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Daniel
Little
1991
Topics:
Comments and discussion of the
theory of practical rationality 1
Theories of practical
rationality 3
Altruism and commitment 3
Fairness 3
Decision rules 4
Possible alternative decision
rules 4
Classification of criticisms
of SER 7
Criticisms of narrow economic
rationality 10
Principles of inference 15
The role of theories of
rationality in social science 15
Fairness, Cooperation, and
Rational Self-interest 18
Rationality Cooperation and
Fairness 19
Economic rationality. 20
Problems with this conception.
20
Possible remedies. 22
Implications for the moral
economy debate. 24
References 25
Altruism and fairness 27
Summary 30
Time preferences 31
Social science theories of
rationality 32
Explanation without relativism
33
Where does the debate arise? 34
I. What is the thin theory of
rationality? 35
Practical vs. belief
rationality 35
A series of positions: 36
The role of theories of
rationality in social science 36
References 39
So
far the qualification we have considered to the "collective action
theorem" have accepted the premise of economic rationality; it has been
argued on a variety of grounds that even economically rational individuals will
engage more frequently in collective action than the CAT predicts. Let us turn now to a more fundamental
objection to the CAP: arguments to the effect that the concept of rationality
as maximizing of private interests is itself defective.
First,
this conception of rationality is difficult to reconcile with the idea of moral
decision making. If rationality
essentially involves maximizing self-interest, then acting out of moral
concerns--moral rules, altruistic concern for others, or personal or political
commitments--would appear to be irrational. And in fact economists and public policy analysts tend to
subsume moral motivations under the category of "non-rational
influences" (e.g., Hardin (1982)).
Let
us begin by making it clear that the objections which follow are not
romanticizing efforts to displace the concept of rationality from our concept
of human activity, or to elevate sentiment or passion to a dominant position in
our understanding of action.
Rather, the critics we will consider argue that human beings are
(imperfectly) rational; but that rationality does not consist simply in
maximizing one's private interests.
A number of philosophers have attempted
to incorporate the idea of fairness into the concept of rational decision
making. See for example the
extensive literature on utilitarianism and fairness (Regan (1980), Griffin
(1985), and Harsanyi (1985)). A reason for my performing an act is that I
benefit from widespread performance of this sort of act, and I recognize that
fairness requires that I pay my share of the cost of these public
benefits. John Rawls's A Theory of
Justice represents an extended argument to the effect that there are principles
of justice which ought to regulate the just society, and these principles
derive from the principle of fairness.
Rawls's construction is at some distance from our primary concern, since
he is concerned with global features of justice, while we are concerned with
individual rationality. But the
kernel of Rawls's construction is relevant here: if individual rationality
involves evaluating alternative lines of action in terms not only of the costs
and benefits of each alternative, but also in terms of the fairness of each
alternative, then we have arrived at a structured concept of rationality. And it is a concept which involves the
imposition of side constraints on the decision making process.
A second, and more general, approach, is
one which attempts to modify the conception of rationality so as to introduce a
mechanism for moral deliberation.
Is it possible to describe a conception of practical reason which
incorporates maximizing rationality and moral considerations? The goal would be to arrive at a
conception of rationality which contains economic prudence as a special case;
provides a mechanism of deliberation within which moral constraints and reasons
have scope; and is sufficiently
precise to permit some degree of reasoning about rational decision making.
Let us now take stock from this
excursion into recent moral philosophy.
What consequences, if any, follow from these considerations for the
concept of rationality? We saw in
our discussion of Sen's work that there are good analytical and empirical
reasons for judging that much actual human behavior is not explicable on the
basis of a simple utility-maximizing scheme. This finding might lead us to suppose that human beings are
typically not rational; or it might lead us to question the concept of
rationality associated with SER.
Sen suggests the latter course, and proposes that we attempt to
construct a more structured concept of practical reason which permits us to
take account of moral, political, and personal commitments as well as concern
for welfare. Moreover, Sen shows
that the former cannot be subsumed under the simple concepts of
welfare-maximizing or preference rank-ordering.
Next, we saw in Nagel's work a series of
arguments to the effect that rationality requires altruism: recognition of the
reality of the interests of others and a direct willingness to act out of
regard for those interests. This
line of thought directly addresses the egoism assumption of SER. It does not, however, do quite enough
for us; for it does not give us a way of incorporating the idea of moral
principles (or other normative requirements) into the decision making process.
Finally, we saw that other recent moral
philosophers have outlined the sort of structured decision making process
necessary in order to take account of the role of principle in decision-making:
the decision maker can combine a set of side constraints on action (normative
commitments, in Sen's terms), as well as a set of goals (personal interest,
social goals, the welfare of others, etc.). And the decisions he arrives at will be a complex function
of constraints and goal-maximizing actions.
How do these findings relate to our
central concerns? First, they
offer both a set of criticisms of SER (SER is an inadequate conception of
practical reason because it makes it impossible to take account of certain
features of the decision making process which are intuitively crucial), and an
alternative model of the decision making process which promises to be a more adequate
analysis of the concept of human rationality. Moreover, this richer conception of practical reason
promises to offer a new set of solutions to different classes of collective
action problems: if individuals are altruistic to some degree (that is, responsive
to the interests of others), and if they are principled (that is, moved by
considerations of fairness, reciprocity, or justice), then they will be
practically motivated to act differently when confronted with occasions for
collective action than the CAT predicts.
A second, and more general, approach, is
one which attempts to modify the conception of rationality so as to introduce a
mechanism for moral deliberation.
Is it possible to describe a conception of practical reason which
incorporates maximizing rationality and moral considerations? The goal would be to arrive at a
conception of rationality which contains economic prudence as a special case;
provides a mechanism of deliberation within which moral constraints and reasons
have scope; and is sufficiently
precise to permit some degree of reasoning about rational decision making.
A second, and more general, approach, is
one which attempts to modify the conception of rationality so as to introduce a
mechanism for moral deliberation.
Is it possible to describe a conception of practical reason which
incorporates maximizing rationality and moral considerations? The goal would be to arrive at a
conception of rationality which contains economic prudence as a special case;
provides a mechanism of deliberation within which moral constraints and reasons
have scope; and is sufficiently
precise to permit some degree of reasoning about rational decision making.
Generally the
position to be argued here is that practical reason--the application of reasons
to problems of choice--has a more complex structure than the maximizing
conception allows; that it includes a capacity for the human actor to take
account of moral reasons for acting and refraining; and that in consequence
several classes of public goods problems may be seen to have solutions which
are unexpected from the point of view of simple economic rationality.
This
discussion may begin with an obvious fact: Individual human action, in a wide variety of social
contexts from traditional societies to modern political organizations, is
influenced by moral considerations.
Members of an organization or group may be induced to contribute to
collective projects out of an unwillingness to take unfair advantage of other
members' contributions (i.e., motives of fairness and reciprocity, and an
unwillingness to be a free rider).
Or they may be induced to contribute to a collective scheme for aiding
the indigent out of simple recognition of the reality of the needs of other
persons which the scheme is intended to address (i.e., motives of
altruism). It is not necessary to
provide extensive empirical justification for these assertions; they are a
commonplace of human social life.
The
question is, how are we to describe action prompted by these sorts of
motives? One possible approach is
to lump these sorts of behaviors together under the heading of
"nonrational" or "extrarational" influences on conduct‑‑on
a par with habitual conduct, conduct stimulated by subliminal persuasion,
etc. (This appears to be Hardin's
approach (1982:103 ff.).) On this
approach, moral motivations are non‑rational impulses which push and pull
action away from the optimal solutions which correctly represent rational self‑interest. Thus to the extent that one is
influenced by moral factors, one is less than wholly rational.
Second,
we might attempt to describe this sort of conduct as a rational calculus of a more
complicated sort than that usually discussed in economic explanation, and refer
to psychic benefits to which "moral behavior" gives rise. The agent takes some amount of pleasure
or satisfaction in acting altruistically, or he suffers some discomfort in
acting unfairly; and when these pleasures and pains are taken into account, the
action taken may be seen to maximize the individual's utility calculus.
This
approach looks suspiciously ad hoc, in that it introduces a hypothetical effect
("psychic benefit") in order to balance the rational calculus
equation. More importantly,
though, this approach runs contrary to the best current thinking about the
process of moral reasoning.
Both
these approaches appear to depend upon an emotivist theory of morality and
moral motivation. They assimilate
moral action to a causal model of action in which a variety of non‑rational
motive causes distortion of the process of rational deliberation. Thus to be moral is to act contrary to
what reason dictates. But emotivism
is not a particularly persuasive view of moral psychology. And it would appear that one can do
better than this by introducing a more complex model of practical reasoning
which accords moral reasons some rational force.
Let
us briefly reconstruct a conception of "practical reason" which
reflects recent thinking by moral philosophers and moral psychologists about
the process of moral reasoning.[1] The goal would be to arrive at a
decision rule which contains economic prudence as a special case; provides a
mechanism of deliberation within which moral constraints and reasons have
scope; and is sufficiently precise to permit some degree of reasoning about
rational decision making.
Some
philosophers and rational choice theorists have argued that the postulate of
economic rationality may be modified with the addition of a motive supporting
conditional fairness or reciprocity (Elster, Sen, Harsanyi, Margolis). The decision rule on this approach
might look something like this:
Maximize private interests unless the proposed action involves a public
goods problems; in that case, estimate the likelihood of enough cooperative
behavior to secure the collective good; if success is likely, cooperate;
otherwise defect.
IF the action does not affect a public good
THEN
maximize private welfare.
OTHERWISE
estimate the likelihood of success of cooperative/ collective
action;
IF
success is sufficiently probable,
THEN
cooperate;
OTHERWISE
defect.
This rule does not
embody strict moral principle or altruism, but rather conditional
reciprocity. It represents a
limited willingness to contribute to public goods, but only on the assumption
that there is a realistic prospect that collective action will succeed.
The
welfare-maximizing rule was flawed by being predisposed against cooperative
action. This rule is flawed in the
opposite direction, however. It
doesn't correctly describe voters' behavior or collective action either, since
it would predict virtually universal contribution to public goods. The problem is that cooperative
behavior preempts private striving on this rule whenever cooperation is
sufficiently likely in others.
What the rule appears to need, therefore, is a weighting function which
permits the decision maker to balance private costs and benefits against the
gains of cooperative behavior and the prima facie presumption in favor of
fairness or reciprocity. Let's see
if we can incorporate this feature into the model.
IF the action does
not affect a public good
THEN
maximize private welfare.
OTHERWISE
estimate the likelihood of success of cooperative/ collective
action;
IF
success is sufficiently probable,
THEN
assign an index V to the value of the collective good and cooperation in this
case and compare with the cost of cooperation C.
IF
V > C
THEN
cooperate;
OTHERWISE
defect.
OTHERWISE
defect.
This rule begs an
important question: how to compare private costs and the value of cooperation
and the collective good. It is
consequently a less rigorously applicable rule than the simpler
welfare-maximizing rule. At the
same time, it would appear to correspond more faithfully to the decision-making
procedure which real persons undergo when deliberating about collective
projects. It is also noteworthy
that this rule appears to collapse onto a Harsanyi-like dual-utility maximizing
rule. The individual assigns
utilities to private goods and values to public goods, and possesses a
weighting function which defines the rate at which tradeoffs are made between
the two goods. The decision rule
may then be stated quite simply:
Act so as to maximize the weighted sum of private and public welfare.
