The core concept of rational choice is what each undergraduate of economics is introduced to in one of the first sessions of their economics course at university. So was I. My fellow students and I sat in one of those large lecture halls in Heidelberg, enthusiastic toward that which was about to come. The teacher enters, starts the class with telling us about consumer demand, a theory grounded in the idea that people’s choices can be modeled via indifference curves. After studying the properties of those curves for several weeks, we concluded that thinking about behavior in this way had up until then been the most puzzling thing we had ever heard of. In German high school, the subject of economics is usually absent. When I began my degree program in economics at the university, I was excited to hopefully be able to critically engage one day in the public and political discourse about economics and the economy by making use of tools provided by the field. My idealistic self was convinced (and potentially still is) that one could only change the system from within, ideally using the language that a system and its proponents use themselves. Yet, I quickly felt that I might fail with economics. The technical language to model behavior in terms of consistent choices, rational preferences, and indifference curves was counterintuitive and so different from everyday discourse that I had a hard time translating. During my first semesters, I did not see any way to connect the two and almost gave up on the subject entirely. Understanding the basics in my first microeconomics class as an undergraduate has been a concern of mine ever since. This book is the result of finding one way to take this puzzlement as a starting point for making a serious attempt to better understand what economists are up to.
Upon reflection, it was not only the technical language that seriously astounded me; students might generally have difficulties jumping into the technical jargon and modeling language of economics. It was also the way in which economists used the concept of rational choice to study the economy. In the real world, human agents are motivationally complex; but in the economist’s models, human agents are rendered far simpler in order to make the models work. While I understood the purpose and use of models to model the behavior of entities in the natural world, it was a challenge to understand the idea that we could similarly reason about human behavior. Another challenge was to understand that there could be something like a scientific theory of individual choice. In light of our naive but widely accepted commonsense understanding that human choices are free, a theory – necessarily deterministic when envisioned in some traditional and, as often still presented in economics, even old-fashioned sort of way – that explains and predicts our behavior appeared to be an oxymoron. The continuous affirmation by the lecturer, that theories of rational choice were after all not supposed to function as proper theories of individual behavior in economics, did not really help. Rather, it further nurtured my puzzlement and a continuous longing for some proper – ideally philosophical informed – explanation for apparent inconsistencies.
The first encounter with philosophy of economics raised hopes for a disciplinary space that allowed for explicitly reflecting on those issues. Yet, the philosophical debate about the foundations of rational choice theories only reinforced this longing for explanation. Economists and philosophers obviously scrutinized rational choice theories with very different goals in mind. While economists had told me that the theory of consumer behavior functioned as one theoretical ingredient of an abstract representation to scientifically reason about consumption and prices, philosophers – alongside many psychologists – pointed to rational choice theories as the Achilles heel of economics in that it had been shown to be rather questionable as a theory of human behavior and would, as such, have to be replaced with an alternative theory that better captured the key characteristics of human agency. To me, that seemed dubious as well if the idea was precisely not to explain human behavior as, for instance, it is in psychology but rather to explain characteristics and changes of the economic system, such as monopolistic competition, price changes, inflation rates, unemployment, and inequality. My reaction to philosophical appraisal became defensive; it was that economics was so much more than microeconomics 101 had shown us. Economics appeared to me to be a field with a multitude of very specific yet highly diverse problems, with a variety of different instruments to tackle those problems, with a set of established and justified methodological standards and widely accepted epistemic norms – such as simplicity, tractability, and predictive power – that would be cited to select between the different instruments available. Against this background, the philosophical debate and economic practice seemed worlds apart, frequently resulting in either discussions that target a strawman or discussions that were relevant only for a negligible part of what economics is all about.
