Economists like to cite the results of natural experiments or observations, in which people’s preferences are revealed by behaviour, rather than discovered by asking them. This is often said to be a truer reflection of someone’s preferences, as they must put their money (often literally) where their mouth is.
For example, you might ask someone in a questionnaire whether he would gamble £5 on a 10% chance of winning £60 and he might say that he would, but if you give him £5 and then ask him whether he wants to take a chance, he might not.
People often talk the talk but when faced with a real choice do something else. Sometimes it’s about projecting an image; not only to other people, but sometimes to themselves, so that even an anonymous survey can be affected by the effect.
I encounter this a lot when discussing whether things are good for us: people do it, so they must want to do it. Why should we regulate gambling, since people clearly benefit from it… i.e. they do it, and that must mean that the pleasure they get from satisfying the desire to do it is greater than the losses they incur?
People behave a certain way, and therefore that way must be best for them; who are we to judge other people’s preferences?
I might first answer that for a rational person to behave optimally he needs perfect information, which is often not the case. And a certain type of political person might suggest that we spread information rather than regulating or taxing things that we think harm the doer. Sometimes teaching people is harder than outright forbidding them from doing something. This is why parents need various rules; children can do a lot of things that are unwise, and it takes time and effort to make them understand why they should not do them. If many such dangerous behaviours are available, a parent needs to forbid them all while (one hopes) gradually teaching the child.
But beyond all this we might ask what advertising is for. If people are rational actors who only need information, why are adverts not bland descriptions and portrayals of the product on offer, merely ensuring that potential customers know that it exists? Why are we so familiar with, for example, pretty women in adverts? Why do we have an advertising industry at all?
If I have a need and I discover that there is a product that satisfies it, and I am entirely rational, that should be sufficient for me to buy the product (or look into it and see that it is overpriced). Advertising exists to persuade us: to make us want a product.
The ‘revealed inference’, through the existence of a whole industry (even if we were to ignore psychology as an academic pursuit), is that preference is malleable. We are irrational creatures, weak-willed and foolish. An established way to treat alcoholism is with a drug that is taken once (per day) and makes the user feel very ill if he then drinks alcohol. It relies on a person’s preferences changing through the day: he must be strong enough just once a day to take the tablet, and then he ‘locks in’ that strength, which otherwise might fail. If humans were consistent such a treatment would be unnecessary or impossible.
People also bemoan their procrastination. We have a whole word for putting off what one ‘wants’ to do. Should we assume that a person’s true preferences are to avoid doing what he claims to want to do? In a world of distraction machines, full of creations designed to take attention, fighting one’s way through to one’s own goals takes effort; effort that we do not always have, especially after long days of work which sap our focus.
I think it’s naïve to treat all this behaviour as people’s true preference. People often clearly articulate what they want even when there is no social benefit from concealing truer preferences. What we have in conflict are different aspects of humanity.
In modern terminology, we might call it ‘system 1’ and ‘system 2’, following Daniel Kahneman’s categorisation of instinctive and thoughtful behaviours respectively. But he didn’t invent the idea. We have known about the contrast between hedonism and contentment (, for example,) for centuries. Even ignoring addiction, attention-theft and persuasion, there is a conflict between the experience of fun now and pleasure later. This conflict is one tool advertisers can use to persuade and addict people.
If a person says that he wants contentment, and pleasure later, why should we take that as the lesser preference? We have a conflict between what he rationally says, and his behaviour, which can more easily be swayed by irrational concerns: impulsive weakness perhaps. We should probably trust his statement more than his behaviour. After all, what is the seat of humanity; of a soul? Is it the instinctive lizard-brain, or the sentient, thoughtful brain?
Where behaviour does not match stated preference, that should tell us that there is social or market failure. False impressions, uncertainty over the future, or need for some happiness right now are all things we could avoid in a society that cared for its people. This would make far more sense than assuming that people truly wanted to self-destruct.
For example, I would like a career in writing. You might find this short essay bad, or good. It doesn’t matter: I don’t pursue a career that I believe that I would find very fulfilling because it is uncertain. I could put a lot of effort in and not get anywhere, or get only poorly-paid tasks writing mostly under someone else’s creative control. I could learn and train if I’m not good enough, but I have no information about how good my work is nor how good it needs to be. The world is full of people who would like some artistic outlet but instead work in admin. jobs.
Their revealed preferences are that they do not really want to be artistic. This contrast with their stated preferences shows that society is not set up for them. And what is society for except satisfying its people? We should listen to people’s ambitions and dreams. These are not ‘unreal’ preferences. They are dashed hopes, replaced with the fodder fed to us by advertisers.
People
might seem to be satisfied when they buy a new car whose adverts have repeated
the idea that this provides freedom; that sitting in the driver’s seat makes
one sexually desirable and powerful. What has really happened is that people
who would have been fine were rendered unsatisfied by advertising, and some of
them lose their money in order to make good that dissatisfaction. The same happens
in grossly unequal places even without advertising: if you see other people who
are fantastically well-off, you desire their lives even if you cannot have them.
It doesn’t matter if outrageous wealth is achieved through obvious luck or luck masquerading as ability; the masses
will still want such lives, and be less satisfied as a result. Inequality
itself causes stress and suffering. I do believe that we should allow some
difference in wealth and income, to reflect work done in life. But no human
being is worth £millions a year when others receive mere £s.
We should be helping people to achieve full person-hood, curing them of their addictions to procrastination, social media, advertised products, processed food or whatever else it might be, rather than cruelly deciding that people should be worse off and unhappier. We should help people's thoughtful, rational sides win in their lives; help their souls conquer their whims and shine freely. In just the same way that we give alcoholics disulfiram, we need disulphiram for the economy. Instead, many economists recommend more alcohol for the alcoholic, as it’s what he clearly wants and it would be patronising to think he needs anything else. Let’s have some doctors in charge instead.
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