“I have often wondered why economists, with these absurdities all around them, so easily adopt the view that men act rationally. This may be because they study an economic system in which the discipline of the market ensures that, in a business setting, decisions are more or less rational. The employee of a corporation who buys something for $10 and sells it for $8 is not likely to do so for long. Someone who, in a family setting, does much the same thing, may make his wife and children miserable throughout his life. A politician who wastes his country’s resources on a grand scale may have a successful career.”
Ronald Coase, “Comment on Thomas W. Hazlett” (1998: 577) Quoted in The Myth of the Rational Voter: Why Democracies Choose Bad Policies by Bryan Caplan
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About Daniel Burton
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I just watched a documentary outlining how many economists have based their complicated algorithms, calculating overall economics of nations on the idea that people make money decisions rationally. The fact is most people don’t and I’d probably have to include myself in that group sometimes.
Does this mean that Economists have had some bad assumptions leading to bad choices in government policy? …… Probably!