Humans Cannot Behave Rationally

[Lazariun]

So I have gotten myself into the middle of a debate with a Psych graduate student from my university about the nature of the bailout. After finally getting past a good deal of arrogant "oh, you little ungrad, just go study some more and then you'll have the right to talk", we've finally come to some real discussion. I'm having some trouble thinking about how I should attack her position though:

"I do believe people act rationally. That is, to promote their own life and well-being on a long-term scale."

This is the first point I'd like to hear more about in your argument. It seems to be at the foundation of your assertions. What scientific evidence that this is true do you have? I think if you look any the body of evidence out there you'll find that actually, it's overwhelmingly not the case. What we're discussing here is called, experimentally, delay of reward. You're asserting, if I understand you, that it is easy for people to delay reward. This is not true. It is oddly difficult for folks to do this. This has been shown repeatedly for both humans and for non-human animals. It is very difficult to put off a small reward today for a big reward in the future. Even in the realm of aversives this is true. Humans will choose a BIG shock right now over a smaller shock to be delivered in the future. Seems dumb, but there it is.

I do believe that humans /can/ behave rationally some small part of the time. But the evidence shows us that very little of our day-to-day behavior is thought out. Instead we use heuristics, short-cuts and respond primarily via physiology and biology.

Applied to every day: Just look at the folks around you. What would they be doing if they were behaving completely rationally? Would they ever smoke? Would they ever get a hangover? Would they ever bounce a check or buy an item when it wasn't on sale? Would they even live in this town?

A system founded on the premises that humans can behave rationally all or even most of the time is fatally flawed.

Something about this doesn't sit right with me. I've seen the statistics she's talking about, regarding delay of reward, but it doesn't seem like a valid conclusion to immediately jump to "because people often don't delay reward, they are therefore not rational". It seems almost a fallacious line of reasoning. Anyone?

Now, as for the rest of it, I find it interesting that it was she who took a conversation regarding economics and turned it suddenly into a conversation about whether or not human beings are rational or not. I think she's showing her true feelings about man: He is incapable of making smart decisions, therefore he is incapable of ruling himself. We must obviously interfere in the lives of others when it is for the benefit of the greater good.

I am sure many people used the same line of reasoning to justify Monarchy.

Also, since I brought up Hong Kong as an example of a mostly laissez-faire economy that has lasted long term, she brought up this:

Oh, and about Hong Kong: how do you feel about the mega gap between rich and poor that many experts feel may soon cause a populist governmental shift in Hong Kong?

I'm very tempted to say that I don't really consider the gap all that terrible a thing. Am I mistaken?

[softwareNerd]

Anyone who saves, even a dime, instead of spending, is delaying a reward. Anyone who thinks "I'll stop now, otherwise I'll get a hangover" is also going against one of the examples cited. Also, there were many bankers who did not dive into the sub-prime mess, while knowing that their annual profits would be worse (but fearing that they would have to pay in the long run).

So, those are your counter-examples. Now, to reconcile the two

Edited October 1, 2008 by softwareNerd

[KevinDW78]

It seems like her argument is based on "If it's not easy, then it's not valid." What does it matter if delayed reward is difficult or hard, and likewise, what does it matter if socialism is easy as pie? That doesn't make either right, wrong, valid, or invalid. It's a lot easer for me to fire a gun and blow someone's head off rather than become their friend. Does that mean making friends is pointless because it takes too long and I should just go around shooting people?

Edited October 1, 2008 by KevinDW78

[KendallJ]

What is she using the ratinoality argument to argue against? I'm not sure I udnerstand.

The "gap" between rich and poor is a straw man. It's a curve. And everyone gets richer on it. Egalitarians don't like the idea that some get a lot more richer, but everyone's std of living improves.

[Lazariun]

What is she using the ratinoality argument to argue against? I'm not sure I udnerstand.

The "gap" between rich and poor is a straw man. It's a curve. And everyone gets richer on it. Egalitarians don't like the idea that some get a lot more richer, but everyone's std of living improves.

From what I gather, she is attempting to show that humans can act rationally but very rarely do.

Excellent point on the wealth curve you mentioned.

You've all given me some great points for thought gentlemen, and I appreciate it. If anyone else has further commentary please feel free.

[KendallJ]

From what I gather, she is attempting to show that humans can act rationally but very rarely do.

But the system doesn't depend on nor is predicated upon acting ratinoally. It rewards those who do, and punishes those who don't, naturally.

I think it's reflected in this parody fo the Bush Bailout speech.

http://www.dianahsieh.com/blog/2008/09/bus...n-bailout.shtml

[Lazariun]

Again guys, I really appreciate the help. Here is my response to her:

Credit to those whose words I've borrowed here to make my point.

