This article was written by guest author John Wood, J.D. Candidate, May 2011 at New York University School of Law.
Studies of human nature in the context of legal policy tend to contrast the rational choice view against the more recent behavioral model of decision-making.[i] This framework is misleading in that many of the latter school’s insights find expression in literature that predates it by centuries. To illustrate this, I draw the following concepts from The Federalist Papers’ remarkably insightful discussion of human nature: bounded rationality; bounded will-power; bounded self-interest; bounded ethicality; reactive devaluation; escalation of commitment; availability bias; self-serving bias; confirmation bias; optimism bias; myopia; endowment effect; loss aversion; prospect theory; collective action problems; rent seeking; free riding; groupthink and holdout situations. I propose an etiological rather than binary approach to framing the debate about human nature that seeks out the conceptual continuity of classical liberal, neoclassical economic and behavioral perspectives.[ii]
In contrast to the “standard versus behavioral” framework for understanding human nature, my claim is that prevailing views of human rationality have undergone a triadic dialectical progression. A dialectical progression consists in an assertion in the form of a thesis, a reactive negation in the form of an antithesis, and a resolution of the tension between these two in the form of a synthesis.[iii] The three phases of a dialectical progression are all parts of an organic unity. “[T]he resultant synthesis of the [thesis and antithesis occurs] through a process of ‘overcoming’ (concurrently implying to lift up, abolish, and transcend).”[iv] The “standard versus behavioral” framework should be jettisoned in favor of an etiological view which appreciates the origins and permutations of the concepts under discussion. Otherwise, we arbitrarily cut contemporary behavioral scholarship from its historical roots.
Allow me to outline the rudiments of the dialectical progression in models of human nature. Thesis: Classical liberal philosophers of the 17th and 18th centuries took as a central tenet the irrationality hypothesis, expounded by philosophers ranging from Adam Smith to Baruch Spinoza.[v] Antithesis: By the 19th and 20th centuries, neoclassical economics endorsed a “rational maximizer” theory of human decision-making. Synthesis: In the mid-20th and 21st centuries, scholars of multiple domains have endeavored to provide an empirical account of decision-making that seeks to reconcile imperfect rationality with utility maximization. The conceptual framework of the triad as abstract-negative-concrete applies to the etiology of prevailing studies of rationality. Philosophical abstraction based on anecdotal evidence was replaced by an abstract model of rational decision-making that negated the idiosyncratic features of the classical liberal account that in turn was replaced by an empirically grounded or concrete account of decision-making.
With a revival of interest in classical scholarship in the 17th and 18th centuries, the conception of human rationality in the subsequent period can be accounted for as the “antithesis” to the Enlightenment thesis in the dialectical progression, inasmuch as its defining tenet (that globally we act rationally to promote our self-interest) negates a definitive element of its precursor. The rational maximizer hypothesis negatives the irrationality hypothesis by ignoring the “deviations from calculating self-interest” that attend our passions[vi] in a way that isolates what Aristotle considered the quintessential hallmark of our species. “[M]an is the only animal who has logos.”[vii] Logos means both reason and language, a touchstone faculty which enables rational deliberation, qualitative ranking, and the performance of abstract economic or utilitarian reasoning. This understanding of human decision-making served for quite some time, and remains influential and useful despite inroads made by the behavioral movement.
The third stage, the interdisciplinary approach in our time, tacitly reconciles the concerns of both prior models, by experimentally diagnosing the tendencies illuminated by the thesis in order to promote the goals of the antithesis. Studying irrationality allows us to become more rational. Thus, contemporary empirical behavioral studies are colorable as a synthesis in the dialectical progression. If this is true, we can see the evolution of consciousness growing before our eyes; mind becoming ever more aware of itself over time; we have cause to celebrate the achievements of contemporary academic discourse as something really new, something truly superior, than that of our predecessors, notwithstanding the withering futility suggested by Ecclesiastes: “The thing that hath been, it is that which shall be; and that which is done is that which shall be done: and there is no new thing under the sun. […] There is no remembrance of former things; neither shall there be any remembrance of things that are to come with those that shall come after.”[viii]
[i] See, e.g., Oren Bar-Gill and Richard Epstein, Consumer Contracts: Behavioral Economics vs. Neoclassical Economics, NYU Law and Economics Research Paper No. 07-17; Minnesota Law Review, Vol. 92, 2007-2008 available at SSRN: http://ssrn.com/abstract=982527; Christine Jolls, Cass R. Sunstein, Richard Thaler, A Behavioral Approach to Law and Economics, 50 Stan. L. Rev. 1471, 1473 (1998).
[ii] For the purpose of this blog, I will simply describe the etiological approach my larger paper does so much to set up. Those interested in my findings in The Federalist Paper should consult my paper on SSRN. See John Wood, The “Constitution of Man”: Reflections on Human Nature from The Federalist Papers to Behavioral Law and Economics, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1751067.
[iii] Heinrich Moritz Chalybäus, Historische Entwicklung der spekulativen Philosophie von Kant bis Hegel (1837, 5th ed. 1860) (interpreting Hegel in an exegetical account of German philosophy). G. W. F. Hegel in Phänomenologie des Geistes [“The Phenomenology of Spirit”] (1807) expresses the dialectical triad “abstract-negative-concrete,” while Hegel’s Wissenschaft der Logik [“The Science of Logic”] expresses the dialectical triad “immediate-mediated-concrete.”
[iv] Vincent B. Leitch, et al., The Norton Anthology of Theory and Criticism, 626 (2001).
[v] Stephen Holmes, “The Secret History of Self-Interest,” in Passions and Constraint: On the Theory of Liberal Democracy, 42-43 (University of Chicago Press 1995).
[vi] Consider the principle antonyms of self-interest in Holmes, 57-58, which “provide striking evidence for the complexity of seventeenth- and eighteenth-century views of motivation.”
[vii] “[L]ogon de monon anthrōpos ekhei tōn zōōn.” (1253a9).
[viii] Ecclesiastes 1:9, 11. King James Version. (Cambridge University Press 1976) (1611).