me that Pharmacists who are trained scientists can peddle such unproven stuff as aromatherapy, homeopathic potions, magnetic pillows and other various commercial snake oil.

Homer Paxton
Homer Paxton
2022 years ago

I have always thought that aromatherapy stinks!

Fyodor
2022 years ago

FXH, it’s called a “retail markup”. Pharmacists tend to be shopkeepers, not scientists.

derrida derider
derrida derider
2022 years ago

As you probably know, a standard argument in the public choice literature is that it is irrational to vote voluntarily – the probability that your vote will be the one to swing an election is far too low to justify the effort. What’s not so widely realised that this also applies to political beliefs. The individual’s cost of holding an ignorant or irrational belief in politics is generally very low (unlike, say the costs of an irrational belief about the law of gravity) – it cannot justify individuals’ expenditure of effort to rectify it.

Given this, it’s no surprise that such beliefs are formed by spurious and often tenuous things – such as desire to signal personality types.

James Farrell
James Farrell
2022 years ago

Don,

Since you’re writing a lot about belief, I think it would save you a lot of trouble to opt for a narrower definition of it, focussing on the psychological dimension. My idea of a belief is something one thinks to be the case, and would be significantly disconcerted to discover not to be the case after all.

This covers a broad spectrum from factual beliefs (Prince Philip is still alive, the car is in the garage, Coke contains more sugar than orange juice) to religious and other superstitious notions (Santa exists, God exists, star signs affect personality), to causes and political affiliations (whales must be saved, socialism is the key to a better world, Beazely can lead labor to victory).

The sources of beliefs are varied: observation, logical deduction, personal authority, and conventional wisdom contribute in different measures to different kinds of belief.

But what these disparate things have in common is that they constitute the firm ground we walk on. For example, it’s not just a working hypothesis for me that I’m the biological progeny of my ostensive parents: I firmly believe it, and would be shattered to learn I was adopted. More trivially, although I’m good on geography generally, for most of my life I thought that Estonia was between Latvia and Lithuania, and was shaken when I discovered at around 35 that it’s actually on the top. And I know that people who suddenly lose religious faith, or are disillusioned with a political movement, experience distress.

By contrast, many of the phenomena you’ve been talking about would be better classed as opinions and postures: official positions one presents to a world that admires consistency and conviction, where the inner thoughts of the individual concerned (such as they are) are in fact vacillating, fluid, incomplete and inconsistent. Opinions and intellectual postures are, as you’ve been saying, exclusively tied up with the identity a person wants to cultivate, and are likely to change fairly painlessly according the individual’s milieu and to broader social trends and fashions.

Sorry to rave on. The aspirin box is a tour de force, by the way.