The first thing I want to do in this blog is reject the economic idea of rationality. Mainstream economists assume that people are optimizers. People are supposed to know what they want and do what they can to get as much of it as possible.
Imagine your goal is to get to the top of a hill. While it takes effort to get there, you steadily make progress one step at a time. You may have to work your way around boulders or other obstacles along the way, but you always know where you are headed. Every decision you make to turn left or right is informed by the goal that is clearly in sight.
Mainstream economists assume that the day-to-day choices we make are like deciding to turn left or right when climbing a hill. There is no guess work involved. The choices we make move us inexorably towards our goals.
I have two problems with this view of how we make decisions. First, we don’t have clearly defined goals. Second, we aren’t very good at moving towards the goals we do identify.
What is the goal of life? Beats me. I don’t even think there is a single overarching goal. The best I’ve seen are loosely defined things like “the pursuit of happiness” or “to get closer to god.” Nothing as concrete as the peak of hill.
Even if we set goals, we have a tough time pursuing them. Ever go on a diet? All you have to do to lose weight is eat less and burn more calories. Easier said than done.
While it might be nice to be an optimizer pursuing a single well-defined goal, life is too complicated. The hill we climb is shrouded in fog and most of us spend a good deal of time going the wrong way and walking into trees.
Whatever it is that our brains do, it isn’t optimization.
