August 11, 2021

Horse 2880 - Rational Choice Fails Us Because It Can't Exist

One of the problems that happens when you try to build models of the kosmos is that because the kosmos is bigger and more complex than your model, it sometimes refuses to be contained within the confines of your model.

In building your model of the kosmos, it is almost self-evident that you need to build it out of components that are simpler than the thing that you intend to simulate. Take a map as an example. You can not very well make a 1:1 map of Canberra because it would need to be as big as Canberra. Invariably, your model needs to have symbols and theories about how the kosmos works, and that involves making assumptions.

One of the assumptions that keeps on arising in both economics and social behaviour is the theory that people make rational choices.

Rational choice theory is more like a set of guidelines rather than hard and fast rules and basically states that individuals will make and use some kind of rational calculations to make rational choices and achieve outcomes that are aligned with their own personal objectives. This more than likely stems from the somewhat obvious statement that the centre of everyone's universe is about 19mm behind their corneas and as such humans are the hero of their own story and as a result, selfish. As selfish and self-interested beings, rational choice theory suggests that in maximizing an individual's self-interest, that they will make decisions which they expect will provide them with the greatest benefit and satisfaction, given the limited option they have available.

There is a caveat in that behavioural economics does at least try to explain why people sometimes make irrational decisions and why their behavior does not always follow the predictions of economic models. This is where rational choice theory tends to leave behind economics and enters the realm of psychology. 

I think that all of that sounds fine provided that we lived in an ideal kosmos. I would agree that people would make optimal decisions that would provide them with the most benefit and satisfaction, except that we do not live in an ideal kosmos and individuals are not playing with all of the available information which they might need.

The problem with humans generally is that people are often motivated by emotions, which themselves are subject to immense change within even one day, and affected by an unknowable amount of external forces. People are like The Doctor's TARDIS in that they are so much bigger on the inside than mere models can contain.

"Do I contradict myself?

Very well then I contradict myself,

(I am large, I contain multitudes.)"

- "Song Of Myself, 51", Walt Whitman (1855)

It is a hideous understatement to say that individuals do not always make rational decisions. It is also a hideous understatement to say that individuals do not have perfect access to the information they would need to make the most rational decision every time.

Moreover, people value different things for equally irrational reasons. Concepts like hyperbolic discounting suggests that people value some dollars more than others. Politics, partisanship, paternalism, patricianism, patronage, and privilege, also means that people value different people differently. 

This therefore is the underlying reason why I am currently at home in a lockdown. Literally nobody is playing with anything like a complete set of information, from the lowest of the low, to the Premier of New South Wales. Some people are led to believe theories which defy logic, some people are simply selfish beyond the point of normal spitefulness as well.

I would wager that it is literally impossible to expect anyone to conduct any kind rational thinking, rational choice making and any kind of rational risk assessment, when the collective response ranges from borderline hysteria, through to culpable neglect of others, through to complete denial of reality.

The problem with hindsight is that it is always in 6/6 vision whereas looking into the future is often like looking into a blurry void. Hindsight tells us that what the Premier should have done was declare an immediate and very hard lockdown and then double and triple down on any vaccination rollout. The Premier failed to do this because she was under pressure from the economic liberal wing of her party which values some dollars more than other dollars and some people more than other people. That meant that the Premier tried to control the problem without resorting to lockdowns or border closures.

Aided and abetted by commercial news media which backs her part, the narrative has now been spun that the people of southwest and western Sydney have a “compliance” problem; rather than addressing the issue at hand by putting resources into greater income support and better communication, especially on vaccination. 

The long, slow, and wiser option may have been to improve the model of the kosmos from the outset and choose to give the general public more information about the various kinds of drivers and morbidities, such as lung and respiratory complaints, various kinds of blood related conditions such as high blood pressure and diabetes, as well as the more generalised morbidities such as overweight and obesity, and other kinds of issues like cancer.

Even that kind of information campaign will still not have been terribly effective as those people who would have otherwise made irrational decisions would have continued to do so. It means that all we are left with is the incorrect assumption that people make rational choices, and that they need to be coerced into some kind of compliance by force of law and reinforcement of fear. The problem is that reinforcing fear won’t be effective long-term. Fear is the mind killer, the anaesthetic of bravery, the anaerobic oil slick which smothers the mind; the biggest reason why rational choice theory is bunk.

No comments: