Monday, August 22, 2016

Being rational

Man is a rational being. Also most economists think man is and they build their theories on it, which often fail. For basically man is not rational. Or rather most of the time he or she isn’t. Usually man lets guide him or herself by feelings and emotions, also in economic decisions and not only in matters of love and relations. That’s what the Israeli psychologist Daniel Kahneman found during many years of research, together with Amos Tversky and others. In 2002 he got the Nobel Prize in Economics for it. Actually, it would have been reasonable that all economic theories had been revised in that light, but it didn’t happen. As we know since Thomas Kuhn published his The Structure of Scientific Revolutions: Mainstream theories that have been refuted in scientific discussions don’t disappear simply because of these discussions. Often they still remain mainstream for a long time, but they disappear because the advocates of these theories become older and have to give their places to a younger generation with new ideas. Mainstream theories are not toppled but die out.
A standard example of man’s irrationality is the research finding by Lawrence Williams and John A. Bargh that holding a warm cup of coffee makes you have more positive attitudes towards a stranger than holding a cup of ice coffee, for what has the temperature of your coffee to do with your likes and dislikes? But this instance doesn’t involve a kind of economic or quasi-economic calculation. So let me take this case, which I have used before in another context (just like the cup-of-coffee-case): A driverless, runaway trolley on a railway is heading for a tunnel, in which it would kill five people. You are standing on a footbridge above the track. You are slim and short but a fat man is just crossing the bridge. If you jump on the track, you will be run over by the trolley, which will kill you and the five people as well. If you push the fat man on the track, he will be killed but the trolley will stop and the five will be saved. A simple economic calculation tells you that this is the best you can do, for the net gain will be four lives saved. But even if you make this calculation, I’m sure that you’ll not push the fat man from the footbridge, for your intuition and your feelings, will tell you that this action is impermissible. And nobody will reproach you that you didn’t. But what if the fat man stumbles over a stone and will fall on the rails so that he will be killed by the trolley and the five other men will be saved, unless you stop him? I’m sure that also then you’ll not make an economic calculation and that you’ll not think: “I can’t help that he stumbled over a stone. I didn’t push him, but if I allow him to fall on the rails, the net gain will be four lives saved, so let him fall.” No, that will not be what you think, but you’ll follow your feelings and grab the fat man by his collar and stop him falling, in spite of the loss of five other lives. If you think, you’ll think “I have to save the fat man.” Nobody will reproach you that you saved the fat man and “so” let five other men die.
Generally we think that we are rational beings. That we are conscious, reasoning selves that have beliefs, make choices, and decide what to think about and what to do. However, psychologists have discovered that this is not how man is made up. Most of what we do is not rationally and consciously considered but we just do. We simply follow our intuitions and feelings, although it can happen that we actively and explicitly think about what we must do or decide, for example if what we are going to do is not routine, if it is complicated, if it requires attention or if we have the time for it. Psychologists say it this way: Our thinking is determined by two systems, a fast system and a slow system; or as the Keith Stanovich and Richard West called them, System 1 and System 2. As Kahneman explains in his book about the subject, System 1 operates automatically and quickly, with little or no effort and no sense of voluntary control. It’s here that we find our emotions, feelings and intuitions. System 2 allocates attention to effortful mental activities that demand it, including complex computations. Here we find our subjective experience of agency, choice and concentration, so Kahneman. And it’s this System 2 that stands for the rational man, as understood by most economists, although it’s actually System 1 that makes most of our economic decisions. Maybe it’s better so that our thinking is organised that way, for if it weren’t, we would often lack the time to act. Too much time would be spent on thinking how to act. We wouldn’t have survived prehistory, for every smilodon or other carnivore that had passed our way would have had time enough to devour us, before we had decided to flee or to fight. It spares us also the impossible decision whether to save the fat man from falling on the railway or the five other men from being killed.
Source: Daniel Kahneman, Thinking, Fast and Slow. Penguin Books, London, 2012.

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