Economic Self-Interest

So the Nobel Prize in economics was recently awarded to Thaler, who showed that economic actors (i.e., “people”) don’t always act rationally, or in their best interests. While I have not read his award-winning work, that isn’t even important, because there are two underlying assumptions that don’t hold up, and that must be true for the hypothesis to be true: first, that rational and irrational behavior are different things, and second that “best interests” can be definitively measured.

Without going further, everyone should by now be identifying the scientific woo in the assertion. As I’ve written about before, rationality and irrationality are two sides of the same coin–that which we value, we value for emotional reasons, yet it is only rational to care (emotion-based) about our values. That’s rather circuitous, so let me explain with an example. Let’s say that I love chocolate milk, and that I’d be willing to pay $5 for a bottle of Hershey’s Chocolate Syrup if only one remained at the store and I was competing with someone else for it. It is only rational that I put my desires first, and therefore only rational that I seek out and attempt to acquire the chocolate syrup. But why should I care about having chocolate syrup, and why should I care whether I am happy (with my desires fulfilled) or unhappy (with my desires unfulfilled)? Why should I care whether I am happy and acquired the chocolate syrup, or unhappy without the chocolate syrup?

We have a strong tendency to separate the two things, but they cannot be separated. There is no rational reason that I would care whether I am happy or sad–only emotional ones. Yet it is only rational that, if my emotional state matters to me, then I would attempt to keep my emotional state positive. If I care, then it is only rational that I do things that satisfy that concern, but there is no rational reason that I should care except that I care, and that, since I care, it only makes sense for me to do things to satisfy that concern. See? It’s all circular. Rationality and irrationality are woven together, inseparable; no one ever “acts rationally” and no one ever “acts irrationally.” They perpetually act both rationally and irrationally.

Suppose I run into a burning building to rescue a cat. Many people would say that I had behaved irrationally. Yet others would say that, because I care deeply about cats (no, really, I do, and I would rush into a burning building to save one), it is only rational that I would do everything in my power to save them. Yet there is no rational reason that I should care about cats–I care about them for emotional reasons, hence the use of the word “care.” Yet is it not irrational for an untrained person to rush into a burning building for any reason? Is it not irrationality–emotion–my love for cats–that inspired my behavior, even though it’s got an overwhelming likelihood of being against my best interests (survival)? And, if so, why should my survival be considered a rational goal?

On the surface, it would certainly appear that it is only rational for a person to want to keep themselves alive, but is it? No. Such a want–a desire–is motivated entirely by emotional concerns: a fear of death, a love of life, whatever. There is no rational reason to want to continue living, but look what we are doing–we are calling it irrational to rush into a burning building because it could lead to death. We are assuming that it is rational to want to continue living, but that assumption is flawed; there are only emotional reasons. So we are not using “rationality” in its accurate, true sense when we ascribe it as a value to certain actions; we are labeling a broad range of actions with “self-preservation” as the ideal goal–a goal that we put as the ideal only for emotional reasons.

For what rational reason does an individual, group, or species conclude that their survival and procreation are valuable? There isn’t one, and that’s the assumption upon which his idea is built–that there is. There is absolutely no rational reason that I should care whether I live or die, whether humanity lives or dies, or whether the entire freaking planet lives or dies. Why? Positive and negative statements are value statements, and they are made according to unknown, subjective, individual-specific criteria and weighed for emotional reasons, not rational ones.

Before anyone can say that actors occasionally act rationally or irrationally, they must define what these words mean. Apparently, “rationally” in this context means “in their best interests.” According to whom? And by what criteria? Plenty of people would say that habitual drug users are acting against their best interest by continuing to do methamphetamine, but are they? Who is to say that the short-term high of meth isn’t a sufficient reward for them to outweigh the longterm damage? Who is to say what is in their best interests and what is not? Who in the world has the omniscience to make such a statement, and then to present it as science? This guy won a Nobel Prize for “demonstrating” that Person A occasionally acts against Person A’s best interests.


What in the bloody hell are we considering to be in Person A’s best interests? Economic stability? Amassing untold wealth? Getting lots of pussy? And then why are we considering those things to be in their best interests? And even if we could somehow come to a universally agreed upon criteria of what is and isn’t in someone’s best interests, this doesn’t even begin to answer the question of whether they’re acting in their long-term best interests, but against their short-term best interests (as I do each time I buy cryptocurrency). How in the world can we ever attempt to say scientifically that Person A has acted against their short-term best interests and against their long-term interests, according to this gargantuan list of factors and concerns that we have by fiat determined to be “best”?

And this guy won a Nobel Prize for this.

In actuality, what Thaler has proven is that “By the criteria of what I consider to be ‘best,’ people occasionally do things that will not yield the results of what I consider ‘best.'” It doesn’t matter if his criteria is economic stability, productivity, long-term survival, or anything else–why in the world should his values, or even the majority’s values, dictate that another person has behaved irrationally? No, Thaler. You have demonstrated that people occasionally do things that you feel are not in those people’s best interests. That’s all you’ve demonstrated, and that, as science, is meaningless and useless.

If you define their “best interests” in the way that you prefer, then it’s no surprise that you’ll find people occasionally act against the “best interests” that you’ve defined, because not everyone is trying to achieve whatever goals you have outlined; not everyone cares about those same things. It’s not in my economic and financial best interests to take time out of my workday to write this article, but I care about whether science is actually, you know, scientific. Is it rational that I care about that? Well… It’s no more rational than your estimation of what is and isn’t in other people’s best interests.

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