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Rat Choice and Other Tastes

Perhaps the most annoying conceit of neoclassical economics is that it alone, among the social sciences, comprehends human behavior, and does so in a way that makes perfect sense to the man in the street. Sociologists and anthropologists may come up with more or less interesting (if ad hoc and atheoretical) ways to describe society and culture, but they just don’t grasp the all-encompassing power of individual agency. The neoclassical economist, however, believes that economic, political, and social outcomes are the result of choices made by individuals maximizing their expected utility. People have stable, ranked preferences for, say, wealth and security, and they select the presidential candidate, job, or neighborhood that they believe will best maximize their income and safety. Sound a little reductionist? Maybe that’s because you need to come down a peg or two. “People who are not intellectuals,” sniffs rational choice guru Gary Becker, endorse the “rational choice approach” instinctively.

Critics have pointed out that rational choice theory wrongly assumes that things like tastes are given and stable, and that much of human behavior is affected by irrational factors such as habits, addiction, culture, and norms. But Becker will have none of this. Accounting for Tastes, his 1996 collection of essays, argues that rational choice theory can indeed predict seemingly irrational behavior, as well as explain tastes. Explaining why people want what they want has traditionally been beyond the pale for economists, who, probably for good reason, stuck to figuring out how people get what they want. Becker, however, is a Nobel laureate, a former economic policy advisor to Bob Dole, and the baddest of the Chicago Boys. He’s never met a subject that couldn’t be flattened by the analytic steamroller of free-market theory: Rising divorce rates are caused by lax no-fault divorce laws, which lower the incentive to invest in love; discrimination occurs when racist employers willingly pay a premium to employ white workers. Taste, it turns out, is just as easily accounted for. To a certain extent our preferences are determined by “childhood and other experiences, social interactions, and cultural influences.” We’re also free, to the extent we can afford it, to choose our own poison, whether it’s speculating in Furbies, smoking crack, or listening to postrock.

In societies without the nannying encumbrance of social security, you see, parents don’t hit or abuse their kids because they want nice children who will care for them when they grow old.

But if tastes were irreducibly subjective, then predicting behavior would be impossible—and Becker’s musings on the subject would have all the authority of say, phrenology. No, Becker needs a calculus of stable, universal “meta-preferences that applies to CEOs and Indian peasants alike. These meta-preferences, also known as the “extended utility function,” encompass desires for goods (like health or shoes), “personal capital” (past experiences), and “social capital” (peer pressure, desire for esteem, and the like). In other words, you might want to buy a Land Rover because you live in the veldt, or because you grew up in the veldt, or because your buddies at work think it would really kick ass to off-road through the veldt. Wait—sorry—that’s the “sport utility function.” In any case, a troublesome question dogs Becker’s theory: Do meta-preferences exist, and if they do, how can we tell what they are? You’ll have to take Becker’s word—like subatomic particles or the chupacabra, “utilities cannot be observed.”

Meta-preferences may be invisible, but they sure are useful. Since deep down, we all have the same needs, meta-preferences “form a stable foundation for welfare analysis that uses Pareto-optimality.” Translated from rat-choice, Becker believes that certain government policies can make everyone better off. Let’s say that some people think they prefer more unemployment insurance or public health care. They suffer from a rational choice version of false consciousness; what they really want, according to Becker, is government policies that create the most “wealth” by letting the rich keep their money and taking money away from the poor to give them incentives to work harder. Strange enough, meta-preferences always point to reduced government spending. Consider this Becker chestnut: Government social security programs make “selfish parents become meaner.” In societies without the nannying encumbrance of social security, you see, parents don’t hit or abuse their kids because they want nice children who will care for them when they grow old. Even when the rich get more than their share, the lower classes don’t suffer. Becker provides a strange account in which the rich use churches to indoctrinate the lower classes with utility-reducing norms, such as humility and self-abnegation. But because the rich provide subsidies through the church, “no one is harmed.” Oligarchy, Becker-style, is a win-win proposition; it satisfies the whims of the rich and the meta-preferences of the poor.

While Becker does at least acknowledge that people are motivated by more than pecuniary self-interest, his argument remains strikingly tautological: People prefer to get what they want, and we know what they want because they got it. In the end, Becker is not able to use calculus and graphs to show why, as he puts it, “some people get addicted to alcohol and others to Mozart.” But we do know this: Even if some people think they want more government spending, what we all really need is laissez-faire capitalism.