This
rule is specifically constructed to give a more satisfactory account of
individual decision making in circumstances of collective action. It does not on its face take account of
other moral considerations: altruism, fairness, and moral commitment. Another promising insight is the idea
that a full theory of rationality must also involve different sorts of
considerations altogether. An
example of an attempt to embody moral principle in the decision rule is
Nozick's notion of a "side-constraint theory." Such a theory would presumably have a
welfare-maximizing component, so that the theory would contain economic
rationality as a special case (i.e., in circumstances where moral principles
and requirements of fairness have no application). But the rule would have an overriding set of moral
constraints which limit choice of actions according to their consistency with a
list of moral rules.
This
concept of rationality has a fundamentally different logical structure than
that of SER. It is not
fundamentally a maximizing function, but rather a complex of side‑constraint
rationality and maximizing rationality.
This more elaborate structure permits us to bring the idea of moral
limitation and moral obligation into the domain of rationality.
This
sort of rule might be modeled along these lines:
LIST
alternative actions in order of the (private/general) welfare they generate.
ELIMINATE
actions which violate specified moral rules.
CHOOSE
the highest ranking alternative which survives the filter.
This rule becomes
either "morally constrained egoism" or "morally constrained
altruism" depending on how welfare is understood; either as self-interest,
or as interests of all affected persons.
Criticisms of the concept of economic
rationality have occurred along two independent dimensions. First, there is a psychological
criticism having to do with the assumption of self-interestedness. The usual concept of economic
rationality assumes that each individual is out to maximize the satisfaction of
his own private interests; thus economic man is an egoist. Against this assumption, various
critics have argued that human beings have a variety of altruistic motives;
they are capable of acting out of regard for the interests of others as well as
out of self-interest. Thus human
beings sometimes accept sacrifices to private interest for the sake of family,
friends, anonymous strangers, or the social group. And it is sometimes held that this form of behavior is ruled
out by the assumption of economic rationality.
One especially important example of this
type of view is that of the utilitarian decision maker who impartially chooses
strategies according to the sum contribution which each alternative makes to
the welfare of all.
Let us refer to this as the
"content objection": it maintains that the theory of economic
rationality assumes that the content of rational planning is defined by
self-interest, whereas most human beings sometimes pursue the interests of
others as well. This objection is
not quite on target, however. For
the theory of economic rationality is not in fact forced to assume egoism
(though it frequently does).
Rather, it assumes only that each individual has an ordered set of goals
or interests which he would like to further; and then he engages in activity
which is designed to effectively maximize the attainment of those goals. Consequently, it is consistent with the
concept of economic rationality to attribute altruistic goals to the agent
(though it is necessary to provide an ordering to those goals). And so long as the agent pursues those
goals by attempting to maximize or optimize their attainment, he may be said to
conform to the requirements of economic rationality.
When we explicitly add the assumption
that individuals attach some weight to the welfare or interests of others, we
are immediately able to solve some of the paradoxes of collective
rationality. In particular, the
2-person prisoner's dilemma looks more tractable on the assumption that both
players are making their decisions on the basis of both players' payoffs, both
will arrive at the "cooperate" strategy. This is true absolutely for the impartial decision maker who
weights both players' welfare equally.
And it is frequently true even for players who are partial to their own
interests in the sense that they discount payoffs to the opponent, so long as
the conflict between interests of the two parties is not too severe. Thus in the game matrix above, strict
impartiality leads to a choice of "cooperate"; but so does a
principle of choice in which one values his own welfare at a rate twice that of
his opponent.
However, the addition of the assumption
of altruistic consideration of the welfare of others does not solve all types
of collective action problems. In
particular, the n-person PD persists even in the light of this additional
assumption. This follows from two
assumptions. First, an
individual's contribution adds only a negligible amount to the total collective
good. And second, the individual's
cost is not negligible. On these
assumptions, the maximizing altruist will reason that his contribution will be
wasted, and will refrain from contributing.
Strict and limited utilitarianism, then,
represent a family of views which overcome the egoism feature of standard
economic rationality, but which preserve the idea of rational choice as a
welfare-maximizing process. (This
discussion relates closely to recent work in utilitarian ethics. Particularly important is the debate
over act and rule utilitarianism.
See Sen and Williams (1982) for relevant contributions.)
The second type of criticism of standard
economic rationality is more fundamental.
This view holds that the conception of rationality as maximizing welfare
is itself fundamentally flawed--regardless of the issue of egoism and altruism. Or rather, the view holds that
maximizing decision making is one part of a full theory of rationality, but
that a full theory of rationality must also involve different sorts of
considerations altogether. The
chief candidate for addition to the rational decision making procedure is the
idea of following a moral rule or principle. On this account (which is manifestly Kantian in tone), the
rational decision maker will be mindful of two fundamentally different kinds of
considerations. For a range of
possible actions A<1>, ... A<i> the decision maker will first ask
whether any of these actions is required by moral principle, and whether any
are ruled out by moral principle.
Any actions which are ruled out by moral principle are dropped from the
decision making process. If a
unique action is required by moral principle it will be adopted. If no decision has been reached, the
decision maker now moves to the optimizing stage: he assesses the alternative
actions in terms of their contributions to his table of preferences and selects
that action which optimize his preferences.
This concept of rationality has a
fundamentally different logical structure than that of SER. It is not fundamentally a maximizing
function, but rather a complex of side-constraint rationality and maximizing
rationality. This more elaborate structure
permits us to bring the idea of moral limitation and moral obligation into the
domain of rationality.
Moreover, this additional assumption
permits the solution of a wider class of collective action problems. If the requirement of fairness or reciprocity
is a moral requirement, then "free-rider" obstacles to collective
action will be diminished. The
prospective contributor will consider contributing and taking a free ride. He will rule out the free ride on
grounds of fairness. And he will
choose out of the restricted set, and decide to contribute.
We might note parenthetically that the
Kantian moral philosopher goes one step further, by trying to show not only
that it is rational to act out of regard for moral principle even in cases
where doing so leads to sub-optimal outcomes in terms of preferences; but
further, that a particular range of moral principles are rationally derivable
or justifiable. (See Nagel, Rawls,
Kant.) We might call this the
concept of practical reason.
These considerations suggest a possible
classification of models of rational decision making:
|
TYPE OF
INTEREST REFERRED TO |
|
TYPE OF
DECISION PROCESS |
|
|
|
Maximizing |
side-constraint |
Egoism |
SER |
reciprocal
egoism |
altruism |
utilitarianism |
Kantian ethics |
Two important criticisms of SER emerge
from this discussion. First, SER
has historically been inclined towards an assumption of egoistic self-interest;
and in fact prisoner's dilemma situations, game theoretical reasoning, and the
like depend upon this assumption.
However, it is possible to introduce the assumption that decision makers
take the interests or welfare of others into account (with or without a
discount function) and preserve the main outlines of SER. More fundamentally, we found that
telling objections have been put forward the maximizing structure of SER;
philosophers and economists alike have argued that a full theory of rationality
needs to give a place for the operation of moral principle in the decision
making process. Further, it was
shown that introducing altruistic consideration of others solves some
collective action problems but not all; but that when we add the requirements
of moral principle, we find that a wider class of collective action problems
are solved.
If these points are to have empirical
significance (as opposed to purely philosophical plausibility), it is necessary
to give some account of the mechanisms by which moral principles and altruistic
motives come to be motivationally effective. And it is necessary to give some concrete evidence to the
effect that actual human decision making reflects the motivational diversity
and rational structure which these criticisms predict. We will turn to a discussion of the
former below when we consider the causal role of moral systems; briefly, the
account will emphasize socialization processes through which individuals come
to internalize the norms of the social order around them. There are some suggestions in the
biological literature, however, that altruism in primates has an evolutionary
basis as well; that is, that altruism is not merely the result of
socialization, but is rather in some sense built into the human decision making
system (much as various features of linguistic competence are evidently built
into the neurophysiology of cognition).
See Margolis (1982) for further development of this possibility.
How do these factors affect Popkin's
arguments? To the extent that
Popkin's analytical work--and the predictions which he derives concerning
village institutions--depends upon a theory of human motivation and decision
making which is importantly mistaken, it will be evident that the theoretical
inferences have little application to human society. If villagers are altruistic in the narrow sense of being
affected by their perceptions of the needs and welfare of others; and if
villagers' decision making processes are importantly constrained by simple
moral constraints like fairness, reciprocity, and the like; then the CAT does
not validly apply to village society because village society does not satisfy
its premises.
We must be careful not to draw an overly
strong conclusion, however; for no one maintain that human beings are
indifferent to private welfare.
Indeed, generally speaking it would seem reasonable to assume that each
decision maker places high priority on personal and familial welfare; human
beings generally do not behave like impartial utilitarians. This finding suggests that human
behavior is the resultant of several different forms of motive: self-interest
and altruism; and several different types of decision making processes:
maximizing and side-constraint testing.
And to the degree that self-interest and maximizing behavior are
prominent in a particular type of circumstance, to that degree the CAT will be
empirically significant. In
village society one presumably will find a mix of these four possibilities;
consequently it is invalid to directly apply the CAT. Rather, it is necessary to offer empirical arguments and
analysis to show in what circumstances the premises of the CAT are most fully
satisfied, and in which as a consequence we would most confidently predict
collective action problems. But we
have now seen a variety of features of community life which plausibly work to
enhance both the impulse to altruism and the impulse towards fairness and
reciprocity; and these considerations in turn suggest that some communities in
some circumstances may manage to effectively overcome collective action
problems.
Much
of the argument in this chapter has been based on the supposition that
rational-choice analysis sheds substantial light on a variety of processes of
social change. A number of
criticisms have been advanced in recent years, however, to the narrow
conception of economic rationality.
These criticisms have direct bearing on the issue of the adequacy of the
rational choice framework of analysis of social phenomena. These criticisms must be addressed, and
their significance evaluated, before we can reasonably conclude that the
rational-choice model has significant application in the explanation of
concrete social phenomena. Now we
will consider the adequacy of the assumption of narrow economic rationality
itself and the body of public choice analysis which depends upon it. We will find that this theory is
inadequate as a comprehensive account of rational deliberation; it is therefore
not a sound base for the theory of rational-intentional action; and social
science is therefore to some extent misguided when it founds explanations of
aggregate patterns on the simple public choice model. It should be emphasized that this position does not
deprecate the importance of rationality in explaining human activity, or
elevate emotion or impulse to a dominant position in our understanding of
action. Rather, the critics we
will consider argue that human beings are (imperfectly) rational, but that
rationality does not consist simply in maximizing one's private interests.
We
may begin with A. K. Sen's critique of narrow economic rationality. Sen criticizes the assumption of pure
self‑interest which is contained in the standard conception (Sen 1982:84‑90). "The purely economic man is indeed
close to being a social moron" (Sen 1982:99). Against the assumption of self‑interested maximizing
decision‑making, Sen argues for a proposal for a more structured concept
of practical reason: one which permits the decision maker to take account of
commitments. This concept covers a
variety of non‑welfare features of reasoning, but moral principle
(fairness and reciprocity) and altruistic concern for the welfare of others are
central among these.
"Commitment is, of course, closely connected with one's
morals. But moral this question is
in a very broad sense, covering a variety of influences from religious to
political" (Sen 1982:93). Sen
believes that the role of commitment is centrally important in the analysis of
individuals' behavior with regard to public goods. For example, he suggests that the voters' paradox may be
explained by assuming that "voters are not trying to maximize expected
utility, but . . . to record one's true preference" (Sen 1982:97). And he draws connections between the
role of commitment and work motivation.
