Philosophy of Social Science Chapter 6 Critic

Philosophy of Social Science Chapter 6 Critic

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 Shuey

Abstract

In this chapter the author discusses the reliabilities of rational choice theory, which implies that the human take the action of the maximized utility. The economists use the theory to construct the predictions of human action. The author introduced the cardinal utility theory, the marginal utility, and the instrumentalism view of the theories. These theories may not perfectly express how human do when they are making choices for a behaviorist because being too psychological, but they are sometimes useful. 

The Theory of Rational Choice

The Theory of Rational Choice takes a great part on the economics. It was a way of ordering desires. From the law [L] mentions in the previous parts of the book, the actions are related to desires. Thus, the marginalists transformed it to an assumption that people do things rationally. That is, between all the choices, people will do the most beneficial one. They call the additional utilities gained from one unit of commodity the marginal utility. By using the idea, they can construct relationship between quantity and price, finally predict the market-clearing equilibrium. Farther, they think the equilibrium will happen naturally, so the government don’t need to do much planning. The phenomena is called by Adam Smith the invisible hand. The preference of a person was called ‘’cardinal utility’’, which is absolute.

However, is this theory really true? It seems not so in many cases, but we do not have a way to test if the utilities are deceptive or not. In order to analyzing the theory of rational choice mathematically, they assumed the ‘’ordinal preference’’:

1. The utility of commodities is comparable.

2. The utility of commodities have transitivity, i.e. a>b and b>c then a>c.

3. People are rational and will choose the commodity that maximizes the utility.

This kind of utility is only relative and only concerns about the behavior (what people choose).

Behaviorism and Instrumentalism

The cardinal utility still have failures. People may change through time, and it is difficult to know if people really does things rationally. For the behaviorists, it is still too psychological. If we come to desire and implicit utilities, it is psychology.

  Another kind of view is the instrumentalism. It takes a useful theory only as a tool to systemize human actions. The terms desire and belief are merely nouns invented to be useful. It comes up with the view of a ‘’black box’’, that is, we can only deal with the ‘’inputs’’ and ‘’outputs’’ of a person, not going to understand mental reality. And all the theories applied to economy is just models.

One of the idealized theory invented to predict general equilibrium assume that:

1. Agents are rational.

2. Agent can complete information.

3. Commodity are infinity divisible.

4. The production efficient always remains the same.

5. Purchasing and selling can be done in any time.

These assumptions can be analyzed with mathematics and prove the existence of equilibrium. Through the assumptions may be too idealized, they are essential in economics because they can make predictions in some range of error. The instrumentalists do not care about is the theory really true or whether they can applied to human mind. They just care if the theory is practical or not.

Here comes another point. A practical view still should be tested by experiment. Without testing, we can never know our predictions really come true in given conditions. It is also true in natural sciences and all the idealized theories and laws.

The Benefits of Psychology

Only if we view economics theories as instruments can we applied idealized assumptions and psychology to real word. The author claims that some progress in psychology can also benefit the predictions of economics. New psychological phenomenon are found and studied every day. These results can someday be used in economics and other social sciences, even though we can hardly what human mind really is.

Personal Opinions

I think that the psychological view of [L] seems very easy to accept at first sight. In fact, it is hard to prove. When using rational choice theory to the complex society, we often found it too difficult to control all the variations. However, maybe we can observe the human society and economical behaviors with the statistical methods to find some new laws.