I had written: > > to economists, as far as I can tell, "rationality" simply means > > "consistency." But I used the word "individualistic." That's another > > word that's ambiguous without definition, but I meant "greedy."
Michael Perelman wrote: > Isn't rationality far more limited than you suggest? Isn't it rational to > cut down > forests or to destroy the ocean if the present value of the expected benefits > exceeds > the present value of the expected costs? it's a good practice to always use qualifying adjectives with abstract nouns. After, "economic rationality" (cutting down forests if net expected PV of benefits > 0) is quite different from psychological mental health (an absence of conflicting inner forces?) or legal rationality (sanity, seen as knowing the difference between right and wrong). now, economic rationality's net expected PV of benefits _might_ include the effects of caring about others (sometimes mislabeled "altruism"). Even though the Ekon's seemingly-incessant focus on atomistic markets seems to drive out any consideration of such fellow-feeling, the standard neoclassical theorist's "economic rationality" can incorporate it. Varian once did a paper on envy, for example, which spawned an entire literature in the profession. This shows, among other things, that caring about others can play a big role in orthodox economics. But the theory tends toward tautology. The main "demand" that economic theorists put on their "rationality" is that _homo economicus_ be consistent in its responses to price signals. The insistence on consistency of behavior seems to be the only thing that keeps tautology away. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante.
