Rational Choice's Bias Toward Money

How has rational choice theory come to dominate both our understanding of the world and our view of good judgment, and why is that a problem? What are the benefits of remembering to zoom in and out to get a better picture of problems and solutions? Why do we prefer reducing things to numbers even if that abstracts useful levels of data?

Barry Schwartz is a professor Emeritus at Swarthmore College and the prolific author of many books. His latest titles include Choose Wisely: Rationality, Ethics, and the Art of Decision-Making and Wisdom: How to Discover Your Path in Work and Life.

Greg and Barry discuss the limitations of rational choice theory, the importance of practical wisdom, and the role of judgment in making decisions. They also touch on the broader implications of rational choice theory across various fields, the history of economic and social science paradigms, and the necessity of incorporating ethical considerations into people’s decision-making. 

*unSILOed Podcast is produced by University FM.*

Episode Quotes:

The way we think about the world changes the world

10:47: The argument in the book [Choose Wisely] was, the way we think about the world changes the world. And it is true that the way we think about the world changes the world, but it changes the world materially. It does not just change the world because of the ideas we have running around in our heads; it changes the material world. Yeah. The factory did not exist, and then it did. And as a result, what it meant to work changed. That was not in our heads. That was, you know, a structure that was out in the world that made demands on the people who walked in the door every day. So it was not idealism. The argument was that ideas change not just how people think, but what kinds of things people are able to do. And I think the same thing is true with rational choice theory, though it is a bit more abstract. You know, you cannot do a rational choice analysis without being able to quantify.

Why we can’t game the way to design incentives

14:16: People somehow think that there is a bulletproof way to design incentives, so that they will not distort why they gave us the incentives they are designed to encourage. And, the bad news is there is no such thing, and there is no system that cannot be gamed.

How economics changes the way we think

07:22: There is a general, more general problem in social science, which is that, unlike planets, people are affected by claims that are made about what they are like. And so, the more we read social science, and the more economics, the king of the social sciences, dominates the news, the more inclined we are to think like and act like economists. So, does this tell us that the economists have discovered something? No. I mean, maybe. But it is just as likely that what economists have done is create something. They have created a way of approaching decisions and value assessment and so on that is consistent with their framework and changed people as a result.

What we miss when we measure everything

42:15: Rational choice theory is not neutral about what stays in the frame and what goes outside it. Things that go outside the frame are the ones that are most difficult to quantify using the same scale that you are using for everything else. And so, in the case of the price of a pound of beef, you could add the amount of money that our taxes contribute to subsidies. You could factor in the costs of the fertilizers that enable the corn to grow enough so that the cows can get fattened up. How do you quantify exactly the cost to human health? You can do it. How many more dollars do we pay per year because of antibiotic-resistant bacteria? But does that capture the cost in health? No. It only captures the dollar cost in health.

Show Links:

Recommended Resources:

• Rational Choice Model
• Daniel Kahneman
• Reinforcement Learning
• B. F. Skinner
• Reflexivity (Social Theory)
• Karl Popper
• George Soros
• Goodhart's law
• The Omnivore's Dilemma
• Annie Duke
• Phronesis
• Telos
• Swarthmore College
• Adnan Khashoggi

Guest Profile:

• Wikipedia Page
• Faculty Profile at Swarthmore College
• Profile at The Decision Lab
• Social Profile on X

Guest Work:

• Amazon Author Page
• Choose Wisely: Rationality, Ethics, and the Art of Decision-Making
• Why We Work (TED Books)
• Wisdom: How to Discover Your Path in Work and Life
• Brilliant: The Art and Science of Making Better Decisions
• The Paradox of Choice: Why More Is Less, Revised Edition
• Practical Wisdom: The Right Way to Do the Right Thing
• Are We Happy Yet? Happiness in an Age of Abundance (Cato Unbound)
• The Paradox of Choice: Why More Is Less
• The Costs of Living
• The Battle for Human Nature: Science, Morality and Modern Life

Related unSILOed episodes:

• Barry Schwartz - Why We Work: Breaking Down the Psychological and Economic Factors of a Great Workplace
• Donald MacKenzie - Trading at Light Speed: The Impact of Ultra-Fast Algorithms on Financial Markets

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