My first moment of enlightenment came when realizing that an explicit distinction between different uses of rational choice theories in economics and in philosophy. For example, philosophers often use expected utility theory as a theory of practical rationality. The concept of practical rationality in philosophy defines a distinctive standpoint of reflection and deliberation about individual action to show people what action to take and how to evaluate it (Wallace Reference Wallace and Zalta2020). When used in philosophy, theories of rational choice therefore often specify the task of practical reason as determining which course of action would optimally advance an agent’s ends. This is a task that differs fundamentally from using some theory of rational choice to model price changes on markets. It seems therefore obvious that a normative theory of action and practical reason needs to satisfy a different set of evaluation criteria than a scientific theory that serves as a starting point to reason about the economy. A distinction between tasks would require a separation of quality criteria used to assess rational choice theories as applied to a specific set of problems. This is not to say that the sets of problems to which philosophers and economists apply rational choice theories never overlap. This is the case, for instance, when economists also use expected utility theory as a normative theory to help agents improve their decision-making. However, as the number of shared problems is small, a discussion that fails to specify the problem for which the theory is supposed to provide a solution misses the target.
This book aims at bringing some clarity into the discussions about rational choice theories and its usefulness in economics. The following conversations are meant to illustrate their different positions in the debate about the potentials and limitations of the concept and the theoretical accounts grounded upon it in the context of the social scientific frameworks they are part of in economics. The hope is to thereby reveal the multifacetedness not only of the concept itself but also of how it has been used by economists. I depart from the working hypothesis that the debates around the usefulness of rational choice theories in economics have for a long time been characterized by disunity and confusion, which has implications for the way in which they are appraised and for how the result of this appraisal affects economics and its scientific status. The idea underlying those conversations is therefore to shed light on the justifications and goals that economists have in mind when using rational choice theories and to reveal where and how economists, philosophers and sometimes also psychologists – when engaged in those debates – diverge in their views as well as in their purpose when appraising rational choice theories. More specifically, the conversations aim to achieve the four following goals:
1. Clarify what the object under discussion, viz. rational choice theories, is taken to be among the different protagonists in those debates, how the concepts constitutive of the theories have been interpreted and how they are applied.
2. Reach a better understanding of the way economic practitioners justify the epistemic role of rational choice theories.
3. Shed light on the diverging positions that defenders and opponents of rational choice theories hold.
4. Discuss the epistemic potentials that alternative approaches to human behavior play and should play in economics.
To achieve those aims, the conversation format struck me as an ideal methodology. Apart from their persistence, debates about rational choice theories are also exemplary for the frequently existing distance between philosophy of science and the sciences. Targeted conversations can reveal confusion and dissent among scholars precisely by – albeit admittedly in an artificial way – overcoming this distance. I take it to be “the capacity of orality to express that which falls under the theme of the invisible” which allows for bringing to the fore what was frequently left implicit in those contributions and debates (Jullien Reference Jullien, Düppe and Weintraub2019, 45; italics in original). By discussing and trying to understand the positions of scholars involved in the debate, a conversation can reveal hidden assumptions and make explicit the methodological commitments and epistemic justifications underlying those positions that are usually not mentioned in publications. Such conversations can show how abstract concepts and theoretical frameworks are always part of a context, that is, part of the practices of economics. The result is the presentation of a set of variants of rational choice theories and assessments thereof that will require a more nuanced appraisal than those captured in often categorical and general criticisms.
The scholars selected for this project were interviewed qua their role as academics. They all have been protagonists in debates about rational choice theories as practicing economists, psychologists, or philosophers. In their role, they have either made substantial contributions to develop the concept of rational choice or have voiced unique – and sometimes critical – views on the matter and thereby advanced the debate in one way or another. I first approached all of them quite informally via email with an introduction of myself and a short description of the project to inquire about their interest. With one exception of Daniel Kahneman, I did not send my questions in advance but posed them on the spot, sometimes in an adapted version of the ones I had prepared for the interviewees, when we met. I prepared my questions for all interviews by reading all (or, when scholars were extremely prolific, much) of their research and popular science contributions. All conversations were recorded and transcribed. I edited them in a minimalist fashion for readability and sent them to interviewees for their edits and publishing consent. Interviewees sent me their editing suggestions and I accepted most of them. Edits that lead to changes in content were kept to a minimum (see more on the editing process below). My general policy to resist substantial changes of an interview’s content was the reason that one interviewee declined publication of their interview after reading the transcript, which I accepted.
