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I can’t be the first person on Ricochet to have noticed that philosophers and economists don’t always get along. The tension between the two bears some resemblance to the tension between conservatives and liberals. As the old trope goes, conservatives believe that liberalism is wrong, while liberals believe that conservatism is evil. Similarly, when economists and philosophers disagree, the economists believe it’s because the philosophers aren’t making sense, while the philosophers believe it’s because the economists are morally bankrupt.
Do you have a theory about this? I do. Here goes:
Perhaps the main reason philosophers hate economists is because philosophers and economists both use the same word to mean very different things. To be fair, philosophers used the word first (philosophers existed way before economists). But you’d think philosophers would have no problem understanding that some words are simply semantically overloaded, and this word is one of them.
If you haven’t guessed what the word is by now, it is “rational” (along with its sister word “rationality”). My understanding of philosophy is somewhat on the shaky side, but it seems to me that philosophers generally consider a rational actor to be one who is both self-aware and capable of discursive reasoning.
To an economist, being a rational actor requires neither self-awareness nor discursive reasoning. Rather, being rational in the economic sense simply means responding fairly predictably to incentives. By this logic, even trees could count as rational actors, as Milton Friedman hypothesized:
Let us turn now to another example, this time a constructed one designed to be an analogue of many hypotheses in the social sciences. Consider the density of leaves around a tree. I suggest the hypothesis that the leaves are positioned as if each leaf deliberately sought to maximize the amount of sunlight it receives, given the position of its neighbors, as if it knew the physical laws determining the amount of sunlight that would be received in various positions and could move rapidly or instantaneously from any one position to any other desired and unoccupied position.
Now some of the more obvious implications of this hypothesis are clearly consistent with experience: for example, leaves are in general denser on the south than on the north side of trees but, as the hypothesis implies, less so or not at all on the northern slope of a hill or when the south side of the trees is shaded in some other way. Is the hypothesis rendered unacceptable or invalid because, so far as we know, leaves do not “deliberate” or consciously “seek,” have not been to school and learned the relevant laws of science or the mathematics required to calculate the “optimum” position, and cannot move from position to position?
Clearly, none of these contradictions of the hypothesis is vitally relevant; the phenomena involved are not within the “class of phenomena the hypothesis is designed to explain”; the hypothesis does not assert that leaves do these things but only that their density is the same as if they did.
Despite the apparent falsity of the “assumptions” of the hypothesis, it has great plausibility because of the conformity of its implications with observation. We are inclined to “explain” its validity on the ground that sunlight contributes to the growth of leaves and that hence leaves will grow denser or more putative leaves survive where there is more sun, so the result achieved by purely passive adaptation to external circumstances is the same as the result that would be achieved by deliberate accommodation to them.
Most likely, a philosopher’s gut reaction is that calling a tree a rational actor debases the very concept of rationality.
Hopefully, his second reaction is that different disciplines may use the same word in different ways without debasing each others’ concepts, but I doubt many philosophers get that far. Not because philosophers are unusually obtuse, but because our own conception of rationality is so bound up in our self-identity that we instinctively want to defend “our” definition of the word in order to defend who we are:
Being human means being a motivated reasoner, even when you’re a philosopher.
Philosophers might find some consolation in the fact that good economists do indeed know how weak the economic notion of rationality is. As Ronald Coase (an economist so insightful that he won a Nobel prize for work that included no calculations beyond simple arithmetic) put it,
The rational utility maximizer of economic theory bears no resemblance to the man on the Clapham bus [the British equivalent of the man on the street] or, indeed, to any man (or woman) on any bus. There is no reason to suppose that most human beings are engaged in maximizing anything unless it be unhappiness, and even this with incomplete success…
[W]hatever makes men choose as they do, we must be content with the knowledge that for groups of human beings, in almost all circumstances, a higher (relative) price for anything will lead to a reduction in the amount demanded. This does not only refer to a money price but to price in its widest sense.
Whether men are rational or not in deciding to walk across a dangerous thoroughfare to reach a certain restaurant, we can be sure that fewer will do so the more dangerous it becomes. And we need not doubt that the availability of a less dangerous alternative, say, a pedestrian bridge, will normally reduce the number of those crossing the thoroughfare, nor that, as what is gained by crossing becomes more attractive, the number of people crossing will increase.
It’s unfortunate, in retrospect, that “rationality” should be the economic shorthand for “responding fairly predictably to prices in their widest sense”. If economists had simply used a different word, I think they’d get a lot less hate from philosophers. Moreover, us ordinary folk would have one less overloaded term to deal with. It’s difficult to carry on a conversation when people use the same cluster of letters to refer to such wildly different concepts, especially when both concepts are intimately tied to human identity.Published in