Are people rational? – Jethro El Lapuz Camara

Arguably, this question has created one of the most significant intellectual divides among the social sciences. Proponents of human rationality have always come from economics and to some extent, from political science. On the other hand, its opponents have mainly come from psychology, anthropology, and even sociology.

Well, assuming that people are rational is significantly attractive. Since rational people are predictable, being able to explain what happens around us becomes easy. Look at, for example, economics. By assuming that people are rational, economists have generally explained all exchanges in terms of how much people can get out of it. Things as superficial as ice cream and as important as education, for economists, all boil down to one question: How much are people willing to pay for it?

Of course, an assumption like this has drawn serious criticism from other social scientists. Being able to broadly explain a lot of things often comes at a price of forgetting contexts. There are situations where people don’t make rational decisions. Honestly, would people normally consider not paying for a loved one who is in a hospital, even if its expenses could drive them to debt? Their decision is not a matter of how much they could get out of it, but out of their attachment for their loved one.

Often, this kind of criticism is ignored by those who want to keep predictability in their explanations. It is always viewed that these situations are hard to predict. People who want to make sense of things around them would have a difficult time if they included these situations. However, social scientists from Stanford University explain otherwise: There are predictable ways in which people are not rational. Below, through a simple survey, they provide the ways people are predictably irrational.

People view things the same way, regardless of how it is framed

Specifically, if people are rational, then we can assume that risks are considered the same, despite the gain or loss that comes along with it. However, social scientists at Stanford University do not agree. The amount of risk in gains would be more valuable when it is the same amount of risk in losses. Simply put, people make more risky choices when faced with losses.

To illustrate this, they asked undergraduate students from Stanford University and the University of California at Berkeley. They asked these students to answer some questions:

Problem 3 in the questionnaire.
Problem 4 in the questionnaire.

Ideally, if people are rational, then their answer should be the same since the values are just the same for both candidates in each question. However, there was a significant shift of answers from Frank (74%, 52%) to Carl (26%, 48%) in Problem 4 because the problem shifted from gains to losses. In such a situation, people made more risky choices than before.

People decide consistently

On another aspect, rational individuals are expected to choose the same options, no matter how they are ordered or written. However, this is not the case: People perceive the difference to be bigger between smaller numbers than between larger numbers, even if the absolute difference is the same. Thus, if those smaller numbers are rewritten as larger numbers, we can expect a significant shift of choices, making people choose an inconsistent decision.

How is this true? Look at the answers of the undergraduate students below:

Problem 9 in the questionnaire.
Problem 10 in the questionnaire.

Looking at Problems 9 and 10 in the survey, we can see that all the values should refer to the same outcomes. 90% employed is just another way of saying 10% unemployed. Therefore, rational people are expected to answer in the same way — but the respondents in the Problems did not. There was a shift from program K (64%, 46%) to program J (36%, 54%) in Problem 10. People perceived those numbers differently, allowing them to see the difference in Problem 9 as less costly than in Problem 10.

People know perfectly well the outcomes of their actions

They don’t. People generally mistake events that are only associated with their actions as direct outcomes of their doing. If people were rational, they would be able to differentiate those things.

To make this clearer, the social scientists looked at elections. Rational people would not vote since they know that their decision would barely have a significant impact on the outcome. However, people think otherwise. Since their decision — and the thoughts behind it — are generally associated with others’ decisions and thoughts as well, people vote thinking that their action would also be similar to what others would do: “What if because everybody thought they did not affect the election, nobody would vote?” Thus, people would vote to prevent that drastic outcome.

As we can see, people do vote on elections. Rational people wouldn’t — just look at this guy:

Tweet by @wroetoshaw about elections.

People consider all available options first before making a decision

Well, let’s say you’re rational, and you’re going to decide on what food you’re going to eat inside a mall for dinner. If you did consider all options, then probably the mall would’ve closed already before you got to a decision. Imagine the number of food choices you would have, along with their prices, their taste, their amount, their healthiness, and more. You would also have to consider the restaurant: Is it clean? Is it near? Does it look good? Is the staff hospitable? The effort your brain would need to consider all of these would surely drain you.

Thus, as Robert Jervis from Columbia University explained, people have shortcuts on these options. Maybe they’d just consider those they have already tried. Maybe they’d just consider the restaurants on the first floor. Maybe they’d think about what they’re craving at that time.

To illustrate this further, Robert provided a history lesson: World War II. On facing enemies, states would have to consider how strong these enemies are before deciding to engage in a fight. In the 1930s, the British compared their air strength with Germany by simply looking at how many planes each country had. Such a simple measure was easy to understand for the military officials at that time that it was their basis for being ready on fighting the Nazis — despite not knowing the composition of such planes, the ammunition both states had, the kind of anti-aircraft defenses each had, and more.

World War II plane. (courtesy of History on the Net)

People immediately react in the best way possible to changes

Assuming that people are rational means that they constantly update their decisions when things happen. For example, let’s say you’re at a coffee shop. You are satisfied sitting on a relatively comfortable seat. A better seat becomes vacant. If you were rational, you’d go to that seat — but since you’re satisfied already, you probably won’t. For Robert Jervis, people are simply satisficers. If they’re okay at the moment, there’s no reason to do anything else until they’re not.

On bigger issues than what I’ve mentioned, does this still apply? This time, looking at the United States of America during the Cold War, Robert argues that their basis for building aircraft was simply to match the Union of Soviet Socialist Republics’ aircraft. If they had the same number, there was no reason to change, even if they could benefit by adding more. The president at that time, Nixon, was simply satisfied.

Nixon and Khruschev debating during the Cold War. (courtesy of Time)
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