Each conversation is preceded by an introduction, locating and contextualizing the scholar’s contributions. All conversations follow three to four central themes, but scholars might approach them from fundamentally different angles. The way in which a scholar’s own research relates to those themes is what makes each conversation unique. This methodological strategy allows for revealing the different perspectives on one theme while also pointing out the similarities across conversations that enable direct comparison between them.
Is my methodology that of a semi-structured interview that we know from the social sciences? In the following, I consider interviews and conversations to be slightly different in some respects, although some might disagree.Footnote 1 While I proceed in a conventional way insofar as I use a semi-structured interview guide, my methodology diverges in that I allow for philosophical criticism and – sometimes even – skepticism to enter when asking some questions. It is in this way that the interview turns into a conversation, in which the interviewer is not neutral in the sense of just structuring the answers of the interviewee. My role as a conversation partner is that of a curious, tolerant but skeptical devil’s advocate, pushing for making a particular position more explicit, questioning the interviewees positions by also confronting them with some of their opponents’ views. While I defend the view that rational choice theories come in many forms, that distinguishing between them has epistemic consequences, and that for some problems in economics rational choice theories might suffice (see Herfeld Reference Herfeld2018, Reference Herfeld2020, Reference Herfeld2022, Herfeld and Marx Reference Herfeld and Marx2023), my role should not be mistaken for implicitly pursuing some ideological agenda, or for forcing my conversation partner toward articulating a specific viewpoint. Quite the opposite; acknowledging that different scholars engage in substantially distinct projects is meant to reveal the subtlety and profoundness underlying each position that, once we take note of that, hopefully makes us humbler in our judgments for, but also against, a particular theoretical framework.
Given this methodological premise, philosophy does not only enter the scene through conversations with philosophers. Philosophical methods of argumentation and critical reflection also inform the question asked and the anticipated dialectic in those conversations. By bringing philosophy and science together, conversations offer a basis for pragmatic critique that, while being philosophically sound, is useful and relevant for scientific practice. Economists develop and use rational choice theories for specific purposes. Ignoring them seems pointless, can result in serious misunderstanding, and might miss out on considering their possible strengths. Such conversations can hopefully contribute to a fruitful and mutually enriching dialogue on different levels between critics and defenders by provoking new philosophical questions and encouraging a more practice-inspired approach to critical appraisal.Footnote 2
One traditional methodological element, namely that the following conversations follow a similar pattern by tackling a set of core themes – sometimes in reversed order – is kept. It allows for making philosophy and scientific practice to – metaphorically speaking – sit together at one table. Thereby, the concept of rational choice ties all the conversations together. While they are not organized around a single set of questions, almost all conversations start and finish with the same question, which gives an overall coherence. Each conversation then follows a set of questions that mainly aim at discussing the personal take of each interviewee. As such, each conversation mainly engages with a person’s specific contributions and presents a unique viewpoint. Only taken together, those conversations provide an overview of the different positions in the debate and thereby enable a comprehensive appraisal of rational choice theories and their uses in economics generally.
We might conclude from those conversations that we sometimes have reasons to resist the replacement of rational choice theories despite existing criticism. We learn about pragmatic considerations that economists face in their day-to-day scientific practice that make them hold on to them. Whether philosophical standards are useful in appraising rational choice theories surely depends on whether those standards can be met in the first place. To identify feasible standards as grounds for appraisal, we need to consider in-principle constraints sometimes enshrined in the justifications of scientists, the specific objectives that economists have, and the accepted theoretical frameworks, methodological norms and epistemic values that economics is operating with. Conversations can take abstract and publishable discourse to the concrete experience of a practitioner’s day-to-day situations by enabling a discussion occurring outside the commonly streamlined venues of academic journals.
Four qualifications regarding the selection of views represented and the content of the conversations are in order. First, the views presented are not exhaustive. Unlike a scholarly article, a conversation relies upon the interest and willingness of a researcher to spontaneously disclose their unpolished views, potentially even provoking skepticism among their peers. As such, this is not for everyone. Consequently, the underrepresentation of some positions in this book should not be understood as a signal favoring a specific position, a particular school, or a preference for one concrete economic practice. Rather, the ultimate selection of scholars depended on contingent factors that were largely independent from substantive considerations. Some scholars famously defending relevant and/or unique positions about the issue were often simply not available; or a meeting was planned but never materialized.
