Am I Rational?

The central assumption of economics is that individuals are rational, have objectives and tend to take the actions that best achieve them. For that assumption to be useful one must add to it restrictions on what those objectives might be, since if one is completely agnostic on the subject any possible behavior can be explained by assuming a suitable objective. Since we have a good deal of information on what humans value, both by introspection and by observing other humans, we can deduce from the rationality assumption a good deal about what humans will do. We cannot deduce anything with certainty, both because we do not know objectives with certainty and because “tend to” allows for some mismatch between actions and ends, but the rationality assumption may still be the best way available to us of predicting the behavior of other people.¹

The individual about whom I have most information is myself, which makes it interesting to see how consistent the rationality assumption is with my behavior. That is the subject of this post.

Commitment Strategies

I start with an anecdote from about thirty years ago, when I was a faculty fellow at the University of Chicago Law School. One summer I mentioned to Richard Posner, a distinguished colleague, that in order to commit myself to riding a bike in to work I had not paid for a summer parking space at the school. Posner responded that he thought I believed in individual rationality; if riding a bike was the right decision I should not have to trick myself into making it.²

I responded that rationality was an assumption I made about other people. I knew myself well enough to recognize contexts where I would not take the action in my long run interest, used commitment strategies to correct errors I would otherwise make. I did not know other people, the masses of strangers whose behavior I used economics to predict and understand, well enough to improve on the first approximation provided by the rationality assumption.

I could have added that I include the use of commitment strategies by other people in my interpretation of the implications of rationality. In one of my favorite articles I interpret civil order as based on a mutually recognized structure of commitment strategies.

What started me thinking again about the question of my rationality a few months ago was realizing that I had just been working for about two dollars an hour.

A few days earlier, my family had cooked a 15^th century Italian feast for forty fellow participants in the Society for Creative anachronism, a group that does historical recreation for fun. My daughter, who can read the renaissance Italian of the cookbook that was our main source, was chief cook, her parents her assistant cooks. We came home with, among other things, the remains of five chickens. I removed what meat I could, simmered them for a few hours to produce chicken broth for future soups, then removed the solids and spent an hour and a half separating bits of meat from bone and gristle.

I ended up with about a pound of meat. Boneless leg quarters at our local Costco cost about three dollars a pound, so I had been working for about two dollars an hour. Was that rational?

Perhaps. I not only know more about my irrationality than about that of a random stranger, I also know more about my objectives. I like creating order, reducing the entropy of my environment. Converting a pile of boiled chicken bits to separate piles of meat and bones satisfies that.

But there is also a commitment strategy involved, summed up in an old verse:

Use it up, wear it out,
make it do, or do without.

The behavior recommended will not be in my interest in every case but it is a useful prejudice to have built into my habits. Once it is there, ignoring it is not costless. Throwing away good food makes me uncomfortable.

Objectives

The same question, was it rational, can be asked about cooking the feast. Between extensive preparations and time cooking, the three of us spent easily twenty hours each and probably more. Aside from some leftovers, such as the chicken, we got nothing material in return.

We did, of course, get some entertainment — combining information from three different recipes from three 15^th century Italian cookbooks with my experience with a recipe from a 13^th c. Arabic cookbook and ending up with a plausible interpretation of one of the recipes was fun. It gave me a worked out recipe that I will use again and will add to the next edition of the historical cookbook that my wife and I have up on Amazon and as a free pdf on my web page. It also helped spread the idea that medieval and renaissance cooking can be tasty, hopefully got more people interested in trying it, one of my objectives. I like to share my hobbies.

The free pdf raises another issue of whether my behavior is rational. Most of my books are both for sale on Amazon and available for free on my web page, along with most of the rest of my writing. My current writing is here, and free. The explanation of why I give away my work is that I write primarily to spread ideas, not for income, and charging for my writing, even the modest cost of kindles on Amazon, would lead to fewer people reading it.

One of my objectives, one to which I have devoted considerable time and effort, is making the world freer, mostly by creating and spreading ideas. I explained part of what I was doing in an earlier post, How to Save the World:

A single talented individual, an Ayn Rand or Adam Smith, is worth more to a political movement than many millions of dollars spent on promoting its ideas. That raises the question of how to find and recruit such people. My approach is to make material that might interest and persuade as easy to find as possible. That is one reason that most of my work, including books, articles academic and popular, blog and Substack posts, along with video and audio recordings of a large number of my talks, is available for free on my web page.6 My intended target is a brilliant teenager in India, Vietnam, Nigeria, China, Brazil … who is unlikely to buy books, especially books in English, but might come across some part of what I have written online and get hooked by the ideas. Nowadays, with Google providing surprisingly good translation for free, he doesn’t even have to know English, although he probably does.

That is also a reason why libertarians should not post bad arguments for their views, however persuasive they sound. Bad arguments drive off readers intelligent enough to see through them.

Conclusion

As the examples above should make clear, it is hard to test the rationality assumption by observing a single person. There are too many ways in which idiosyncratic objectives or tactics designed to produce rational behavior can explain apparently irrational actions.

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1. I discuss a possible critique of that position in an earlier post.

2. The cost of a parking space was low enough to have no significant weight in my decision.