After posting a message about the near-tautology and non-
falsifiable character of the "rationality" assumption in
economics, I stumbled on a prima facie case of economic
IRrationality that indicates that maybe the "rationality"
assumption is falsifiable:
at the campus stamp machine last year, it was common for
people to put 30 cents in to get a 29-cent stamp and then
leave the one-cent stamp in the machine for anyone to pick
up. This might be seen as rational, because these days one
penny isn't worth the effort. One-cent stamps might be use-
ful, but not very practical, because one might need five
of them to get the right postage, taking up a big segment
of the envelope...
This year, with the postal rate increase, people pay 35 cents
to get a 32-cent stamp. The change shows up not as three one-
cent stamps, but as a three-cent stamp, which currently is
one of the most useful stamps around, since it fills the
gap between the old 29-cent stamps and the new. But students
are still leaving their change in the machine for others to
pick up! This seems totally irrational.
sincerely,
Jim Devine
[EMAIL PROTECTED] or [EMAIL PROTECTED]
Econ. Dept., Loyola Marymount Univ., Los Angeles, CA 90045-2699 USA
310/338-2948 (daytime, during workweek); FAX: 310/338-1950
"Doubt all." -- Rosa Luxemburg.
From: "Knowledge and Persuasion in Economics" by Donald N. McCloskey,
Cambridge U. Press, 1994:
"At Chicago the positivism was laid on thick, and conversations
with the late George Stigler in particular were likely to be
terminated by a positivist edict and a sneer. One conversation with
Stigler was especially eye opening to an associate professor
beginning at last in 1978 to doubt the epistemological claims of
positivism. Stigler was holding forth in the bar of the faculty club
on the merits of behaviorist theorists of voting, in which people are
said to vote according to their pocketbooks. His younger colleague,
who had just read Brian Barry's devastating attack on such models
(Barry 1970 and 1978) and for ten years had been teachinf first-year
graduate students about the small man in the large market (following
Stigler's own exposition in "The Theory of Price, 1966, appendix B,
note 7, p.342), remarked that people would be irrational to go to the
polls in the first place. A single voter has as much to do with the
outcome of an election as a single farmer in Hills, Iowa has to do
with the price of soybeans. The voter therefore appeared to have
shown by entering the voting booth that he was nuts (by an
economistic definition of nuttiness), and it would be strange if he
voted with his pocketbook with strict rationality after he closed the
curtain. The argument struck a nerve, and Stigler because as was his
custom abusively positivistic, declaring loudly that all that
mattered were the observable implications.
To the doubting positivist the procedure seemed to throw away
some of the evidence we have. Strange: throw away some of the
evidence and then proceed to examine the evidence. He noticed, too,
that Stigler refused to talk any more about the matter, striding off
irritated by the idiocy of the young." (p. 14)
Jim Craven
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