Second, each conversation is unique in that the way it proceeds is not fully controllable. The strategy of following a strict set of questions would have compromised the very idea underlying this book, namely offering a platform where views can be developed and laid out without substantial constraints. To get at a comprehensive presentation of a position was one of my aims. However, issues discussed as well as depth of their discussion vary across conversations. What is more, comparing the conversations might also suggest an unevenness because some conversations lasted half an hour, while others took three hours depending on the interviewees’ schedules.
Third, a few constraints set by the book’s goals shaped the outcome. One goal was to reduce the technical complexity of the issues discussed to make the debate about rational choice theories in economics accessible not only for scholars who are nonexperts but primarily also for students. One danger of that is to repeat the obvious, which is why the expert might have to bear with us at times. Besides, asking obvious questions with some naivete was a strategy because they can lead to surprising answers. Provoking reflections about basic issues can sometimes be the most revealing. A conversation about such issues can also force economists to avoid the rhetoric and tacit ideology sometimes characterizing published research. It can steer a debate into new directions by asking again for new justifications of accepted positions and thereby challenge established research processes, methods, and widely accepted approaches.
Finally, the selection of scholars has obvious gender, racial, and ethnic imbalances. This partly reflects the imbalances that have been for a long time characteristic of the debate about rational choice. As one goal of this project was to contrast substantially different positions underlying the most influential research agendas in economics, the sample from which to choose, including economists who have been winners of the Alfred Nobel Memorial Prize of Economics, is already profoundly biased toward white male scholars. For example, there have been only three women who have been the lone recipient of the Nobel Memorial Prize in a given year – the late Elinor Ostrom from Indiana University, Ester Duflo from MIT and Claudia Goldin from Harvard University. A conversation about Ostrom’s research on making rational choice theories empirically useful for studying collective action problems would have been a wonderful addition to the conversations. Since 1947, there have also been only six female recipients of the John Bates Clark Medal – Amy Finkelstein, Esther Duflo, Susan C. Athey, Emi Nakamura, Melissa Dell, and Stefanie Stantcheva – whose work is highly impressive, yet not directly connected to the issues discussed here. It is thus the fundamental gender imbalance in this long-lasting debate about rational choice theories and the profession at large that is manifest in the list of interviewees.Footnote 3 The same applies to other underrepresented groups in philosophy and economics specifically but also in academia more generally.
Of course, there have been other challenges to putting my methodology into practice. First, some of the conversations concern historical episodes or personal matters. However, the conversation transcripts should not primarily be taken for oral histories (although they could be used as historiographic sources), as I do not use the personal or professional biography format and the goal was not to produce a narrative. They have been (minimally) edited by myself and each scholar for readability. Such editing implied at least two kinds of dangers. First, a danger is that information is removed and thereby a scholar’s words are taken out of context. Sometimes such a contextualization is irrelevant but sometimes it is not. Either way, it gets lost once the conversation is not listened to or can lead to misunderstandings if not presented as a detailed transcription as is common in ethnography or oral history. Second, another danger is that controversial issues and spontaneously made points might have been slightly toned down. While in all cases edits targeted readability, clarity, and coherence, the change of words always implies a change in content, even if only slightly. This relates to a more general challenge of interviews with scientists: Interpretational sovereignty might be something an interviewer, an interviewee, and a user of those interviews are fighting over. As a result, scientists can be reluctant to offer new and publicly available information that deviates from commitments made in their published work. It might also question the narrative scientists themselves hold to preserve accepted allocations of scientific credit, scholarly reputation, and academic legitimacy (e.g., Jullien 2018, Weintraub Reference Weintraub, Barnett and Samuelson2007). This is not to say that the content of the conversations has been fundamentally changed after the fact. Yet, the content should not be viewed as crude data to be used uncritically as a historical source for studying people’s scholarly or personal lives. Rather, they are primarily a source for a methodological position of each scholar regarding the nature, use, and constraints of rational choice theories.
