POST-RATIONAL ECONOMIC MAN
Global 21st-century society depends on an 18th-century worldview. It's an Enlightenment-era model that says the essence of humanity — and our best guide in life — is cool, conscious reason. Though many have noted, here on Edge and elsewhere, that this is a poor account of the mind, the rationalist picture still sustains institutions that, in turn, shape our daily lives.
It is because we are rational that governments guarantee our human rights: To " use one's understanding without guidance" (Kant's definition of enlightenment), one needs freedom to inquire, think and speak. Rationality is the reason for elections (because governments not chosen by thoughtful, evidence-weighing citizens would be irrational). Criminal justice systems assume that impartial justice is possible, which means they assume judges and juries can reason their way through a case. Our medical system assumes that drugs work for biochemical reasons, applicable to all human bodies — and not the price on the pill bottle makes a difference in its effectiveness.
And free markets presume that all players are avatars of Rational Economic Man: He who consciously and consistently perceives his own interests, relates those to possible actions, reasons his way through the options, and then acts according to his calculations. When Adam Smith famously wrote that butchers, brewers and bakers worked efficiently out of "regard for their own interest," he was doing more than asserting that self-interest could be good. He was also asserting that self-interest — a long-lasting, fact-based, explicit sense of "what's good for me" — is possible.
The rationalist model also suffuses modern culture. Rationalist politics requires tolerance for diversity — we can't reason together if we agree on everything. Rationalist economics teaches the same lesson. If everyone agrees on the proper price for all stocks on the market, then there's no reason for those brokers to go to work. This tolerance for diversity makes it impossible to unite society under a single creed or tradition, and that has the effect of elevating the authority of the scientific method. Data, collected and interpreted according to rigorous standards, elucidating material causes and effects, has become our lingua franca. Our modern notions of the unity of humanity are not premised on God or tribe, but on research results. We say "we all share the same genes," or " we are all working with the same evolved human nature" or appeal in some other way to scientific findings.
This rationalist framework is so deeply embedded in modern life that its enemies speak in its language, even when they violate its tenets. Those who loathe the theory of evolution felt obligated to come up with "creation science."
Businesses proclaim their devotion to the free market even as they ask governments to interfere with its workings. Then too, tyrants who take the trouble to rig elections only prove that elections are now a universal standard.
So that's where the world stands today, with banks, governments, medical systems, nation-states resting, explicitly or implicitly, on this notion that human beings are rational deciders.
And of course this model looks to be quite wrong. That's fact is not what changes everything, but it's a step in that direction.
What's killing Rational Economic Man is an accumulation of scientific evidence suggesting people have (a) strong built-in biases that make it almost impossible to separate information's logical essentials from the manner and setting in which the information is presented; and (b) a penchant for changing their beliefs and preferences according to their surroundings, social setting, mood or simply some random fact they happened to have noticed. The notion that "I" can " know" consistently what my " preferences" are — this is in trouble. (I won't elaborate the case against the rationalist model as recently made by, among others, Gary Marcus, Dan Ariely, Cass Sunstein, because it has been well covered in the recent Edge colloquium on behavioral economics.)
What changes is everything is not this ongoing intellectual event, but the next one.
In the next 10 or 15 years, after the burial of Rational Economic Man, neuroscientists and people from the behavioral disciplines will converge on a better model of human decision-making. I think it will picture people as inconsistent, unconscious, biased, malleable corks on a sea of fast-changing influences, and the consequences of that will be huge for our sense of personhood (to say nothing of sales tricks and marketer manipulations).
But I think the biggest shocks might come to, and through, institutions that are organized on rationalist premises. If we accept that people are highly influenced by other people, and by their immediate circumstances, then what becomes of our idea of impartial justice? (Jon Hanson at Harvard has been working on that for some time.) How do we understand and protect democracy, now that Jonah Berger has shown that voters are more likely to support education spending just because they happen to cast their ballots in a school? What are we to make of election results, after we've accepted that voters have, at best, "incoherent, inconsistent, disorganized positions on issues," as William Jacoby puts it? How do you see a town hall debate, once you know that people are more tolerant of a new idea if they're sitting in a tidy room than if they're in a messy one?
How do we understand medical care, now that we know that chemically identical pills have different effects on people who think their medicine is expensive than they do on patient who were told it was cheap? How should we structure markets after learning that even MBAs can be nudged to see a $7 per item as a fair price — just by exposing them to the number 7 a few minutes before? What do we do about standardized testing, when we know that women reminded that they're female score worse on a math test than fellow women who were reminded instead that they were elite college students?
Perhaps we need a new Adam Smith, to reconcile our political, economic and social institutions with present-day knowledge about human nature. In any event, I expect to see the arrival of Post-Rational Economic (and Political and Psychological) Humanity. And I do expect that will change everything.
