Economics for the Irrational

According to Mathew Crawford (The World Beyond Your Head), economics once held “that we are rational beings who gather all the information pertinent to our situation, calculate the best means to given ends, and then go about optimizing our choices accordingly. The assumption was that we are able to do this because we know what we want, and the calculation will be simple because our interests are not in conflict with one another.”

Behaviorial economists have their doubts. The rational optimizer knows what he wants, and many of us don’t. Besides, “we’re a lot lazier than the rational optimizer view would have it. That is, to make everything a matter for reflection and explicit evaluation goes against the grain of how human beings normally operate.”

Crawford summarizes the “nudge” approach of Cass Sustein, but dismisses it in favor of a more “local, actor-centered” notion of the “jig,” a “a device or procedure that guides a repeated action by constraining the environment in such a way as to make the action go smoothly, the same each time, without his having to think about it.” A short-order cook uses jigs, as does a bartender, spacing up his tools and ingredients so that his work becomes a flow, a dance.

Crawford prefers jigging to “the prospect of being nudged by Cass Sunstein.” Who wouldn’t?

But the local, individual jig can be misunderstood, especially if it’s assumed that the jigger, like the rational optimizer, is an autonomous, isolated individual. He isn’t. Every jigger is embedded in someone else’s jigging: “Quite apart from the extreme case of the push-button McDonald’s kitchen, it is true in general that a cook begins his day in an environment that has already been given a long-term structure by someone else, equipped with tools and facilities laid out in some arrangement. This might be called the background jig. A further part of the background jig is the menu: only certain dishes may be ordered. That is, the menu regulates the cook’s activity. And the prep work (chopping vegetables, preboiling the potatoes for home fries, etc.) has been done by the evening shift, who are now in bed. Thus, other people tacitly hover in the background of the cook’s activity and give shape to it.”

It’s jigs within jigs, jigs all the way down.