"To run an organization entirely on incentives to personal gain is
pretty much a hopeless task" (Sen 1982:98). He argues, therefore, that in order to understand different
areas of rational behavior it is necessary to consider both utility‑maximizing
decision making and rational conduct influenced by commitment; and it is an
empirical question whether one factor or the other is predominant in a
particular range of behavior (Sen 1982:104).
Sen
suggests the outline of an alternative decision-making rule. On this account the agent is postulated
to embody two sorts of preference rankings: a ranking of first-order
preferences and a meta‑ranking of preference rankings in terms of the
relation "ranking x is more moral than ranking y" (Sen 1982:100‑101).
We
might ask briefly to what aspect of the theory of rationality these points are
directed--the formal theory or the empirical theory. Does Sen mean to assert that the narrow conception of
economic rationality is flawed on logical grounds, or is his point rather that
this conception does unacceptable violence to the actual processes of human
rational decision making? It would
appear that Sen believes both claims, but the logic of his position flows from
the second point to the first.
That is, he appears to reason, first, that narrow economic rationality
is not a good account of actual human decision-making; and second, that this
fact is a reason for modifying the formal theory of rationality as well.
Thus
Sen holds that an adequate theory of rationality requires more structure than a
simple welfare‑maximizing model would allow; in particular, it needs to
take account of moral principles and commitment. Sen's proposals for a more structured conception of practical
reason, however, are the least convincing part of his account. The idea of a meta‑ranking of
preference rankings is unintuitive, to say the least; it should be possible to
give a better account of the relation between means‑end rationality
(utility maximizing) and rational subordination of action to principle (moral
reasoning). Therefore let us now
turn briefly to important contributions by recent moral philosophers.
Sen's
arguments show that there are good analytic and empirical reasons for judging
that much actual human behavior is not explicable on the basis of a simple
utility‑maximizing scheme.
This finding might lead us to suppose that human beings are typically
not rational, or it might lead us to question the concept of rationality
associated with the standard conception.
Sen suggests the latter course, and proposes that we attempt to
construct a more structured concept of practical reason which permits us to
take account of moral, political, and personal commitments as well as concern
for welfare. Moreover, Sen shows
that the former cannot be subsumed under the simple concepts of welfare‑maximizing
or preference rank‑ordering.
(Sen's main contributions are contained in "Rational Fools"
and "The Impossibility of a Paretian Liberal" in Sen, ed. 1982.) Thus Sen holds that an adequate theory
of rationality requires more structure than a simple welfare‑maximizing
model would allow; in particular, it needs to take account of moral principles
and commitment. Sen's proposals
for a more structured conception of practical reason, however, are the least
convincing part of his account.
The idea of a meta‑ranking of preference rankings is unintuitive,
to say the least; it should be possible to give a better account of the
relation between means‑end rationality (utility maximizing) and rational
subordination of action to principle (moral reasoning). Therefore let us now turn briefly to
important contributions by recent moral philosophers.
Various
moral philosophers have argued that practical rationality is more comprehensive
than narrow economic rationality.
Thus Thomas Nagel provides a series of arguments to the effect that
rationality requires altruism: recognition of the reality of the interests of
others and a direct willingness to act out of regard for those interests (Nagel
1971). This line of thought
directly addresses the egoism assumption of the standard conception. It does not, however, do quite enough
for us; for it does not give us a way of incorporating the idea of moral
principles (or other normative requirements) into the decision making
process. But other recent moral
philosophers have outlined the sort of structured decision making process
necessary in order to take account of the role of principle in decision making:
the decision maker can combine a set of side constraints on action (normative
commitments, in Sen's terms), as well as a set of goals (personal interest,
social goals, the welfare of others, etc.).
Thomas
Nagel's The Possibility of Altruism
provides one possible way of developing a more comprehensive theory of
practical reason. Nagel's work is
an extended essay on the logical character and requirements of practical
reason. In particular, Nagel
argues that once we have correctly analyzed the requirements of reason, we will
discover that simple egoism is irrational. "Just as there are rational requirements on thought,
there are rational requirements on action, and altruism is one of them"
(Nagel 1970:3). This argument thus
represents a direct challenge to the assumptions of standard conception of
rationality, and a defense of the view that practical rationality has a
substantially more complex structure than simple utility‑maximizing
models allow.
Nagel
begins with a conception of rationality which is substantially different from
the standard conception of rationality: being rational is acting for good
reasons. "We may explain what
a man does by referring to his reasons. . . . A consideration can operate as a motivating reason only if
it has, or is thought to have, the status of a reason in the system of
normative principles by which individuals govern their conduct. Such normative principles therefore
specify significant features of the motivational structure" (Nagel 1970:15). And Nagel believes that once we work
out the implications of this conception of "acting on the basis of
reasons", we will discover that certain consequences follow for the
actor. In particular, it follows
that the actor will act out of regard for the interests of others; he will act
altruistically. "The general
thesis to be defended concerning altruism is that one has a direct reason to
promote the interests of others‑‑a reason which does not depend on
intermediate factors such as one's own interests or one's antecedent sentiments
of sympathy and benevolence" (Nagel 1970:16).
It
should be noted that Nagel's concept of altruism is one which holds that the
rational agent will give practical weight to the interests of others as well as
to his own interests. "By
altruism I mean not abject self‑sacrifice, but merely a willingness to
act in consideration of the interests of other persons, without the need of
ulterior motives" (Nagel 1970:79).
For our purposes Nagel's arguments suggest one important conclusion: the
standard model of economic rationality cannot serve as a full theory of
practical reason. Instead, it is
necessary to conceive of the rational decision maker as being subject to a
variety of moral constraints which modulate behavior and which sometimes
restrict self‑seeking actions.
Thus
Nagel intends to establish that rationality requires altruism: recognition of
the reality of the interests of others and a direct willingness to act out of
regard for those interests (Nagel 1971).
This line of thought directly addresses the egoism assumption of the
standard conception. It does not,
however, do quite enough for us; for it does not give us a way of incorporating
the idea of moral principles (or other normative requirements) into the
decision making process.
Finally,
a number of philosophers have attempted to incorporate the idea of fairness
into the concept of rational decision making. A reason for my performing an act is that I benefit from
widespread performance of this sort of act, and I recognize that fairness
requires that I pay my share of the cost of these public benefits. John Rawls's A Theory of Justice represents an extended argument to the
effect that there are principles of justice which ought to regulate the just
society, and these principles derive from the principle of fairness. Rawls's construction is at some
distance from our primary concern, since he is concerned with global features
of justice, while we are concerned with individual rationality. But the kernel of Rawls's construction
is relevant here: if individual rationality involves evaluating alternative
lines of action in terms not only of the costs and benefits of each
alternative, but also in terms of the fairness of each alternative, then we
have arrived at a structured concept of rationality. And it is a concept which involves the imposition of side
constraints on the decision making process. A more structured decision making process is necessary in
order to take account of the role of principle in decision making: the decision
maker can combine a set of side constraints on action, as well as a set of
goals. And the decisions he
arrives at will be a complex function of constraints and goal‑maximizing
actions.
How
do these findings relate to our central concerns? First, they suggest that the narrow conception of economic
rationality is an inadequate conception of practical reason because it makes it
impossible to take account of certain features of the decision making process
which are intuitively crucial.
Further, these considerations suggest an alternative model of the
decision making process which promises to be a more adequate analysis of the
concept of human rationality.
Moreover, this richer conception of practical reason promises to offer a
new set of solutions to different classes of collective action problems: If individuals are altruistic to some
degree (that is, responsive to the interests of others), and if they are
principled (that is, moved by considerations of fairness, reciprocity, or
justice), then they will be practically motivated to act differently when
confronted with occasions for collective action than the collective action
theorem predicts.
These
findings have direct import for the applicability of rational-choice models in
social explanations. For example,
recall the discussion in chapter 2 of freeriding and public goods
problems. Once we consider a more
complex theory of practical deliberation, formal arguments predicting the
emergence of public goods problems in real social groups will be found to be
misleading. On a more complex, and
more empirically adequate, account of practical reason, altruism, cooperation,
and reciprocity are rational choices; therefore we would expect a social group
consisting of rational individuals to show marks of cooperation and altruism.
We
must be careful not to draw an overly strong conclusion, however; for no one
maintain that human beings are indifferent to private welfare. Indeed, generally speaking it would
seem reasonable to assume that each decision-maker places high priority on
personal and familial welfare; human beings generally do not behave like
impartial utilitarians. This
finding suggests that human behavior is the resultant of several different
forms of motive: self‑interest and altruism; and several different types
of decision making processes: maximizing and side-constraint testing. And to the degree that self‑interest
and maximizing behavior are prominent in a particular type of circumstance, to
that degree the collective action theorem will be empirically significant. In village society one presumably will
find a mix of these four possibilities; consequently it is invalid to directly
apply the collective action theorem.
Rather, it is necessary to offer empirical arguments and analysis to
show in what circumstances the premises of the collective action theorem are
most fully satisfied, and in which as a consequence we would most confidently
predict collective action problems.
But in chapter 2 we saw a variety of features of community life which
plausibly work to enhance both the impulse to altruism and the impulse towards
fairness and reciprocity; and these considerations in turn suggest that some
communities in some circumstances may manage to effectively overcome collective
action problems.
These
findings concerning the adequacy of the concept of economic rationality have
immediate consequences for Popkin's case against the moral economists. For Sen and Nagel give reasons for
holding that moral commitments and values are a constitutive part of human
rationality. In the context of
village society we must ask whether there are moral norms which might affect
individual action; and the answer to this question appears to be unavoidably
affirmative. Scott's arguments to
this effect are particularly strong (1976:13‑56); but almost any study of
traditional society would do just as well. And the arguments advanced by Sen and Nagel suggest a way of
incorporating adherence to moral standards (e.g., reciprocity, fairness, or
unwillingness to be a freerider) into the process of rational decision
making. Thus it is consistent to
hold that rational peasants may modulate their conduct out of regard for
various forms of traditional morality.
These arguments therefore cast doubt on Popkin's assumption that the
rational peasant is exclusively motivated by considerations of familial or
personal welfare, and they undermine Popkin's skepticism about the motivational
efficacy of moral principles and village assumptions about fairness. If villagers are altruistic in the
narrow sense of being affected by their perceptions of the needs and welfare of
others; and if villagers' decision making processes are importantly constrained
by simple moral constraints like fairness, reciprocity, and the like; then the
collective action theorem does not validly apply to village society because
village society does not satisfy its premises.
Two
important criticisms of the standard conception of economic rationality emerge
from this discussion. First, the
standard conception has historically been inclined towards an assumption of
egoistic self‑interest; and in fact prisoners' dilemma situations, game
theoretical reasoning, and the like depend upon this assumption. However, it is possible to introduce
the assumption that decision makers take the interests or welfare of others
into account (with or without a discount function) and preserve the main
outlines of narrow economic rationality.
More fundamentally, we found that telling objections have been put
forward the maximizing structure of narrow economic rationality; philosophers
and economists alike have argued that a full theory of rationality needs to
give a place for the operation of moral principle in the decision making
process.
What,
then, are the principles of inference that constitute rationality? The following are illustrative.
Principles
of deductive inference:
if
you believe a set of sentences Si, and P logically follows from Si, then accept
P as well (or else give up belief in some of Si).
Principles
of inductive inference:
Inductive
generalization: if you have observed n individuals and all have the property P, infer that all
have the property P.
[qualifications on sample size and sample technique.]
All hypotheses must be empirically
testable in some fashion.
Testing of hypotheses through deductive
consequences
Inference to the best explanation
Evaluate causal hypotheses using Mill's
methods.
Choose the simplest of a group of
empirically equivalent hypotheses
Occam's razor: don't postulate new
entities unless forced to by empirical findings.
Explanations
in social science often refer to the rational actions of individuals. Before considering the logic of such
explanations in detail, let us ask a preliminary question: What is the intended import of various
theories of rationality? Several
possibilities suggest themselves.
First, the theory of rationality may be a normative discipline which is
intended to establish universal rules of reasoning in support of belief and
action. (Call this the "pure
theory" of rationality.) On
the side of belief this discipline would include deductive and inductive logic,
probability theory, and (perhaps) applied philosophy of science.[2] These disciplines are normative in that
they attempt to establish criteria of sound inference; to be rational is to
reason in accordance with these criteria.
On the side of action the normative theory of rationality would include
an account of the rules of reasoning which "ought" to allow a
decision maker to consider his beliefs, goals, and (perhaps) values, and arrive
at the optimal action in the circumstances. Partial efforts in this direction include the disciplines of
decision theory and game theory; one might also include various theories of
applied ethics as potential candidates in this part of the theory of reason.[3] Overall, the goal on this approach is
to arrive at a decision procedure for action which generates the
"right" decisions on the basis of a given range of information about
goals and beliefs.
It
should be noted that on this account the theory of rationality is sufficiently
idealized that it bears little relation to actual human decision making. For symbolic logic, decision theory,
and game theory abstract from limits on computational power, information
access, memory, and the like.
These abstractions entail that ordinary human reasoners cannot fully
embody these models of rational calculation. For example, even two-person games for which game theory
shows that solutions exist are too complex for anyone but a mathematical
economist with ample computational resources to solve. This finding shows that human reasoners
do not solve strategic decision problems using two-person game theory.[4]
A
rather different conception of the import of a theory of rationality is one
according to which the goal is to provide an empirically grounded theory of
deliberative human action. (Call
this the "cognitive theory" of rationality.) On this account, the theory of
rationality is a branch of cognitive psychology. One might pose this question: How do human beings arrive at beliefs and make decisions
under optimal circumstances (i.e., ample time for decision making, low level of
emotional influences on the process of deliberation, and adequate informational
resources)? On this account we
would conceive of the theory of rationality much as Chomsky conceives of the
theory of grammar: as an idealized representation of psychologically real
processes and protocols.[5] On this approach it is an open question
whether there is one form of deliberative decision making or many. It is logically possible, for example,
that different cultures have developed different structures of reasoning which
are transmitted through education from one generation to the next.
If
after appropriate empirical research we were to conclude that there are
important features in common among all cultures in terms of deliberative
reasoning (as Chomsky argues there are features in common among all natural
languages), then the theory of rationality would have important application in
social science. One would be able to
construct explanations of various social patterns on the basis of analysis of
the decision-making procedures of individuals within the environments of choice
which their societies pose for them.
What
are the relations between these different sorts of theories? Consider first the relation
between the pure theory and the cognitive theory. One possible view is that the formal discipline is in fact a
highly idealized representation of what the empirical discipline would uncover
after full investigation. Formal
logic correctly identifies the rules of deductive inference, and human beings
(through favorable evolution, possibly) embody these rules in their ordinary
processes of reasoning. Likewise,
decision theory and game theory establish the correct principles of reasoning
in circumstances of uncertainty and competition, and human beings imperfectly
embody these rules. The political
economy approach to social science appears to presuppose something like this.[6]
The relation between the cognitive
theory and the means-end theory might go along these lines. The means-end theory presupposes that
agents embody some cognitive process of deliberation or other, but it tacitly
presupposes that this process is a relatively simple one. However, whatever the findings of the
empirical discipline of deliberative reasoning, the theory of rational action
will simply incorporate the resulting theory into its attempts to explain
behavior as the calculated effort to achieve goals on the basis of beliefs.
Finally,
what is the relation between the interpretive theory and other theories of
rationality? Its proponents view
the interpretive theory as the most comprehensive account of intelligible human
action among these alternatives, and an account within which other views of
rationality constitute special cases.
For much human action--in our culture and others'--may be understood as
calculated to maximize the attainment of one's ends, given one's beliefs. Therefore means-end explanations are
often the correct way of understanding the agent's behavior. But other forms of action do not
conform to this model; therefore interpretation theory requires that we
construct other models of action within the context of which to understand
these types of action.
Where
does the theory of economic rationality lie in this taxonomy? First, it falls within the formal
theory of rationality in its guise as formal decision theory. Economists and decision theorists are
interested in working out the logic of the simple assumption of maximization of
utility, and the complications which risk, uncertainty, and strategic
interactions introduce into this model.
Second, it plays a role in the empirical theory of deliberation in that
some have presented narrow economic rationality as a model of the cognitive
process of deliberation. The
argument here is that narrow economic rationality correctly describes a wide
range of human behavior, and the best explanation for this fact is that human
beings embody a process of calculation which approximates the formal theory of
economic rationality. That is,
human beings really act so as to maximize private interests. The theory of narrow economic
rationality also has a central role in the means-end theory of rational action;
it is the procedure which common sense recommends for understanding action in
terms of goals and beliefs.
The
main assumptions of the rational-choice paradigm are these: human beings are
deliberative; they are capable of forming true beliefs about their natural and
social environment; and they are concerned about individual and family
welfare. Many criticisms of this
model derive from the suspicion that rational-choice analysis makes
unreasonable assumptions about individual behavior as excessively calculating
and excessively materialistic.
We
might ask briefly how public choice theory fits into the taxonomy of theories
of rationality provided earlier.
The goal of public choice theory is to analyze the collective or
aggregate consequences for a social group as a whole of the rational choices
made by individuals within structured circumstances of choice. At present this field depends upon the
narrow conception of economic rationality; but what changes would be forced by
incorporating a fuller and more adequate conception of decision making? Much of the power of public choice
theory derives from the simplicity of the assumption of economic rationality;
it is quite possible that a substantially more complex theory of rationality
would make it impossible to derive formal results in the aggregate. Taking an extreme case, it would appear
unpromising to require a description of the full range of possible motives of
individual action and attempt to derive aggregate consequences. So some degree of abstraction is
required in the description of individual decision making. At the same time, whatever results are
derivable from the richer assumption would presumably be more directly
applicable to the behavior of existing social groups.
Problems of rationality and morality
economic
rationality
Standard conception: maximize rational self-interest.
Problems
of collective rationality:
public
goods problems
Hardin
Popkin
freerider
problems
prisoners'
dilemma
Taylor
Axelrod
Does the standard conception fit with actual individual
behavior?
Sen:
Rational Fool, Paretian Liberal
Simon:
substantive rationality
Taylor:
community
Practical reason
Morality
and altruism
Nagel
fairness
Rawls
cooperation
Regan
Is it possible to describe a conception of practical reason
which
incorporates
maximizing rationality and moral considerations?
Harsanyi
and Margolis: two preference structures.
Sen:
metaranking of preference structures.
The
goal would be to arrive at a conception of rationality which:
contains
economic prudence as a special case;
provides
a mechanism of deliberation within which moral constraints and reasons have
scope;
is
sufficiently precise to permit some degree of reasoning about rational decision
making.
Cases
to consider.
Hardin
Popkin
Axelrod
Taylor
I
am currently working on a project in the philosophy of social science which is
concerned with the use of assumptions about economic rationality to explain
patterns of village life in premodern agrarian societies. There are two important schools of thought
in this area. The first (the
"moral economy" school) holds that peasant societies are knit
together by powerful communal institutions, and that individual peasant
families organize their daily lives (e.g., labor contributions to collective
projects, decisions about cultivation, contributions to collective welfare
funds, etc.) through recognition of the requirements of communal life. On this approach a shared morality,
communal institutions, and universally recognized obligations of reciprocity
are the guiding features of village life.
The
other school (the "rational peasant" school) holds that peasants are
rational decision makers; they are chiefly concerned with family welfare over
the medium run; and as a result peasant societies show the mark of classical
collective action problems, prisoners' dilemmas, etc. In particular, this school holds that collective goods are
consistently underachieved because of individual noncontribution, and that
communal institutions are either undermined by noncompliance or exploited by
powerful individuals for their own benefit. Crucial
to this dispute is the status of the assumption of economic rationality. However, there is significant
controversy about this assumption along precisely those dimensions which are
most significant for the moral economy debate: the adequacy of the theory of
economic rationality in circumstances where cooperation and fairness are at
issue, where moral values arise, and where public goods are concerned. Philosophers, economists, and game
theorists have raised serious objections to the theory of economic rationality
on the ground that it cannot give a satisfactory account of behavior motivated
by moral principle, by altruism, or by fairness and reciprocity.
In
the following I'd like to introduce some of these issues for discussion. My goal here isn't to give you a
finished position; I've put this together in a few afternoons. Rather, I'd like to bring together the
main outlines of some of the thinking in this area in order to see if we can
make some progress on the issue in conversation.
The
standard conception of economic rationality is one according to which the agent
acts so as to maximize private interests, preference satisfaction, utility, or
welfare. Recall Rawls's premise in
the original position: Individuals
are privately rational and mutually disinterested. This is the standard assumption of game theory, economics,
and decision theory. In order to
make use of this conception in a particular decision problem, the analyst
identifies a measure of utility for the players, and then tries to work out an
optimal strategy for each player to achieve the highest score.
(a) First,
this conception of rationality is difficult to reconcile with the idea of moral
decision making. If rationality
essentially involves maximizing self-interest, then acting out of moral
concerns--moral rules, altruistic concern for others, or personal or political
commitments—would appear to be irrational. And in fact economists and public policy analysts tend to
subsume moral motivations under the category of "non-rational
influences" (e.g., Hardin (1982)).
Consider
a case. Suppose a prosperous
farmer Smith attends a repossession sale of the property of failed farmer
Jones, but refrains from bidding on an attractively priced tractor which he
needs and will have to purchase later at a higher price. His action fails to maximize his own
private welfare; so let's canvass possible motives which might have led to this
choice. First, the farmer may feel
personal loyalty or friendship for the bankrupt Jones, and chooses not to
benefit from Jones's misfortune. Next,
Smith may be acting according to a principle of solidarity: If members of the community refuse to
participate in farm sales, banks and creditors will have less incentive to
foreclose. Or Smith may be a
Kantian; he may reason that he could not will the universalization of his
action.
Finally,
Smith may be flatly irrational; e.g., he may have miscalculated, or he may be
under the influence of magical thinking, leading to the conviction that
involvement in Jones's misfortune now will lead to his own failure in the
future. The point of the example
is this: The standard conception
of economic rationality cannot embrace any of these motives as rational. But a priori, we need a conception of
practical rationality which can give appropriate place to moral motives, and
which can distinguish between irrational beliefs and miscalculations, on the
one hand, and legitimate moral reasons, on the other.
(b) Second,
this conception of economic rationality has difficulty dealing with collective
action and interactive behavior.