I am asserting that people act rationally to promote their own lives and self-interest most of the time, yes.

My only evidence for this is empirical. It is every day. When a person decides to save a quarter rather than spend it, or on a larger scale, save or invest their raise rather than blow it, they are acting rationally. When a person says, "I've had too many drinks, I should slow down", they are acting rationally. It even comes down to the simple and the obvious. When a person decides to look both ways before crossing the street, instead of walking out blindly, or reading while doing it, they are acting in a rational manner that promotes their own survival and well-being.

Yes, it is true that people do not always think about their best long-term benefit and weigh risk versus reward. Sometimes this can be a very difficult thing to do, anyway, because no one can predict the future.

My evidence for the case that this is a fact is that people thrive. We are not dropping like flies, insurance companies make fortunes off the statistical likelihood that people will survive/be unharmed. The population is increasing, standard of life is increasing, we do not live in a Dark Age and human progress continues at an exponential curve. If we did not act rationally for the most part, would any of this be the case?

Your argument seems to be partially: It isn't easy to be rational, so therefore it is invalid that people act rationally.

My question to you is, what does it matter if acting in a long term rational manner is difficult? So what if controlling people under a fascist or socialist system is easy? Does it make it right? I don't think it does.

Our conversation began with economics, but by your own line of questioning has moved to the debate over whether people act rationally. I think this is interesting, because I think it shows the unspoken premise that you operate on. Correct me if I appear to be putting words in your mouth here, but I think you have related this argument to economics because you personally think people are incapable of handling their own affairs. Whether this be on an individual scale or just on a global scale I'm not sure. Do you believe it is justified to interfere in the individual rights of a person for the "greater good" of many, as it concerns economics? If so, then we've come to the deeper root of our differences. I think people probably justified monarchy this way. "We must be our brother's keeper" and all.

Now in response to this question: "How do you feel about the mega gap between rich and poor that many experts feel may soon cause a populist governmental shift in Hong Kong?"

I think the gap between rich and poor is often used as a straw man. What supposed egalitarians tend to overlook is that overall wealth and standard of living increases for people living in these societies. They just don't like the fact that some people are a lot richer. For some reason it becomes a question of "equality", but without much thought as to why, or by what standard it should follow. It often ends up with these same people arguing that individuals who have honestly and legally earned their fortune should for some reason give it to those who didn't earn it. By what right though?

The great thing about rationality is that reality is it's judge and executor. Those who do act rationally succeed and those who don't, fail. And that is the purest justice there is.

[jmr]

A few examples of irrationality hardly trumps all the rational actions people make every day. Anyone who goes to school, gets a job, invests, or hell, even looks before crossing the street is acting rationally for future rewards. It's so common and embedded in our mindset that we don't even think about it.

EDIT: you beat me to it

Edited October 1, 2008 by jmr

[eriatarka]

Typically for a psychologist, she ignores the effect that things like sociology, culture and education have on decision making, and ends up with the conclusion that because people act in a certain way today they _have_ to act that way, which is fallacious. Given a more rational culture which didnt promote poor impulse control (through advertising etc) and an education system which was actually geared towards developing critical thinking and intelligence, people would almost certainly make different decisions from those they make today.

Secondly, her claim that people cant delay reward is misleading - large parts of middle class life are based around giving up present happyness for a perpetually delayed reward that often never arrives (and this parallels certain nihlistic interpretations of Western religion - sacrifice life on earth for eternal happyness afterwards). The number of people who are prepared to waste their youth working themselves to death in horrid office jobs just so they can 'save for retirement' for example. If anything, I'd say that people today are losing the ability to live in the present and enjoy things for the pleasures they bring in themselves through their pure immediacy, although its slightly complex because this interacts with the poor impulse control which is fostered by a culture based around advertising. But regardless, the deeper point is that theres no reason to believe the same attitudes would exist if the culture were to be radically changed.

Edited October 1, 2008 by eriatarka

[UptonStellington]

Ditto what everyone has said, for the most part.

If I understand this, were you having a conversation about economics and rational choice, which lead you to this current debacle?

She sounds like the typical psych student at my school (which pains me to say, I wish they weren't like this) -- always citing some statistic and context dropping. Regarding Hong Kong, who are these "experts" she's referring to? Until you can both agree that the people she's quoting are "experts," she is only appealing to authority.

Another thing -- if acting rationally means acting in accordance with reality, hasn't our tendency to do so been amply demonstrated by the incredible growth in real wealth (since I'd argue that wealth demonstrates our ability to cope with reality) over the decades and centuries, not to mention the explosion of real wealth that occurred once people were left free to act in their own interests?