Quick: What do you get when you mix a Nobel Prize winner with a MacArthur genius?
You get this: "The claims of some heavy drinkers and smokers that they want to but cannot end their addictions seem to us no different from the claims of single persons that they want to but are unable to marry or from the claims of disorganized persons that they want to become better organized."
Yes, Gary Becker and Kevin Murphy, in the rich tradition of University of Chicago Economics, believe that much-if not most-of human behavior can best be understood by assuming that people are behaving rationally, to maximize their best interests.
Unemployment? A rational choice according to another Chicagoan, Nobel winner Robert Lucas: "To explain why people allocate to unemployment, we need to [know] why they prefer it to all other activities."
Addiction? Also a rational choice. Thus, even though many addicts are miserable, this misery doesn't mean that their use of heroin or crack is irrational. As Becker and Murphy put it: "People often become addicted precisely because they are unhappy. However, they would be even more unhappy if they were prevented from consuming the addictive goods."
Why should any of us care that a particular school of economic thought considers human beings to be largely rational? Because this same school of thought has, by no coincidence, been home to some of the most prominent libertarian thinkers of the last century-people like Friedrich Hayek and Milton Friedman, men whose ideas have influenced politicians around the world. Convinced that people are largely rational, these influential thinkers have argues that we should severely limit the scope of government and rely on the power of free markets to maximize people's best interests. After all, if people are largely rational-if they know what's in their best interests and possess the willpower to act upon this knowledge-then the best any government can do is to step aside, and let them pursue the good life.
As a physician trained in behavioral economics, I cannot reconcile either my clinical experience or my research findings with a view of addiction as being completely rational. True: if the price of heroin rises dramatically, people will use less heroin. Some people won't take up the habit. Some hard core addicts will try to cut down their use, or will switch to other drugs. In other words, there is some rationality to the behavior of drug addicts. But as readers of this website no doubt recognize, there is also some desperately irrational behavior contributing to the actions of drug addicts.
Why does this matter? Simple. The more convinced we are that human beings behave in ways that promote their own best interests, the less we should look to the government to protect our interests. If crack makes people happy, we should allow people to use it. No rules, no regulations.
If people want to take out mortgages that are beyond their means, and if lenders want to give them such mortgages, the government should step out of the way and let the market place punish anyone that makes bad decisions.
If a twenty-year-old doesn't want to buy health or disability insurance, and experiences a crippling automobile accident, we should step aside and let her experience the consequences of her decision.
But if you, like me, believe that human nature is a mixture of rational and irrational forces-if you recognize that we consumers are often prey to manipulation by people who know our weaknesses-then you will be open to exploring ways the government can help us make wiser decisions.
Trust me; I'm not talking about big brother. I'm ecstatic to have grown up in the USA rather than the USSR (okay, my wife disputes that "grown up" part!).
But cigarette taxes? Free market enthusiasts think they are a bad idea. Tax dollars to help drug addicts go through rehab? Market evangelists don't to approve of that either, especially if, as Becker and Murphy say, crack is making these people happier. Government dollars spent on anti-obesity programs? Why do that when, according to some Chicago-based scholars, the term "overweight" is a misnomer, since people have rationally decided how much they want to eat and exercise. In this world of perfect rationality, no one is overweight, because everybody has achieved their ideal body mass.
We need to be very careful about adding any layer of government bureaucracy to our lives. But we should be equally careful about stripping away government regulations, when such regulations promote our best interests. Our policies need to recognize that we humans aren't always as rational and strong willed as we'd like to be.
To learn more about my new book, Free Market Madness, check out my website: http://www.peterubel.com/.
Be sure to read the following responses to this post by our bloggers: