We’re all rational, in our own crazy way

In MicroEconomy school, we learn that economic agents (also known as people) act so as to maximise their own utility function.Utility functions are personal and in-transmissible. My utility function includes lots of dancing. And coffee. And time watching sunsets. And doing mentally stimulating work.

Love is when someone else’s well being is part of your own utility function. That is something very special indeed. I love my mother. When I do nice things for her, I am maximising my own utility function and that makes me happy. So love is motivated by as much selfishness as anything else. 

Parents have a large portion of their utility function dependent on their child’s wellbeing. So even a mother’s love is motivated by selfishness. 

Which is absolutely fine! Selfishness and self-preservation is the strongest force of nature. So we have to embrace it in the right way. Embrace the good with the bad that makes our fabric. Just acknowledging the good is depriving people of humanity, Milan Kundera suggested in his “Unbearable Lightness of Being”.

Economists get baffled by Psychologists. Not everybody can be rational because some people are crazy and some non-crazy people act crazily some times. Then they give the example: a woman who likes shoes might travel 100km for a shoe sale in another town, which is irrational because she spends more money in gasoline than she saves in shoes. The example is of course fraught. It forgets the utility associated with the excitement and fun of the trip, the joy of driving, the joy of filling time with a different plan. Her trip choice was actually perfectly rational.

Other people’s behaviour might at times seem nonsensical but only because we do not know the terms of their utility function. Even a mass murderer is maximising his sick utility function, that contains the sick pleasure of causing a pain of a similar kind as the pain that was inflicted on him as a child. Which makes evil self-perpetuating and trans-generational.

So here’s the good news: you’re rational! Doesn’t mean you’re not crazy!

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One thought on “We’re all rational, in our own crazy way

  1. Thanks for this blog post regarding our rationality; I really enjoyed it and am definitely recommending this blog to my friends and family. I’m a 15 year old with a blog on finance and economics at shreysfinanceblog.com, and would really appreciate it if you could read and comment on some of my articles, and perhaps follow, reblog and share some of my posts on social media. Thanks again for this fantastic post.

    Liked by 1 person

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