This model predicts that a group of rational persons will have a great
deal of difficulty coordinating individual action to achieve collective
benefits. Here two large
categories of problems have arisen: public goods problems and cooperation
problems. Mancur Olson showed that
groups composed of rational individuals would find it virtually impossible to
achieve collective action in pursuit of universally recognized collective
interests. And the classic
prisoners' dilemma shows that rational individuals are unable to achieve a
cooperative solution to a transparent situation of choice.
Olson's
collective(c)action result can be illustrated as follows. Imagine a group of rational individuals
who share a common interest in an unpolluted lake. Each individual assigns a value to his share of this public
good of $2000. The primary threat
to the lake is garbage disposal; each household can either bury its garbage for
free, or purchase a garbage sanitizer for $1000. Finally, the effect of each household's untreated garbage on
the cleanliness of the lake is small, and no household can be denied access to
the lake, whatever its garbage disposal system. Now consider the reasoning of a representative decision
maker when confronted with the opportunity of purchasing the garbage sanitizer. He reasons that either most households
will sanitize or they will not.
His decision will not determine which of these alternatives
materializes. His payoff for any
of the four possibilities is equal to the difference between his share of the
public good and his private cost in installing the sanitizer. His payoffs may be listed as follows:
OTHERS
sanitize don't
sanitize
sanitize 1000 (c)1000
SELF
don't
sanitize 2000 0
Whatever
others do, therefore, SELF is better off not sanitizing. This setting is symmetrical for all
players, however; so the conclusion is that no one sanitizes, the lake is
polluted, and no amount of the public good is purchased. The general result is this: Rational, mutually disinterested
persons will not act so as to secure collective goods.
(c) Finally,
however, this conception of rationality faces significant empirical
problems. Actual human behavior
seems widely different from what this theory of rationality would predict in a
wide variety of cases. In an
extremely wide range of examples human beings act individually and collectively
in ways which appear to violate the requirements of economic rationality. This finding could be taken to suggest
"either• that human beings are characteristically irrational (or only
partially rational); or it could suggest that this conception of rationality is
suspect.
A
few examples will illustrate this point.
First, Olson-like public goods arguments show that it is individually
irrational to make the private expenditure of going to the polls--even though
the individual's share of the collective good of a successful election exceeds
the private cost. This is because
the individual will receive the public benefit whether or not he has
contributed. Rational choice
theorists take the fact of 50% turnouts in presidential elections as evidence
for their view: half the electorate behaves as this theory of rationality
requires. The point may be
reversed with good effect, however: fully half does not behave
"rationally".
Other
public goods cases show much the same result--e.g., subscription drives for
public radio and television, or political fundraising efforts. These examples seem to show that
significant numbers of educated, intelligent American citizens act contrary to
the dictates of private rationality.
Finally,
consider strikes, rebellion, and revolution. Various authors (e.g., Allen Buchanan) have applied Olson's
analysis to collective behavior of classes. When considered as a problem of rational choice, the
decision to participate in a strike or rebellion appears to be yet another
example of a public goods problem.
There is a collective interest to be gained through successful
collective action; but no individual has a sufficient private interest in
contribution. So the strike or
rebellion should fail. However,
there are ample examples of successful collective class action—the
Solidarity movement in the shipyards of Gdansk, general strikes in England and
Germany early this century, and revolutions in China, Russia, and Cuba.
A.
K. Sen supports this general line of argument in "Rational Fools"
when he holds that no social organization could maintain itself only through
the working of private economic rationality. "Rational economic man is very close to a social
moron." Rather, economic
incentives must be accompanied by moral principle, political and personal
commitments, and altruistic motivations.
These examples have a common point: Social groups typically find it easier
to achieve cooperative action and collective goods than the model of economic
rationality would predict. At the
very least this would seem to show that the theory of economic rationality does
not provide a good basis for explaining cooperative behavior and collective
action; social science would be well(c)served with a conception of practical
rationality which gives appropriate scope to the sorts of factors which
"do• explain the occurrence of cooperative behavior and collective action.
(a) Some
recent work in applied game theory has accepted the concept of
economic
rationality, but has tried to show that more careful analysis of
certain
kinds of "games" shows that cooperation is the individually rational
strategy. Robert Axelrod provides an important
example of this approach in
"The
Evolution of Cooperation•. He
considers the problem of repeated
prisoners'
dilemmas (which models a large class of problems of collective
action)
and asks what the best strategy is from the point of view of each
individual's
longterm private interests. On any
given play of the
prisoners'
dilemma "defect" is the best private strategy. In repeated play
Axelrod
shows that "Tit for Tat" is the best strategy over repeated
encounters
of repeated prisoners' dilemmas with a variety of competing
strategies. (According to Tit for Tat, the player
opens with "cooperate"
and
then reciprocates his opponent's previous play. If the opponent defects
on
play N, then the player defects on play N+1.) This is a rather nice
result,
since it shows that cooperative behavior can emerge spontaneously
through
individually rational behavior in the right circumstances. Michael
Taylor
arrives at similar results through analysis of premodern social
groups
and the mechanisms through which such groups secure collective goods.
(b) A
second, and more general, approach, is one which attempts to modify
the
conception of rationality so as to introduce a mechanism for moral
deliberation. Is it possible to describe a conception
of practical reason
which
incorporates maximizing rationality and moral considerations? The
goal
would be to arrive at a conception of rationality which contains
economic
prudence as a special case; provides a mechanism of deliberation
within
which moral constraints and reasons have scope; and is sufficiently
precise
to permit some degree of reasoning about rational decision making.
(1) Some
philosophers and rational choice theorists have argued that the
postulate
of economic rationality may be modified with the addition of a
motive
supporting conditional fairness or reciprocity (Elster, Sen,
Harsanyi,
Margolis). The decision rule on
this approach might look
something
like this: Maximize private
interests unless the proposed action
involves
a public goods problems; in that case, estimate the likelihood of
enough
cooperative behavior to secure the collective good; if success is
likely,
cooperate; otherwise defect.
IF the action does not affect a public good
THEN
maximize private welfare.
OTHERWISE
estimate the likelihood of success of cooperative/
collective
action;
IF
success is sufficiently probable,
THEN
cooperate;
OTHERWISE
defect.
This rule does not embody strict moral principle or
altruism, but rather
conditional
reciprocity. It represents a
limited willingness to contribute
to
public goods, but only on the assumption that there is a realistic
prospect
that collective action will succeed.
The
welfare(c)maximizing rule was flawed by being predisposed against
cooperative
action. This rule is flawed in the
opposite direction, however.
It
doesn't correctly describe voters' behavior or collective action either,
since
it would predict virtually universal contribution to public goods.
The problem is that cooperative behavior preempts private
striving on this
rule
whenever cooperation is sufficiently likely in others. What the rule
appears
to need, therefore, is a weighting function which permits the
decision
maker to balance private costs and benefits against the gains of
cooperative
behavior and the prima facie presumption in favor of fairness or
reciprocity. Let's see if we can incorporate this
feature into the model.
IF the action does not affect a public good
THEN
maximize private welfare.
OTHERWISE
estimate the likelihood of success of cooperative/
collective
action;
IF
success is sufficiently probable,
THEN assign an index V to the
value of the collective good
and
cooperation in this case and compare with the cost
of
cooperation C.
IF
V > C
THEN
cooperate;
OTHERWISE
defect.
OTHERWISE
defect.
This rule begs an important question: how to compare private
costs and the
value
of cooperation and the collective good.
It is consequently a less
rigorously
applicable rule than the simpler welfare(c)maximizing rule. At the
same
time, it would appear to correspond more faithfully to the decision-making
procedure which real persons undergo when deliberating about collective
projects.
(2) Finally,
we might briefly consider efforts to construct a conception of
practical
reason which begins from a different premise altogether: not
welfare(c)maximizing,
but rather the concept of the person.
Here I'm
thinking,
obviously, of Nagel's "Possibility of Altruism•. For Nagel argues
that
the first requirement of practical reason is that we recognize the
reality
of other persons. To recognize
another person's reality is to
recognize
the reality of his or her interests.
And to recognize the reality
of an
interest is to recognize that I have a prima facie reason to try to
satisfy
that interest. Therefore I have a
prima facie reason to act
altruistically;
or in other words, practical reason embodies a rational
impulse
towards altruistic action. (It
might be noted that this account
would
appear to be entirely consistent with a welfare(c)maximizing decisionÜf______Ü
rule,
with the nonstandard assumption that the welfares to be considered
include
the interests of other persons.
Thus Nagel's position appears to
have a
utilitarian implication.)
Another
example of this sort of effort would be an attempt to embody
moral
rules directly within the decision rule.
(Nozick seems to have such a
view
in "Anarchy, State, and Utopia• when he speaks of "side(c)constraint
theories.") Such a theory would presumably have a
welfare(c)maximizing
component,
so that the theory would contain economic rationality as a
special
case (i.e., in circumstances where moral principles and requirements
of
fairness have no application). But
the rule would have an overriding set
of
moral constraints which limit choice of actions according to their
consistency
with a list of moral rules.
This
sort of rule might be modeled along these lines:
LIST
alternative actions in order of the (private/general) welfare they generate.
ELIMINATE
actions which violate specified moral rules.
CHOOSE
the highest ranking alternative which survives the filter.
This rule becomes either "morally constrained
egoism" or "morally
constrained
altruism" depending on how welfare is understood; either as
self-interest,
or as interests of all affected persons.
Let
us briefly take stock of these issues for the theoretical debate I
briefly
alluded to above. The debate is
often cast as one between
rationality
and community, as if the two were polar cases. Many of the
considerations
identified above, however, tend to cast doubt on that way of
characterizing
the dispute. First, the
Axelrod(c)Taylor efforts to show that
cooperation
and public goods can emerge even from strict economic
rationality
have direct relevance to the circumstances of the traditional
village. Axelrod's account, for example, shows
that cooperation can develop
if
relations between players are sufficiently stable to give each player
reason
to expect continuing interactions with the others, and sufficiently
familiar
to permit the players to reidentify each other and keep track of
other
players' history of cooperation.
The traditional village satisfies
both
these conditions; relations are face(c)to(c)face over an extended period of
time,
and villagers have notoriously long memories for failures to
cooperate. Likewise, Taylor identifies a number of
informal mechanisms
through
which village societies can change the payoffs to players in such a
way as
to elicit contributions to collective goods. Thus non(c)contributors
may be
shamed or ridiculed, making it rational to contribute. These
considerations
would suggest that the village "moral economy" is backed by
social
arrangements which make it rational for villagers to cooperate, even
on a
narrow conception of rationality.
Second,
to the extent that criticisms of narrow economic rationality
lead
us to a broader conception of practical reason(c)(c)one which incorporates
motives
favoring reciprocity, fairness, or altruism(c)(c)patterns of village
behavior
which appear to be communal or traditional may be recast as the
natural
consequence of rational individual behavior. When a villager makes
a
voluntary contribution of labor services to a public water control-
project,
for example, we now have an alternative to the traditionalist's
explanation
("the villager's action was blindly subordinated to traditional
norms"):
namely, the villager recognizes the public good to be gained by
collective
water control projects and judges that fairness requires that he
make a
contribution. On this account, the
villager's behavior is both
rational
and cooperative, and village society is both to some degree
communal
and based on rational individual decision(c)making constrained by
existing
village practices and institutions.
Axelrod,
Robert. "The Evolution of
Cooperation•. New York: Basic, 1984.
Barry,
Brian. "Sociologists,
Economists and Democracy•.
Chicago:
University
of Chicago Press, 1978.
Buchanan,
Allen. "Revolutionary
Motivation and Rationality."
