MSUGANA

Love, Rationality, and Economics

Economists are irrational for making the assumption that humans are rational in their decision making.

One of the primary principles that we learn as economics students include the fact that all the micro/macroeconomic models and theories in our textbooks are based upon the assumption that humans engage in rational behaviors.  

But do humans really?

Obviously, the answer is not.  

Behavioral economics is an interesting subject to pursue if you’re interested in these kinds of questions (you should checkout books such as Predictably Irrational by Dan Ariely or Freakonomics and Superfreakonomics by Levitt and Dubner).  

For this post, however, I will not be talking about anything business or finance related.  I will instead be talking about ‘Love’ as a factor that is often ignored by economists yet overly emphasized by the common member of society (aka those who are not holy enough to constantly act rationally such as myself) when making their individual judgments.

First things first…

Problems in our lives often arise with the fact that people and firms face trade offs.  We are forced to make choices that are best for us either for the long-term (often involving sacrificing present ‘happiness’) or short-term (often involving higher risks for the future).  

When faced with love, however, people commonly become quite irrational in their decision making.  This involves people such as myself (CUR to the COL).

When we’re in love, options that are obvious often become exceedingly difficult.  There’s suddenly this abstract entity dragging our hearts, minds, and souls into irrationality.  People who are perceived to be typically logical suddenly become illogical.

Mitt Romney, for example, transferred from Stanford during his undergraduate career to a MUCH MUCH lower ranked school just to be closer to his current wife (yeah super sweet and romantic, but rational.? Not so much..Though he did end up getting a JD/MBA at Harvard afterwards).

If you think about it, there are many many other factors that drive people to conduct in irrational behavior..not just love, per se.  These acts of irrational behaviors often involve our unstable emotions or uncontrollable external factors such as the environment that we live in and the people that we are surrounded by.

After experiencing the influence of these factors in my own personal life, therefore…I would like to demand the wonderful authors of economic textbooks out there to PLEASE incorporate love and emotions into consideration when illustrating economic phenomenas..Just to see what the world would end up like ;-) (Yeah I know I’m being totally naive for saying this….Conducting Political/Social Science research is already challenging enough…).

But seriously….I need a textbook that could teach me how to exclude love and emotions in my decision making.  

We would all, in fact, be much much more rational when we’re emotionless.