rational choice vampires

The philosopher Laurie Paul has a book called “Transformative Experiences.” It grapples with a very important philosophical problem: there are experiences that transform who you are and it is difficult to reconcile the person before and after the experience. For example, before you have children, you vow that children are too annoying. After you have children, you can’t imagine life without them. In an interview with Russ Roberts, Paul uses a great example from fiction – vampires. Few humans would say, “sure, I’d like to drink blood for a living.” But after they experience the life of vampires, they’re all for it. Being human seems so puny in comparison to an eternal life. I won’t get into whether I completely buy Paul’s analysis, whether there are indeed events that literally change you in a basic way that makes intertemporal comparisons of utility impossible. Instead, I’ll use Paul’s basic point to pivot to a discussion of rational choice theory.

Here’s the issue: Rational choice theory assumes that there is an actor (individual or collective) that has a very stable utility function over time. This is an important assumption because, without it, the theory is not informative. For example, if I eat chocolate today and vanilla tomorrow, it doesn’t help to say, “some days you like chocolate and some days you like vanilla.” Paul’s analysis points out that this does not seem to be accurate in some very important cases (e.g., your preferences before and after children). So you have some theoretical choices (ahem) to make. You can either just throw up your hands and say “well, this shows rational choice theory is garbage.” I don’t think that this is a defensible position, as it is nearly impossible to have a discussion of human action without some language that describes options, choice, and incentives. It’s also highly counter-intuitive as most people do seem to make choices everyday.

I think a more defensible position is this: Rational choice is about about stable actors and their incentives in relatively well defined situations, but it is not true that human beings represent a single “actor” over their entire lives. In other words, rational choice may be a decent way to describe, say, whether a presidential candidate will spend campaign money in a particular state (i.e., stable actor, clear choices and costs). But it’s a horrible way to understand how actions taken as a child represent the same actor that makes choices in old age. You are literally biologically and culturally different at age 70 and age 7, though your old and new selves will clearly have a lot of similarity, more than with other people.

Of course, Paul is not the first social theorist to run into this problem. Becker himself had to soften up on classical rational choice theory in his work on drug addiction. According to him and Kevin Murphy, the issue is that drugs to actually change people and thus it makes no sense to assume that preferences are stable. Thus, preferences are endogenous to choice (e.g., taking drugs changes your utility function). It was still rational choice, but it made a very big concession. In Paul’s language, drug addiction is a very negative transformative event.

Paul’s and the Becker/Murphy example point to a different model of human action – over your life, you can be “transformed.” Aging, child bearing, changing professions, etc. Thus, to talk about action long term, you need an “overlapping actors”* model. Short term, RCT is not a bad way to talk about daily choices, but long term people transition between states. RCT will be silent about the transition and about cross-transition comparison, but will be useful within each life.

Bottom line: Yes, we live in a world of incentives and those matter, but long term, you get issues where classical rational choice just doesn’t say a lot.

*Not original – see here.

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Written by fabiorojas

November 30, 2020 at 7:23 pm

Posted in uncategorized

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