By Gordon Hull
In Sleights of Reason, Mary Beth Mader makes the point that there is an ontological distinction between the members of a normalized “population” and the individuals they represent. Mader is talking about statistics and bell curves; as she summarizes the part of her argument that’s relevant here, “statistical social measurement is ontologically problematic on the very level of the conceptual composites expressed in statistical measures and distributions and not only on an allegedly duplicitous subsequent prescriptive application of an allegedly descriptive conceptual instrument” (45). In other words, it’s not just that we get told that we’re “abnormal” or not living up to the norm; it’s that the way the norm is constructed also needs scrutiny.
The connection between neoliberalism and biopower – the one that Foucault seems to make in Birth of Biopolitics, but then doesn’t exactly spell out – is made crystal clear in a piece by Gary Becker that makes precisely this move in declaring that accounts of human behavior based on human rationality can nonetheless apply to irrational behavior as well. The piece is cited often enough for the temerity of the claim that economic rationality can be applied to irrational behavior, and it clearly evidences Foucault’s claim that “American neo-liberalism still involves, in fact, the generalization of the economic form of the market. It involves generalizing it throughout the social body and including the whole of the social system not usually conducted through or sanctioned by monetary exchanges “ (BB 243; Becker elsewhere claims that “the economic approach provides a valuable unified framework for understanding all human behavior, although I recognize, of course, that much behavior is not yet understood” (Essence of Becker, 13, emphasis original)). That said, what is actually going on in the discussion of irrationality becomes substantially more interesting when read in light of Mader’s point about norms and populations.
Becker starts with the connection between macro and microeconomics, and notes that macro theories are unproblematically connected to micro when people behave rationally at the micro level. Consider, for example, a household that is trying to maximize its total utility (the paper also includes discussions of firms, which I omit here for the sake of simplicity. The logic is parallel). In that situation, demand curves are negatively inclined – when something gets more expensive, you start to consume less of it. But of course we can all immediately think of households that do not behave rationally in response to changes in their resources. They might cut consumption in a way that lowers their net utility more than needed, for example. Their preferences might seem to change from one moment to the next for no apparent reason. Or they might prefer beer to wine and wine to gin, but then behave in a way that indicates they also prefer gin to beer. In short, their behavior does not evidence the “maximimzation of a consistent and transitive function” (21; I am citing the version in The Essence of Becker).
Becker’s thesis is that as long as you are dealing with the macro level, you basically don’t have to care if they are rational or not:
“Negatively inclined market demand curves result not so much from rational behavior per se as from a general principle which includes a wide class of irrational behavior as well. Therefore, households can be said to behave not only ‘as if’ they were rational but ‘as if’ they were irrational: the major piece of empirical evidence justifying the first statement can equally well justify the second” (21).
That is, “the fundamental theorem of traditional theory – that demand curves are negatively inclined – largely results from the change in opportunities alone and is largely independent of the decision rule” (22). You’ll get to the macro-level result simply because of the changes induced by changes in resources, and you don’t need to make assumptions about how households reason their way through those changes.
How does he achieve this result? Precisely by insisting on the ontological distinction between actual households and those of the economic model. Take the “impulsive” household as a species of irrationality. Such a household behaves – and this is critical – purely randomly. That is, its decisions can be “represented by a probabilistic model in which decisions are determined, so to speak, by the throw of a multisided die” (23). At an individual level, such a family’s decisions may be irrational or display a non-economic rationality.
However, if you aggregate enough of these families – that is, if you treat the impulsive family as a unit in a normalized population – you’ll discover that you get the negatively-inclined curve after all. That’s because the change in resources means that there are fewer ways to behave that do not involve decreasing consumption of the good in question, and more ways to behave that do. So on average, the consumption will decline as if everyone were behaving rationally. Thus, “a ‘representative’ household would act rationally even when actual ones did not if ‘representative’ simply indicates a microscopic reproduction of market responses” (26).
There is a lot that could be said about this result. One point is that it requires that impulsive households behave truly randomly – that is, that the distribution of behaviors being aggregated is stochastic. The model here is natural processes, and Becker specifically cites “the currently glamorous field of physics,” where “the theory of molecular motion does not simply reproduce the motion of large bodies: the smooth, ‘rational’ motion of a macrobody is assumed to result from the errative, ‘irrational’ motions of a very large number of microbodies” (26). In the event that impulsive individuals did not behave randomly, the model would presumably fare less well. For example, Richard Bronk suggests, against Hayek, that “in conditions of uncertainty all markets are prone to being unduly influenced by homogeneous group narratives.” Something similar could be said here: in the case of unpredictable but non-random group narratives, “irrational” behaviors might well aggregate into something other than the dictates of macroeconomics. Becker would no doubt respond that in this case, the behaviors are not in fact “irrational” but are instead the result of decisions made with incomplete information and reflect (implicit) decisions by individuals that the cost of getting more information exceeds the benefits of doing so (this would be the clear direction of his “Economic Approach to Human Behavior”). Once you factored all those epicycles in, your demand curve would appear on schedule. Still, at the very least, that strategy risks occluding all sorts of structural and political factors behind the individual decision it presents, and can involve some pretty ad hoc explanations of behaviors.
The second point is that Becker makes the distinction that Mader is pointing to. Becker emphasizes that there is no need to cram individual households into the economic model – no need, in other words, to try to pretend that actual households behave as the model predicts. It is better to stick with the separate rationalities, the aggregated one and the individual one. Thus, “economists have gone further and constructed also a theory of an actual household that is simply a microscopic reproduction of the market. Observed market behavior is used to infer unobserved household behavior without any recognition that a theory of the household need not simply reproduce the market because market rationality is consistent with household irrationality” (26).
What the population does is quite independent of what you do, as is what a representative member of the population does, even if you’re an actual member of the population. In other words, Becker explicitly disavows the second of the two worries Mader articulates – the one about demanding that individuals be understood as behaving as the model dictates that they should – but still presents a very interesting case study in the first.
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