"Philosophy
& Public Affairs• 9:1 (1979).
Elster,
Jon. "Ulysses and the
Sirens•. Cambridge: Cambridge
University
Press,
1979.
Hardin,
Russell. "Collective
Action•. Baltimore: The Johns
Hopkins
University
Press, 1982.
Harsanyi,
John C. "Essays on Ethics,
Social Behavior, and Scientific
Explanation•. Dordrecht: D. Reidel, 1976.
Margolis,
Howard. "Selfishness,
Rationality, & Altruism A Theory of
Social
Choice•. Chicago: University of
Chicago, 1982.
Nagel,
Thomas. "The Possibility of
Altruism•. Oxford: Oxford
University
Press,
1971.
Olson,
Mancur. "The Logic of
Collective Action: Public Goods and the
Theory
of Groups•. Cambridge: Harvard
University Press, 1965.
Popkin,
Samuel. "The Rational
Peasant•. Berkeley: University of
California,
1979.
Rapoport,
Anatol. "Two-Person Game
Theory•. Ann Arbor: University of
Michigan,
1966.
Rapoport,
Anatol and Chammah, A. M.
"Prisoners' Dilemma: A Study in
Conflict
and Cooperation•. Ann Arbor:
University of Michigan, 1965.
Rawls,
John. "A Theory of
Justice•. Cambridge: Harvard
University
Press,
1971.
Regan,
Donald. "Utilitarianism and
Co-operation•. Oxford: Oxford
University
Press, 1980.
Schelling,
Thomas. "Micromotives and
Macrobehavior•. New York: Norton,
1978.
Scott,
James. "The Moral Economy of
the Peasant•. New Haven: Yale
University
Press, 1976.
Scott,
James. "Weapons of the Weak•
"Everyday Forms of Peasant
Resistance•. New Haven: Yale University Press, 1986.
Sen,
Amartya. "Choice, Welfare and
Measurement•. Cambridge: MIT
Press,
1982.
Taylor,
Michael. "Anarchy and
Cooperation•. London: Wiley, 1976.
Taylor,
Michael. "Community, Anarchy
and Liberty•. Cambridge: Cambridge
University
Press, 1982.
A
central criticism of the narrow conception of economic rationality concerns the
implicit egoism that is generally associated with this framework. It should be emphasized that this
position does not deprecate the importance of rationality in explaining human
activity, or elevate emotion or impulse to a dominant position in our
understanding of action. Rather,
the critics we will consider argue that human beings are (imperfectly)
rational, but that rationality does not consist simply in maximizing one's private
interests.
I
begin with A. K. Sen's critique of narrow economic rationality. Sen criticizes the assumption of pure
self‑interest which is contained in the standard conception (Sen 1982:84‑90). “The purely economic man is indeed
close to being a social moron” (Sen 1982:99). Against the assumption of self‑interested maximizing
decision‑making, Sen argues for a proposal for a more structured concept
of practical reason: one which permits the decision maker to take account of
commitments. This concept covers a
variety of non‑welfare features of reasoning, but moral principle
(fairness and reciprocity) and altruistic concern for the welfare of others are
central among these. “Commitment
is, of course, closely connected with one's morals. But moral this question is in a very broad sense, covering a
variety of influences from religious to political” (Sen 1982:93). Sen believes that the role of
commitment is centrally important in the analysis of individuals' behavior with
regard to public goods. For
example, he suggests that the voters' paradox may be explained by assuming that
“voters are not trying to maximize expected utility, but . . . to record one's
true preference” (Sen 1982:97).
And he draws connections between the role of commitment and work motivation. “To run an organization entirely on
incentives to personal gain is pretty much a hopeless task” (Sen 1982:98). He argues, therefore, that in order to
understand different areas of rational behavior it is necessary to consider
both utility‑maximizing decision making and rational conduct influenced
by commitment; and it is an empirical question whether one factor or the other
is predominant in a particular range of behavior (Sen 1982:104). Sen suggests the outline of an
alternative decision-making rule.
On this account the agent is postulated to embody two sorts of
preference rankings: a ranking of first-order preferences and a meta‑ranking
of preference rankings in terms of the relation “ranking x is more moral than
ranking y” (Sen 1982:100‑101).
Sen's
arguments show that there are good analytic and empirical reasons for judging
that much actual human behavior is not explicable on the basis of a simple
utility‑maximizing scheme.
This finding might lead us to suppose that human beings are typically
not rational, or it might lead us to question the concept of rationality
associated with the standard conception.
Sen suggests the latter course, and proposes that we attempt to
construct a more structured concept of practical reason which permits us to
take account of moral, political, and personal commitments as well as concern
for welfare.
Various
moral philosophers have argued that practical rationality is more comprehensive
than narrow economic rationality.
Thus Thomas Nagel provides a series of arguments to the effect that
rationality requires altruism: recognition of the reality of the interests of
others and a direct willingness to act out of regard for those interests (Nagel
1971). Nagel's The Possibility of Altruism provides one possible way of developing a more
comprehensive theory of practical reason.
Nagel's work is an extended essay on the logical character and
requirements of practical reason.
In particular, Nagel argues that once we have correctly analyzed the
requirements of reason, we will discover that simple egoism is irrational. “Just as there are rational
requirements on thought, there are rational requirements on action, and
altruism is one of them” (Nagel 1970:3).
This argument thus represents a direct challenge to the assumptions of
standard conception of rationality, and a defense of the view that practical
rationality has a substantially more complex structure than simple utility‑maximizing
models allow.
Nagel
begins with a conception of rationality which is substantially different from
the standard conception of rationality: being rational is acting for good
reasons. “We may explain what a
man does by referring to his reasons. . . . A consideration can operate as a motivating reason only if
it has, or is thought to have, the status of a reason in the system of normative
principles by which individuals govern their conduct. Such normative principles therefore specify significant
features of the motivational structure” (Nagel 1970:15). And Nagel believes that once we work
out the implications of this conception of “acting on the basis of reasons”, we
will discover that certain consequences follow for the actor. In particular, it follows that the
actor will act out of regard for the interests of others; he will act altruistically. “The general thesis to be defended
concerning altruism is that one has a direct reason to promote the interests of
others—a reason which does not depend on intermediate factors such as
one's own interests or one's antecedent sentiments of sympathy and benevolence”
(Nagel 1970:16).
It
should be noted that Nagel's concept of altruism is one which holds that the
rational agent will give practical weight to the interests of others as well as
to his own interests. “By altruism
I mean not abject self‑sacrifice, but merely a willingness to act in
consideration of the interests of other persons, without the need of ulterior
motives” (Nagel 1970:79). For our
purposes Nagel's arguments suggest one important conclusion: the standard model
of economic rationality cannot serve as a full theory of practical reason. Instead, it is necessary to conceive of
the rational decision maker as being subject to a variety of moral constraints
which modulate behavior and which sometimes restrict self‑seeking
actions.
Thus
Nagel intends to establish that rationality requires altruism: recognition of
the reality of the interests of others and a direct willingness to act out of
regard for those interests (Nagel 1971).
This line of thought directly addresses the egoism assumption of the
standard conception. It does not,
however, do quite enough for us; for it does not give us a way of incorporating
the idea of moral principles (or other normative requirements) into the
decision making process.
Finally,
a number of philosophers have attempted to incorporate the idea of fairness
into the concept of rational decision making. A reason for my performing an act is that I benefit from
widespread performance of this sort of act, and I recognize that fairness
requires that I pay my share of the cost of these public benefits. John Rawls's A Theory of Justice represents an extended argument to the
effect that there are principles of justice which ought to regulate the just
society, and these principles derive from the principle of fairness. Rawls's construction is at some distance
from our primary concern, since he is concerned with global features of
justice, while we are concerned with individual rationality. But the kernel of Rawls's construction
is relevant here: if individual rationality involves evaluating alternative lines
of action in terms not only of the costs and benefits of each alternative, but
also in terms of the fairness of each alternative, then we have arrived at a
structured concept of rationality.
And it is a concept which involves the imposition of side constraints on
the decision making process. A
more structured decision making process is necessary in order to take account
of the role of principle in decision making: the decision maker can combine a
set of side constraints on action, as well as a set of goals. And the decisions he arrives at will be
a complex function of constraints and goal‑maximizing actions.
How
do these findings relate to our central concerns? First, they suggest that the narrow conception of economic
rationality is an inadequate conception of practical reason because it makes it
impossible to take account of certain features of the decision making process
which are intuitively crucial.
Further, these considerations suggest an alternative model of the
decision making process which promises to be a more adequate analysis of the
concept of human rationality.
Moreover, this richer conception of practical reason promises to offer a
new set of solutions to different classes of collective action problems: If individuals are altruistic to some
degree (that is, responsive to the interests of others), and if they are
principled (that is, moved by considerations of fairness, reciprocity, or
justice), then they will be practically motivated to act differently when
confronted with occasions for collective action than the collective action
theorem predicts.
These
findings have direct import for the applicability of rational-choice models in
social explanations. For example,
recall the discussion in chapter 2 of freeriding and public goods problems. Once we consider a more complex theory
of practical deliberation, formal arguments predicting the emergence of public
goods problems in real social groups will be found to be misleading. On a more complex, and more empirically
adequate, account of practical reason, altruism, cooperation, and reciprocity
are rational choices; therefore we would expect a social group consisting of
rational individuals to show marks of cooperation and altruism.
We
must be careful not to draw an overly strong conclusion, however; for no one
maintain that human beings are indifferent to private welfare. Indeed, generally speaking it would
seem reasonable to assume that each decision-maker places high priority on
personal and familial welfare; human beings generally do not behave like
impartial utilitarians. This
finding suggests that human behavior is the resultant of several different
forms of motive: self‑interest and altruism; and several different types
of decision making processes: maximizing and side-constraint testing. And to the degree that self‑interest
and maximizing behavior are prominent in a particular type of circumstance, to
that degree the collective action theorem will be empirically significant. In village society one presumably will
find a mix of these four possibilities; consequently it is invalid to directly
apply the collective action theorem.
Rather, it is necessary to offer empirical arguments and analysis to
show in what circumstances the premises of the collective action theorem are
most fully satisfied, and in which as a consequence we would most confidently
predict collective action problems.
But in chapter 2 we saw a variety of features of community life which
plausibly work to enhance both the impulse to altruism and the impulse towards
fairness and reciprocity; and these considerations in turn suggest that some
communities in some circumstances may manage to effectively overcome collective
action problems.
These
findings concerning the adequacy of the concept of economic rationality have
immediate consequences for Popkin's case against the moral economists. For Sen and Nagel give reasons for
holding that moral commitments and values are a constitutive part of human
rationality. In the context of
village society we must ask whether there are moral norms which might affect
individual action; and the answer to this question appears to be unavoidably
affirmative. Scott's arguments to
this effect are particularly strong (1976:13‑56); but almost any study of
traditional society would do just as well. And the arguments advanced by Sen and Nagel suggest a way of
incorporating adherence to moral standards (e.g., reciprocity, fairness, or
unwillingness to be a freerider) into the process of rational decision
making. Thus it is consistent to
hold that rational peasants may modulate their conduct out of regard for
various forms of traditional morality.
These arguments therefore cast doubt on Popkin's assumption that the
rational peasant is exclusively motivated by considerations of familial or
personal welfare, and they undermine Popkin's skepticism about the motivational
efficacy of moral principles and village assumptions about fairness. If villagers are altruistic in the
narrow sense of being affected by their perceptions of the needs and welfare of
others; and if villagers' decision making processes are importantly constrained
by simple moral constraints like fairness, reciprocity, and the like; then the
collective action theorem does not validly apply to village society because
village society does not satisfy its premises.
