Perfectly Imperfect (Siren Publishing Classic)
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The DNA of neoclassical economics is defective. Neither the induction problem nor the problems of methodological individualism can be solved within the framework of neoclassical assumptions. The neoclassical approach is to call on rational economic man to solve both.
To make rational calculations projectible, the agents may be assumed to have idealized abilities, especially foresight; but then the induction problem is out of reach because the agents of the world do not resemble those of the model. The agents of the model can be abstract, but they cannot be endowed with powers actual agents could not have. Furthermore, Pierre Bourdieu fiercely opposed rational choice theory as grounded in a misunderstanding of how social agents operate.
Bourdieu argued that social agents do not continuously calculate according to explicit rational and economic criteria. According to Bourdieu, social agents operate according to an implicit practical logic—a practical sense—and bodily dispositions. Social agents act according to their "feel for the game" the "feel" being, roughly, habitus, and the "game" being the field.
Other social scientists, inspired in part by Bourdieu's thinking have expressed concern about the inappropriate use of economic metaphors in other contexts, suggesting that this may have political implications. The argument they make is that by treating everything as a kind of "economy" they make a particular vision of the way an economy works seem more natural.
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Thus, they suggest, rational choice is as much ideological as it is scientific, which does not in and of itself negate its scientific utility. An evolutionary psychology perspective is that many of the seeming contradictions and biases regarding rational choice can be explained as being rational in the context of maximizing biological fitness in the ancestral environment but not necessarily in the current one. Thus, when living at subsistence level where a reduction of resources may have meant death it may have been rational to place a greater value on losses than on gains.
Proponents argue it may also explain differences between groups. The rational choice approach allows preferences to be represented as real-valued utility functions.
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Economic decision making then becomes a problem of maximizing this utility function , subject to constraints e. This has many advantages. It provides a compact theory that makes empirical predictions with a relatively sparse model - just a description of the agent's objectives and constraints. Furthermore, optimization theory is a well-developed field of mathematics.
These two factors make rational choice models tractable compared to other approaches to choice. The Doctrine of Prophecy.
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