Rationalizing the “Irrational”

Economists are famous for attempting to rationalize seemingly irrational behavior. One of the more extraordinary is Gary Becker and Kevin Murphy’s theory of rational addiction, in which they hypothesized that addicts plan their consumption of addictive goods. When deciding whether to smoke a cigarette or take a hit, the theory goes, addicts choose in full knowledge and consideration of the health costs and the future costs of their smoking or drug use due to addiction.

It’s tempting to claim that others’ actions are irrational; to delay such judgement involves a healthy degree of humility. After all, an external witness to a person’s actions doesn’t know what that person’s objectives are. But attempting to rationalize every behavior is also risky (as in policing and crime, for example), making it difficult to simply declare there is alignment between objectives and actions.

If we wish to assess whether someone’s actions are likely to achieve their objectives, we need an alternative way to understand what that person’s objectives are. And one place that might provide insight into these objectives is evolutionary biology.

Every person is the product of billions of years of natural selection. Without fail, every one of our ancestors managed to survive to reproductive age, find a partner to reproduce with (at least since the advent of sexual reproduction 1.2 billion years ago) and have offspring that in turn survived to reproductive age. The result is a mind and body selected to have preferences that would tend to result in survival and reproduction and the continuation of one’s evolutionary line.

When we examine objectives from an evolutionary biology perspective, we see that what appears irrational might simply be a misunderstanding on our part of what someone’s objectives are.

Of course, evolution does not shape our preferences to explicitly seek these objectives. With few exceptions most of us don’t spend our time plotting how we can maximize our reproductive output. Rather, evolution shapes our preferences so that we seek proximate objectives that, at least in the environment they were shaped in, led to our ancestors surviving, attracting partners, and having offspring that survived.

Some of these preferences are obvious. A desire to have sex—(largely) necessary to pass on your genes, although today often thwarted by birth control. A taste for fatty and sweet foods—quite useful in a calorie-constrained environment, but not without problems in today’s abundance. A desire for relative status to attract partners—still important. A strong bond to those otherwise income- and leisure- reducing children—with the modern welfare state, not quite as critical to child survival as it once was.

When we examine objectives from an evolutionary biology perspective, we see that what appears irrational might simply be a misunderstanding on our part of what someone’s objectives are.

Some parts of economics and behavioral science indirectly tap into an understanding of the types of preferences likely to have evolved. From the economists, resources and consumption are important to survival. From the behavioral scientists, social norms reflect our need for status and the way we learn the skills we need to survive. But in many ways the surface has only been scratched.

One of my favorite illustrations of how considering a person’s true objectives can change our understanding of their behavior comes from a 1979 article, by Paul Rubin and Chris W. Paul II, on risk preferences.

Rubin and Paul defined the objective of the men in their model to be obtaining a mate, with the number of mates they get a function of their income (yes, the model is a simplification). If the man’s income is not enough to attract a single mate, they fail to achieve their objective with certainty, and they won’t value that limited income much at all. The safe, steady, low-paying job might deliver the highest expected wealth (the outcomes across all possible options weighted by probability), but it is not enough.

So, what does this young man do? He looks at ways to get his income above that threshold, whatever the risk to his existing income. From an economic perspective, this is risk-seeking behavior. But from the perspective of attracting a mate, it might be risk-neutral behavior.

Once the young man obtains one mate, it would take a large increase in income to attract a second. However, losing a small amount of income and dropping below the threshold could cost him the mate he has. With respect to his income, he has become risk averse.

Two people looking at the same actions could, based on perceived objective, describe the behavior as either irrational and risk-seeking or as measured and risk-neutral.

The interesting thing about this example is that two people looking at the same actions could, based on perceived objective, describe the behavior as either irrational and risk-seeking or as measured and risk-neutral. An observer could also witness dramatic changes in a man’s risk preferences relating to income over a short period of time, with that change driven by success in the mating market rather than any change in their economic circumstances (that change is reflected in the drop in testosterone experienced by men in long-term relationships).

How might this evolutionary understanding of our motivations help us understand behavior? Whenever I revisit Rubin and Paul’s paper, it reminds me of the Chicago gang members described in Steven Levitt and Sudhir Venkatesh’s paper on gang finances, drawn from Venkatesh’s time spent studying Chicago gangs. Gang members, on average, earned little more than the minimum wage. In the four years of Venkatesh’s data, this low-pay work came with an average of more than two wounds, nearly six arrests, and a 27 percent chance of dying.

From an economic perspective, joining a gang entails a strong preference for risk seeking, even with the slim chance of achieving the healthy gang-leader income. This led Levitt and Venkatesh to flatly conclude that economic incentives appear unlikely on their own to explain participation in the gang. But a gang member may simply be taking a rational risk to give them a greater-than-zero chance of achieving their actual non-economic objective, which requires income or status above a certain threshold. A low but stable income from legitimate sources achieves the objective with probability zero.

In some ways, the conclusion that Chicago gang members care about more than income is obvious. But consider some other examples of financial behavior that we assess as being less than ideal. We don’t save enough for retirement. We buy a more expensive car when our neighbor wins the lottery. We buy clothes, trinkets, and bling that we can’t afford. This hardly maximizes financial well-being.

If conspicuous consumption attracts the right person, who is to say it wasn’t worth the cost?

An evolutionary perspective might suggest the basis for these actions. Saving for retirement is an activity of limited evolutionary value, but increasing your relative status is a core preference and part of attracting a mate. (Economists hoping people will simply learn to accept inequality as the price of higher aggregate income generally don’t understand that status and relative ranking are themselves objectives.) And if conspicuous consumption attracts the right person, who is to say it wasn’t worth the cost?

It does not immediately follow that understanding a person’s actual (evolutionary) objectives will rationalize their behavior. As our taste for sweet and fatty foods implies, our preferences evolved in a world much different to ours.

Advertisers have been capitalizing on this disconnect between our evolved preferences and current environment for as long as advertising has existed. In his wonderful book Spent, evolutionary psychologist Geoffrey Miller hypothesized that we are misguided in the actions we take to achieve our evolutionary objectives in a modern consumerist society. In particular, the conspicuous consumption we use to signal traits such as intelligence is unnecessarily indirect. We would be better off using our evolved abilities to show these characteristics through humor, communication, and interaction with others.

Does this leave us back where we started—a belief that people are irrational and that we should intervene to help them? If nothing else, the possibility of alternative objectives should inject a degree of humility into our conclusions about someone’s behavior. Following most evolutionary biologists, we can first ask how a strange behavior might be adaptive before branding it as irrational.

Further Reading & Resources

  • Venkatesh, S. A. (2009). Gang leader for a day: a rogue sociologist takes to the streets. New York: Penguin Books Ltd. (Link)
  • Levitt, S. D., & Venkatesh, S. A. (2000). An economic analysis of a drug-selling gang's finances. The Quarterly Journal of Economics115(3), 755-789. (Link)
  • Rubin, P. H., & II, C. W. (1979). An evolutionary model of taste for risk. Economic Inquiry17(4), 585-596. (Link)
  • Miller, G. (2010). Spent sex, evolution, and consumer behavior. New York: Penguin Books. (Link)
  • Kenrick, D. T., & Griskevicius, V. (2013). The rational animal how evolution made us smarter than we think. New York, NY: Basic Books. (Link)