Two
important criticisms of the standard conception of economic rationality emerge
from this discussion. First, the
standard conception has historically been inclined towards an assumption of
egoistic self‑interest; and in fact prisoners' dilemma situations, game
theoretical reasoning, and the like depend upon this assumption. However, it is possible to introduce
the assumption that decision makers take the interests or welfare of others
into account (with or without a discount function) and preserve the main
outlines of narrow economic rationality.
More fundamentally, we found that telling objections have been put
forward the maximizing structure of narrow economic rationality; philosophers
and economists alike have argued that a full theory of rationality needs to
give a place for the operation of moral principle in the decision making
process.
Let
us now take stock from this excursion into recent moral philosophy. What consequences, if any, follow from
these considerations for the concept of rationality? We saw in our discussion of Sen's work that there are good
analytical and empirical reasons for judging that much actual human behavior is
not explicable on the basis of a simple utility‑maximizing scheme. This finding might lead us to suppose
that human beings are typically not rational; or it might lead us to question
the concept of rationality associated with SER. Sen suggests the latter course, and proposes that we attempt
to construct a more structured concept of practical reason which permits us to
take account of moral, political, and personal commitments as well as concern
for welfare. Moreover, Sen shows
that the former cannot be subsumed under the simple concepts of welfare‑maximizing
or preference rank‑ordering.
Next,
we saw in Nagel's work a series of arguments to the effect that rationality
requires altruism: recognition of the reality of the interests of others and a
direct willingness to act out of regard for those interests. This line of thought directly addresses
the egoism assumption of SER. It
does not, however, do quite enough for us; for it does not give us a way of
incorporating the idea of moral principles (or other normative requirements)
into the decision making process.
Finally,
we saw that other recent moral philosophers have outlined the sort of
structured decision making process necessary in order to take account of the
role of principle in decision-making: the decision maker can combine a set of
side constraints on action (normative commitments, in Sen's terms), as well as
a set of goals (personal interest, social goals, the welfare of others,
etc.). And the decisions he
arrives at will be a complex function of constraints and goal‑maximizing
actions.
How
do these findings relate to our central concerns? First, they offer both a set of criticisms of SER (SER is an
inadequate conception of practical reason because it makes it impossible to
take account of certain features of the decision making process which are
intuitively crucial), and an alternative model of the decision making process
which promises to be a more adequate analysis of the concept of human
rationality. Moreover, this richer
conception of practical reason promises to offer a new set of solutions to
different classes of collective action problems: if individuals are altruistic
to some degree (that is, responsive to the interests of others), and if they
are principled (that is, moved by considerations of fairness, reciprocity, or
justice), then they will be practically motivated to act differently when
confronted with occasions for collective action than the CAT predicts. A second,
and more general, approach, is one which attempts to modify the conception of
rationality so as to introduce a mechanism for moral deliberation. Is it possible to describe a conception
of practical reason which incorporates maximizing rationality and moral
considerations? The goal would be
to arrive at a conception of rationality which contains economic prudence as a
special case; provides a mechanism of deliberation within which moral
constraints and reasons have scope;
and is sufficiently precise to permit some degree of reasoning about
rational decision making.
This
conclusion allows us to infer that agents do in fact discount future
utilities. Why should we expect
there to be a positive interest rate?
Perhaps this circumstance merely reflects people's (irrational)
propensity to discount future utilities.
Upon inspection, however, it is apparent that interest rates do not
merely reflect intertemporal preferences on the part of agents; they also
reflect processes of real growth.
By investing a quantity of resources productively today it is possible
to create a larger sum of resources tomorrow. And this growth rate is a feature of current technology--not
a function of preferences. Even if
there were no credit market (and therefore no positive interest rate), it would
still be true that it is possible to transform a quantity of resources today
into a larger quantity tomorrow.
If tomorrow's utility is not discounted, then there is no upper bound on
the proportion of present income the rational agent should put aside into
productive ventures. Given that
utility is an increasing function of resources, the utility I get from $100
worth of consumption today is less than that I would get from $110; there are
production possibilities that will permit me to turn today's $100 into
resources worth $110; if, by assumption, I do not discount future utilities, then
the utility maximizer should always choose to make the productive investment.
Suppose
that the real growth rate is g: a sum of resources m invested
productively today will result in a value of (1+g)*m resources in the next
period. What is the relation
between the three rates i (interest), r (utility discount), and g (real growth
rate)? In a competitive market the
interest rate will be less than the growth rate, reflecting the entrepreneurial
gains available to producers. (If
i = g, then no entrepreneurial investment would occur.) Imagine that there are two classes of
agents: entrepreneurs and savers/consumers. Given that g is positive, there will be demand for savings (as
entrepreneurs seek out resources for productive investment). This will induce a positive interest
rate less than g. If r is zero (that is,
if savers do not discount future utilities), then any positive interest rate
will elicit savings--driving i to zero as well.
If 0<r then there will be an equilibrium rate of interest such that r
< i < g.
We
found above that actuarial discounting is not exponential. Interest compounding and discounting,
by contrast, are exponential.
And for plausible values of the parameters the two curves cross. What implications does this finding
have for savings behavior? It
implies that saving will cease for those periods in which the effective utility
discount is greater than the interest rate.
Consider
first a problem having to do with the structure of preferences over time: how
should the agent take account of future benefits in deliberating about actions
today? Many of our choices involve
a distribution of benefits to ourselves over the present and future. The act of saving is a choice in which
the agent defers consumption today for the sake of future consumption;
implicitly, then, the agent is making a comparison between the utility of
today's consumption versus the utility today of the future utility produced by
the savings. Suppose that the act
of saving today leads to a net loss of one unit of utility, while tomorrow's
enjoyment of the savings produces a positive benefit of 1.1 units. Is there a rational base for deciding
what to do in such a case? Elster
raises two problems about time preferences: first, whether it is rational at
all for an agent's choices to embody pure time preference (that is, to give
extra weight to present utilities over future utilities), and second, whether
there are consistency conditions that can be imposed on time preference.
It
appears, however, that this account understates the role of uncertainty. Constructing a lifeplan involves
adopting complex strategies in which various circumstances must occur
simultaneously if the plan is to come to fruition. And the more remote in time the moment of enjoyment, the more
likely it is that one or another of these unforeseen obstacles will
arise--giving me a new reason for discounting the future.
The
problem of inconsistent time preferences arises in the context of planning the
expenditure of utility-producing resources over time, using a formula that
leads the agent to change plans repeatedly from one time period to the
next. Suppose the agent has a sum
of money M to distribute over n time periods, and that the utility function is the same
in each period. An agent with no
time preferences would arrive at the following distribution: m1=M/n,
m2=M/n, ... mn=M/n.
The agent with exponential time preferences and discount rate r will select this
distribution:
Consider
a simple numerical example.
Imagine that the agent is deliberating about how to use $1000 over a
period of five years which can either be consumed or saved for future
consumption with accumulated interest at 10%. (Utility is based on the Cobb-Douglas function described
below reflecting the diminishing marginal utility of income.)
period 1 2 3 4 5
future value:
income $1000 $1100 1210 1331 1464
utility 3.16 3.31 3.48 3.64 3.83
Present discounted value:
1000 1000 1000 1000 1000
3.16 2.87 2.74 2.61 2.49
The present value
of each sum is $1000, since each sum is discounted by the rate of interest and
the number of periods that will elapse.
What is the present utility of $1464 five years hence, however? If we say that it is the utility of a
present consumption of $1000, then we have discounted future utilities, but
have done so at a slower rate than we discount income. If we discount at the interest rate,
then the present utility of the future income is 2.49--lower than the present
utility of $1000.
A
number of social scientists and philosophers deny that the concept of
individual rationality can be used to explain behavior in a wide range of
societies and cultures. Instead,
it is held that the concept of individual rationality is specific to modern
western cultures; rationality is parochial and culturally relative. What is involved in this position? There are several versions:
* Modes
of behavior and motivational structures are highly culture-relative and
variable. The model of means-end
rationality is merely one culturally specific mode of behavior, characteristic
of western cultures.
* People
aren't in general rational, deliberative, or calculating. The model of means-end rationality is
culturally specific to modern western culture.
* People
are deliberative and are in a general way sensitive to means-end
considerations. But there are wide
variations in the ways in which means-end deliberation is embodied in different
cultures and historical periods.
So the thin theory does not help us understand people's behavior. It does describe their behavior; but
their choices are highly sensitive to the culturally specific implementation.
We
may refer to the first view as the radical relativist view; while the second is
the substantivist-relativist view.
On the latter approach, the dispute is not properly over the role of the
assumption of rationality and deliberativeness, but rather the thickness of the
description of rationality and social institutions in the context of
explanation. The account of
rational deliberation may be more or less detailed--taking into account only
utilities or preference rankings, taking into account normative constraints,
and taking into account culturally specific worldviews and beliefs. And the account of the environment of
choice may be more or less concrete.
The
substantivist's argument against the economists and the rational choice model
may now be construed in this way: the thin theory of rationality is too thin to
properly describe rational deliberation in most social circumstances. (This appears to be James Scott's view
in The Moral Economy of the Peasant.) And the thin theory of the environment
of choice--a structure of costs and benefits of various actions--is overly
abstract; it is necessary to provide a more detailed description of the
political, social, and economic structures and institutions within which
individuals deliberate.
Institutions impose a set of opportunities, powers, and constraints on
actors in the context of which they deliberate.
What
explanatory models must be given up if we accept the radical relativist
view? First, most obviously, all
forms of economic analysis--classical, neoclassical, Marxist, or general
equilibrium theory--depend on the assumption of individual rationality. If we conclude that Chinese peasants
are not rational calculators sensitive to cost and benefit of alternative
decisions, then we must foreswear explanations based on predicted
equilibria--equalization of wage rates, correlations among price phenomena in
linked markets, etc.
Second,
theories of organization and bureaucracy depend on the assumption that the
behavior of individuals within organizations can be shaped through incentives
and disincentives--again, an assumption that cannot be sustained unless we
postulate that individuals make calculating decisions based on cost and
benefit.
Third,
explanations of political behavior based on material interests, individual
self-interest, or class interests depend on the assumption that individuals
choose actions in an effort to further their interests--once again, the
postulate of individual rationality.
Without this postulate, great swaths of analysis of peasant politics,
both Marxist and non-Marxist, fall by the wayside. Thus both public choice theory and Marxist political theory
depends on the assumption of individual rationality.
The
discipline of human geography likewise depends on the assumption that
individuals make deliberative choices about their place of residence; G.
William Skinner's analysis of market hierarchies collapses if we reject the
assumption of individual rationality.
Giving
up the assumption of individual rationality thus comes perilously close to
giving up on the use of theoretical models in social science altogether, since
the vast majority of such models presuppose indidivual rationality. This is an extremely high cost; for
what sort of social analysis can be performed without the assumption of
individual rationality? There are
at least two possible alternatives.
First, we may do as Geertz seems to recommend: construct our
interpretations of social settings as if they were sui generis.
We might start from scratch and attempt to discover the basis of
motivation and behavior anew in every distinct culture (or even sub-culture).
