Poverty, Irrationality, and the Value of Cash Transfers

It has been demonstrated that irrationality reduces the efficiency of individuals’ allocations, as measured by their “true” or rational preferences. There is also evidence that poverty increases irrationality of different sorts. As a result, the net benefit to society of a cash transfer from taxpayers to welfare recipients may not be zero. The fact that the transfer will be allocated less efficiently by the recipients than by the taxpayers will reduce the value of the transfer, while if the transfer increases recipients’ rationality, it will increase the efficiency of the allocation of their pretransfer budgets, thus increasing the value of the transfer. The net effect on society will be positive or negative, depending in large part on the degree to which the transfer increases rationality. I model these effects in the context of present-biased preferences and explore the effect of irrationality, income, and the size of transfer on the value of transfers. I conclude that under a plausible range of conditions, transfers can generate a substantial positive net benefit. I also model the choices of a fully rational paternalist and find little support for paternalistic in-kind transfers.

Coarse, Efficient Decision-Making

To minimize the cost of making decisions, an agent should use criteria to sort alternatives and each criterion should sort coarsely. To decide on a movie, for example, an agent could use one criterion that orders movies by genre categories, another by director categories, and so on, with a small number of categories in each case. The agent then needs to aggregate the criterion orderings, possibly by a weighted vote, to arrive at choices. As criteria become coarser (each criterion has fewer categories) decision-making costs fall, even though an agent must then use more criteria. The most efficient option is consequently to select the binary criteria with two categories each. This result holds even when the marginal cost of using additional categories diminishes to 0. The extensive use of coarse criteria in practice may therefore be a result of optimization rather than cognitive limitations. Binary criteria also generate choice functions that maximize rational preferences: decision-making efficiency implies rational choice.

Rationalism: A Rational Ground for Morality

Rationalists (including Butler, Price, and Reid) defend an alternative to the sentimentalist position, in three main areas: (1) Against the view that practical reason is subordinate to non-rational desire, they argue that some of our actions result from desires that are responsive to reason, so that we are guided by the apparent merits of different course of action, not just by our non-rational preferences. (2) Against the view that moral judgments depend on our emotions, and moral facts are partly constituted by our emotional reactions, they argue that moral judgments cannot be understood unless we recognize that they are rational judgments about objective facts. (3) Against the view that our moral outlook is utilitarian, they argue that utility is only one relevant moral consideration, and that we have good reason to attend to justice, generosity, and other aspects of morality that are not subordinate to utility.

The Arbitrariness Argument

This chapter presents a non‐arbitrariness argument against near bias: (1) At any given time, a prudentially rational agent’s preferences are insensitive to arbitrary differences. (2) Relative distance from the present is an arbitrary difference between events. (3) If you are near‐biased, your preferences are sensitive to when an event is scheduled relative to the present. (C) So at any given time, near‐biased preferences are not rational. This chapter focuses on objections to (1) (the Non‐Arbitrariness principle), offering cases to support the Non‐Arbitrariness principle. It considers and rejects Preference Uniqueness (i.e., any total set of reasons uniquely determines a set of rational preferences) as a way of defending (1) in favor of moderate preference permissivism. It argues that the Non‐Arbitrariness principle does not rule out rational choice in Buridan’s ass cases. While it is irrational to prefer one option to the other, it is not irrational to act by making choices.

A Discussion of Christopher H. Achen and Larry M. Bartels' Democracy for Realists: Why Elections Do Not Produce Responsive Government

Liberal democracy is often viewed by its supporters as a system of government that responds to the informed and rational preferences of the public organized as voters. And liberal democracy is often viewed by its critics as a system that fails to respond to the informed and rational preferences of its citizens. In this book Larry Bartels and Chris Achen draw on decades of research to argue that a “realistic” conception of democracy cannot be centered on the idea of a “rational voter,” and that the ills of contemporary democracies, and especially democracy in the U.S., must be sought in the dynamics that link voters, political parties and public policy in ways that reproduce inequality. “We believe,” write the authors, “that abandoning the folk theory of democracy is a prerequisite to both greater intellectual clarity and real political change. Too many democratic reformers have squandered their energy on misguided or quixotic ideas.”

A Discussion of Christopher H. Achen and Larry M. Bartels' Democracy for Realists: Why Elections Do Not Produce Responsive Government

Liberal democracy is often viewed by its supporters as a system of government that responds to the informed and rational preferences of the public organized as voters. And liberal democracy is often viewed by its critics as a system that fails to respond to the informed and rational preferences of its citizens. In this book Larry Bartels and Chris Achen draw on decades of research to argue that a “realistic” conception of democracy cannot be centered on the idea of a “rational voter,” and that the ills of contemporary democracies, and especially democracy in the U.S., must be sought in the dynamics that link voters, political parties and public policy in ways that reproduce inequality. “We believe,” write the authors, “that abandoning the folk theory of democracy is a prerequisite to both greater intellectual clarity and real political change. Too many democratic reformers have squandered their energy on misguided or quixotic ideas.”

A Discussion of Christopher H. Achen and Larry M. Bartels'Democracy for Realists: Why Elections Do Not Produce Responsive Government

Liberal democracy is often viewed by its supporters as a system of government that responds to the informed and rational preferences of the public organized as voters. And liberal democracy is often viewed by its critics as a system that fails to respond to the informed and rational preferences of its citizens. In this book Larry Bartels and Chris Achen draw on decades of research to argue that a “realistic” conception of democracy cannot be centered on the idea of a “rational voter,” and that the ills of contemporary democracies, and especially democracy in the U.S., must be sought in the dynamics that link voters, political parties and public policy in ways that reproduce inequality. “We believe,” write the authors, “that abandoning the folk theory of democracy is a prerequisite to both greater intellectual clarity and real political change. Too many democratic reformers have squandered their energy on misguided or quixotic ideas.”

A Discussion of Christopher H. Achen and Larry M. Bartels' Democracy for Realists: Why Elections Do Not Produce Responsive Government

Liberal democracy is often viewed by its supporters as a system of government that responds to the informed and rational preferences of the public organized as voters. And liberal democracy is often viewed by its critics as a system that fails to respond to the informed and rational preferences of its citizens. In this book Larry Bartels and Chris Achen draw on decades of research to argue that a “realistic” conception of democracy cannot be centered on the idea of a “rational voter,” and that the ills of contemporary democracies, and especially democracy in the U.S., must be sought in the dynamics that link voters, political parties and public policy in ways that reproduce inequality. “We believe,” write the authors, “that abandoning the folk theory of democracy is a prerequisite to both greater intellectual clarity and real political change. Too many democratic reformers have squandered their energy on misguided or quixotic ideas.”