Some economists believe that you weigh up all the costs and benefits of an action.
Weighing up the costs and benefits is called a logical action.
In the Star Trek series and films, Spock is logical. Kirk is illogical.
The problem with being logical is that we would spend so much time weighing up the pros and cons of an action that we would never get anything done.
Some Economists still believe in the behaviour rational economic man. That he is constantly trying to obtain the maximum benefit from an activity.
For a rational person.
There’s a balance between the pain of additional effort and the Joy of additional reward in the supermarket AS he Rushes from Aisle to Aisle comparing rice and marginal utility or benefit to be gained based on the money being spent.
How do we decide?
- Whether to break the law.
- Not wear our school uniform correctly.
- Steal from a shop.
Do we only decide to steel when the expected penalty exceeds the value of the Loot?
If we followed this logical thinking path, we would only marry to gain the economies of scale from living together. Maybe that’s the way that marriages have traditionally been and its only in the past couple of centuries we have begun to marry for love!
Do we really act rationally like Mr spock to everything?
This act of rationality can be seen when someone uses what is called a cost benefit analysis. The work out all the costs and benefits of a plan of action and then make a decision on the outcome.
You can view the UK government’s analysis of its High Speed Rail programme known as HS2 here.
In reality we don’t make decision like this.
In fact most people have already made up their mind about a decision before that attempt any kind of cost benefit analysis.
When voters in the UK took part in the Brexit Poll in 2017, did they sit down and make a list of the pros and cons and then make a judgement.
No they had already decided with whether they were for leaving or remaining before they even listened to what politicians had to say about the advantages and disadvantages!
Do you stand in the lunch queue and discuss the merits of the various options available?
No because if you did that lunch would be over by the time you made a fully rational decision.
The problem is that people have a bias and even when people sit down and try to analyse the data they tend to focus on the data that support their argument.
Look at the images on the next few slides and make a note of whether you are on the left or the right or inbetween.
You already have a bias in terms of fashion, food, brands etc without realising it.
IF there were Two Tribes
•one of which is mainly made up of cooperative people like the human crew of the starship enterprise
•the other is populated by rational economic men like spock.
Which would be the most successful?
The first tribe has natural instincts to socialise at work and to share his Good Fortune with others.
Rational economic man is always calculating his own advantage.
Rational economic man always hunts alone, because although the understands the benefits of working together, rational economic men always cheat on each other.
Watch this click of a UK programme called “Golden Balls”.
Co-operative tribes will catch more meat per head and the more food they gather the more people like them there will be in the future.
Who are you like Spock or Kirk?