And
second, we might aspire to a different sort of generalization about human
agency--e.g. a general theory of social psychology, a generalization about the
ubiquity of symbolic behavior, or a Freudian theory of unconscious motivation. This approach, however, is at least as
vulnerable to the charge of ethnocentrism as the rational-choice approach; so I
will consider it no further.
In
what context does the debate over rationality arise? First and foremost it arises in cases where the social
scientist or historian is faced with the problem of explaining a pattern of
individual or group action in a particular social setting. Here the basic question is this: What assumptions is it legitimate to
make about the motives and deliberations of individuals in order to explain
their behavior? A second context
involves the effort to explain the characteristics of a set of social
arrangements--e.g. the placement of villages in the Chinese countryside, the cell
structure of a revolutionary organization, or the slowness of a bureaucracy to
adapt itself to new problems. Here
the question is: What features of
individual activity, within a specific social and natural environment, lead
them to shape their institutions and arrangements in the particular ways that
are to be observed?
Are
there important social-science research tasks for which assumptions of
individual rationality are not appropriate or demanded? Certainly there are; much of the
terrain covered by interpretation theory, cultural anthropology, and
ethnography involves the non-rational significance of individual and social
activity.
But
note that there are many anthropologists who do attempt to explain cultural arrangements
as the result of economic circumstance--e.g. Pasternak or the book I am now
reviewing.
The
claim made for rational-choice theory:
* If
we postulate the thin theory of rationality and work out (at an acceptable
level of description) (i) the beliefs and goals of participants and (ii) the
social and natural environment of choice, then it will be possible to (a)
explain patterns of individual behavior in this context, and (b) provide
aggregative explanations of collective behavior in this context.
II. Qualifications: norms and values, class
interests, more or less materialist description of goals, critique of economic
rationality.
III. Arguments against the rational choice
approach.
IV. Replies.
The
notion of rationality involves several distinct ideas--what we may call belief rationality and practical rationality. The first concerns the standards by which a person comes to
accept beliefs about the world, while the second has to do with the way a
person decides what action to perform.
The claim of cultural relativism of rationality has been applied to
both; but in this paper I am concerned with practical rationality, not belief
rationality. On this account, the
investigator should take beliefs as fixed and explain behavior as a prudent
effort to achieve goals given beliefs.
It is possible, for example, that a given culture may attribute causal
powers to local gods; in which case it is prudent to appease the gods through
appropriate ritual performances.
This topic raises several questions. First, is the concept of individual
rationality applicable across cultures, or is it specific to modern western
European-based cultures? And
second, is it possible or legitimate to attempt to explain social phenomena in non-western cultures
on the basis of rational choice theory?
1. Economic rationality based on egoistic
self-interest and thin description of institutions.
2. Individual rationality as prudence,
based on a broader conception of interests; thin institutions.
3. Individual rationality with broad
interests and thick interests.
4. Deliberative goal-directed agency
within a system of norms, values, and worldviews.
5. Culturally unique agency.
Too abstract a description of
agency
Too little attention to norms and values
Ethnocentric notion of rationality.
The
problem of individual rationality in area studies is a difficult one. On the one hand, some RC advocates
offer an overly narrow conception of rationality: egoistic, economic, and
sparse. On the other hand the
critics go too far in rejecting the concept of individual rationality.
1. Interests and beliefs cannot be
specified in a culture-independent way.
2. The model of calculating rationality is
itself culturally specific. There
are radical differences in agency across culture. Tradition-driven behavior is a subvariant of this position.
3. The RC model does not permit a proper
treatment of norms and values in agency.
4. RC models depend on overly schematic
specifications of agency and structure.
a. These models implicitly project
anachronistic institutional arrangements onto non-western societies--e.g.
exchange relations or market institutions.
Explanations
in social science often refer to the rational actions of individuals. Before considering the logic of such
explanations in detail, let us ask a preliminary question: What is the intended import of various
theories of rationality? Several
possibilities suggest themselves.
First, the theory of rationality may be a normative discipline which is
intended to establish universal rules of reasoning in support of belief and
action. (Call this the "pure
theory" of rationality.) On
the side of belief this discipline would include deductive and inductive logic,
probability theory, and (perhaps) applied philosophy of science.[7] These disciplines are normative in that
they attempt to establish criteria of sound inference; to be rational is to
reason in accordance with these criteria.
On the side of action the normative theory of rationality would include
an account of the rules of reasoning which "ought" to allow a
decision maker to consider his beliefs, goals, and (perhaps) values, and arrive
at the optimal action in the circumstances. Partial efforts in this direction include the disciplines of
decision theory and game theory; one might also include various theories of
applied ethics as potential candidates in this part of the theory of reason.[8] Overall, the goal on this approach is
to arrive at a decision procedure for action which generates the
"right" decisions on the basis of a given range of information about
goals and beliefs.
It
should be noted that on this account the theory of rationality is sufficiently
idealized that it bears little relation to actual human decision making. For symbolic logic, decision theory,
and game theory abstract from limits on computational power, information
access, memory, and the like.
These abstractions entail that ordinary human reasoners cannot fully
embody these models of rational calculation. For example, even two-person games for which game theory
shows that solutions exist are too complex for anyone but a mathematical
economist with ample computational resources to solve. This finding shows that human reasoners
do not solve strategic decision problems using two-person game theory.[9]
A
rather different conception of the import of a theory of rationality is one
according to which the goal is to provide an empirically grounded theory of
deliberative human action. (Call
this the "cognitive theory" of rationality.) On this account, the theory of rationality
is a branch of cognitive psychology.
One might pose this question:
How do human beings arrive at beliefs and make decisions under optimal
circumstances (i.e., ample time for decision making, low level of emotional
influences on the process of deliberation, and adequate informational
resources)? On this account we
would conceive of the theory of rationality much as Chomsky conceives of the
theory of grammar: as an idealized representation of psychologically real
processes and protocols.[10] On this approach it is an open question
whether there is one form of deliberative decision making or many. It is logically possible, for example,
that different cultures have developed different structures of reasoning which
are transmitted through education from one generation to the next.
If
after appropriate empirical research we were to conclude that there are
important features in common among all cultures in terms of deliberative
reasoning (as Chomsky argues there are features in common among all natural
languages), then the theory of rationality would have important application in
social science. One would be able
to construct explanations of various social patterns on the basis of analysis
of the decision-making procedures of individuals within the environments of
choice which their societies pose for them.
What
are the relations between these different sorts of theories? Consider first the relation
between the pure theory and the cognitive theory. One possible view is that the formal discipline is in fact a
highly idealized representation of what the empirical discipline would uncover
after full investigation. Formal
logic correctly identifies the rules of deductive inference, and human beings
(through favorable evolution, possibly) embody these rules in their ordinary
processes of reasoning. Likewise,
decision theory and game theory establish the correct principles of reasoning
in circumstances of uncertainty and competition, and human beings imperfectly
embody these rules. The political
economy approach to social science appears to presuppose something like this.[11]
The relation between the cognitive
theory and the means-end theory might go along these lines. The means-end theory presupposes that
agents embody some cognitive process of deliberation or other, but it tacitly
presupposes that this process is a relatively simple one. However, whatever the findings of the
empirical discipline of deliberative reasoning, the theory of rational action
will simply incorporate the resulting theory into its attempts to explain
behavior as the calculated effort to achieve goals on the basis of beliefs.
Finally,
what is the relation between the interpretive theory and other theories of
rationality? Its proponents view
the interpretive theory as the most comprehensive account of intelligible human
action among these alternatives, and an account within which other views of
rationality constitute special cases.
For much human action--in our culture and others'--may be understood as
calculated to maximize the attainment of one's ends, given one's beliefs. Therefore means-end explanations are
often the correct way of understanding the agent's behavior. But other forms of action do not
conform to this model; therefore interpretation theory requires that we construct
other models of action within the context of which to understand these types of
action.
Where
does the theory of economic rationality lie in this taxonomy? First, it falls within the formal
theory of rationality in its guise as formal decision theory. Economists and decision theorists are
interested in working out the logic of the simple assumption of maximization of
utility, and the complications which risk, uncertainty, and strategic
interactions introduce into this model.
Second, it plays a role in the empirical theory of deliberation in that
some have presented narrow economic rationality as a model of the cognitive
process of deliberation. The
argument here is that narrow economic rationality correctly describes a wide
range of human behavior, and the best explanation for this fact is that human
beings embody a process of calculation which approximates the formal theory of
economic rationality. That is,
human beings really act so as to maximize private interests. The theory of narrow economic
rationality also has a central role in the means-end theory of rational action;
it is the procedure which common sense recommends for understanding action in
terms of goals and beliefs.
The
main assumptions of the rational-choice paradigm are these: human beings are
deliberative; they are capable of forming true beliefs about their natural and
social environment; and they are concerned about individual and family
welfare. Many criticisms of this
model derive from the suspicion that rational-choice analysis makes
unreasonable assumptions about individual behavior as excessively calculating
and excessively materialistic.
We
might ask briefly how public choice theory fits into the taxonomy of theories
of rationality provided earlier.
The goal of public choice theory is to analyze the collective or
aggregate consequences for a social group as a whole of the rational choices
made by individuals within structured circumstances of choice. At present this field depends upon the
narrow conception of economic rationality; but what changes would be forced by
incorporating a fuller and more adequate conception of decision making? Much of the power of public choice
theory derives from the simplicity of the assumption of economic rationality;
it is quite possible that a substantially more complex theory of rationality
would make it impossible to derive formal results in the aggregate. Taking an extreme case, it would appear
unpromising to require a description of the full range of possible motives of
individual action and attempt to derive aggregate consequences. So some degree of abstraction is
required in the description of individual decision making. At the same time, whatever results are
derivable from the richer assumption would presumably be more directly applicable
to the behavior of existing social groups.
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cking (19??) provides a useful survey of the main
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[3] Central contributions include
Jeffrey (1965), Luce and Raiffa (1958), Schelling (1963), and Rapoport (1966).
[4] Elster (1979) provides
discussion of some of the relations between real human reasoners and formal
decision theory and game theory.
[5] Chomsky's account may be found
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[6] One might argue that this
correlation is unlikely. On the
side of inductive reasoning, for example, much recent empirical research shows
that actual inductive reasoners commit systemic fallacies in inferring from a
set of facts to a generalization.
Likewise, the processes of strategic deliberation recommended by
two-person game theory are sufficiently mathematical and complex to make it
unlikely that the human cognitive system embodies these procedures in any
approximate fashion.
cking (19??) provides a useful survey of the main
elements of this part of the theory of rationality.
[8] Central contributions include
Jeffrey (1965), Luce and Raiffa (1958), Schelling (1963), and Rapoport (1966).
[9] Elster (1979) provides
discussion of some of the relations between real human reasoners and formal
decision theory and game theory.
[10] Chomsky's account may be found
in Aspects of the Theory of Syntax (1965).
This sort of approach gives rise to an idealized theory in that it
abstracts from computational errors, memory limitations, etc., which are found
in practical decision making or speech, but it is empirically grounded in that
it is intended to represent the actual processes through which the cognitive
task is performed. Rawls takes
something like this approach in his analysis of our moral competence (1971).
[11] One might argue that this
correlation is unlikely. On the
side of inductive reasoning, for example, much recent empirical research shows
that actual inductive reasoners commit systemic fallacies in inferring from a
set of facts to a generalization.
Likewise, the processes of strategic deliberation recommended by
two-person game theory are sufficiently mathematical and complex to make it
unlikely that the human cognitive system embodies these procedures in any
approximate fashion.