The Atheist's Guide to Reality_ Enjoying Life Without Illusions - Alex Rosenberg [123]
Thucydides’s contemporary followers will grant that there are transitory, ephemeral relationships in human affairs, ripe for exploitation in arms races. But underneath them all, and at all places and times, there are fixed law of economic rationality: everyone acts on self-interest; each of us looks out for number one; we maximize our own welfare, happiness, utility, preferences. It’s individuals acting rationally that drive all the local equilibria and the arms races of economics, politics, and everything else in social life. This dogma is shared by Thucydides’s latter-day protégés with the most distinguished (ersatz Nobel Prize–winning) members of the University of Chicago economics department.
Their doctrine is that there are laws that govern all human affairs: these are the laws economists have uncovered, the laws of rational choice. They are as disarmingly simple as they are far-reaching in their explanatory power. First, between any two choices, each individual always knows which (if either) he or she prefers. Second, if an individual prefers A to B and B to C, then that individual prefers A to C. Third, every individual chooses what he or she prefers most among alternative choices available. What could be simpler? What could be more obviously true (most of the time)? These laws have been known to social scientists at least in rough form since Thucydides assumed them to explain the behavior of his fellow Greeks. Economists have only refined them. The laws of rational choice are impervious to arms races. So we can rely on them to predict human affairs, all human affairs, forever.
Thucydides argued that these facts about human nature would enable anyone reading his History to understand all wars, international relations, and power politics everywhere. It was science, not mere storytelling. Economists think that the same “facts” about individuals’ rational choices fix all the other facts about society. By aggregating individual rational behavior into markets, industries, and economies, economic science can provide foresight. It can even be employed to create stable institutions that won’t perpetually give way to undermining arms races. That, at any rate, was the aspiration of economists up to the end of the twentieth century.
Not too many people believe this line any more. Current events in the financial sectors of the world’s industrial economies have overtaken it. But even before the financial crisis of 2008, a great deal of cognitive science had already shown that no one, not even an economist, is much of an economically rational chooser. Economics, in fact, started to admit this fact in 2002 when it gave its pseudo–Nobel Prize to a couple of cognitive psychologists, Daniel Kahneman and Amos Tversky. They won the prize for proving that people not only violate the “laws” of rational choice, but that paradoxically it is often rational, or at least efficient, to do so. This is just what a Darwinian perspective on human choice would have suggested.
Kahneman, Tversky, and others who have contributed to the subject began by studying how people work their way through choices in laboratory conditions. By setting up experiments in which large numbers of subjects were forced to make choices, trades, guesses, and bets, Kahneman and Tversky were able to isolate rules of thumb, heuristic devices, and shortcuts that people actually use, instead of the logic and probability theory that rational choice requires. As if we didn’t already know, humans often make judgments, guesses, trades, and bets that are not economically rational. They frequently give in to bias and stereotyping in judgment. They allow different but equally accurate descriptions of the same facts to shade their decisions. They are overconfident about some things and not as confident as the evidence would allow about others. They systematically take risks and make