Theme: Incentives

–“Q: DOES THE WORLD OPERATE BY RATIONAL MEANS?”–

Great topic. (RL always brings up good topics.) 😉

In economics we claim human behavior is rational if you understand the information available to the individual, the time he or she has to decide, and the suite of incentives. But what we mean by ‘rational’ is that it’s ‘rationally explainable’.

This is why the common law, courtroom, and jury work. If presented with sufficient information to understand the individual’s state of mind, the jury can decide on the ability, information, and timeliness of the necessity of the person to act in relation to the amount of due diligence a reasonable (average for the individual’s ability) person would perform in order to not err or commit a crime.

In that sense the world is rationally explainable. That does not mean that people act logically or reasonably as if they had the ability, knowledge, and incentives that we have in hindsight.

This is why for example, in the physical sciences we try to predict by producing deliberate tests, and why in the social sciences we try to explain by collecting information that was not deliberately constructed to prevent the problems of demonstrated vs reported behavior (why behavioral science is sh-t). Likewise with logic, all logic is only falsificationary. Not justificationary. Meaning if something is false it’s more certain than something that is a truth candidate since all premises and all conclusions from them are contingent. (That set of sentences is probably something the world needs to understand when they make scientific or unscientific claims.)

The lesson here is that as a participant in the world, people appear to be irrational because we lack the knowledge of their ability, frame, knowledge, experience, and incentives.

But as an observer of the world (behavioral economists), the world is, both individually and in the aggregate, acting rationally in response to the degree of information and ability to make use of it in the time they must act.

So the question is, just as we have taught people enough science to grasp the general rules by which the universe functions, and in doing so raised their demonstrated intelligence substantially, if we taught people enough behavioral science (in the sense of behavioral economics, not the sh-t that passes for psychology and sociology and political science) then we would see the same increase in demonstrated intelligence in the personal, social, economic, and political world that we did in the physical worlds.

This mirrors my suggestion that religion was cheap and stoicism(philosophy) was costly. Mythology was cheap but history was costly. Morals were cheap but laws were costly. illiteracy was cheap but literacy was costly. The rather odd collection of thousands of discrete rules was cheap but the few general rules of science were costly. Fitness in the farm world was cheap, but fitness in the modern world is costly.

In other words, we must educate the body, the soul, the mind, and the memory despite the cost, if we want to make whole people capable of modern society and preserving it without the gradual descent into devolution we’ve seen emerge over the past seventy years – and which threatens another dark age of ignorance, superstition, and muslim-level dysgenia.

The Deficit of Mindfulness is Our Fault. Like many follies of the 20th century we presumed our reduction of scarcity and the provision of plenty, removed all constraints on mankind – presuming human nature included the morals and traditions we had so costly and deliberately manufactured over the millennia to make it possible for people to act as close to ‘as one’ as possible without human super-predators killing and eating one another.

The problem is fixable.
And we know how to fix it.
Or at least, fix enough of us that the problem is minimized.
Which is the best humans can ever do. 😉

Cheers
CD

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