The magnificent edifice of modern microeconomics is built on a simple model of human behaviour: rational choice theory.
The rational person has goals; things she wants and values. She makes choices; she acts to achieve her goals. Saints can be rational, and so can sinners. What matters is having preferences and making choices, whatever those choices happen to be.
The assumption of rationality captures something so essential to survival that it explains non-human behaviour as well. Indeed, with a few simple experiments, it is possible to test the rationality of a wide range of animals.
The first element of rationality is the ability to make choices. This, in turn, requires that an individual knows what he or she wants. The first assumption of rational choice theory is that individuals have complete preferences, that is, given two alternatives, A and B, either A is preferred to B, B is preferred to A, or the individual is indifferent between the two.
The completeness of a rat's, cat's, dog's or other animal's preferences can be tested using this simple experiment:
- Take two pieces of food from the fridge, for example, some left-over chicken and a cube of tofu. Simultaneously present the two pieces to the animal. Take care to position the two pieces so that they are equally accessible, and not to distract the animal with movement.
If the animal is always able to make a choice, be it tofu or chicken, he is demonstrating that he has complete preferences.
(When offered a choice between say lettuce and tomato, the animal might choose the third, implicit option - none of the above - by ignoring the experimenter and walking away. But that is rational too.)
If the animal consistently chooses tofu over chicken, then he prefers tofu to chicken. If the animal sometimes chooses tofu and sometimes chooses chicken, he may be indifferent between the two. Indifference means "no difference", that is, chicken and tofu are equally delicious and yummy, so one just picks one at random.
The only way to fail the "ability to make choices" test is to sit there pondering the chicken and the tofu, thinking "which one do I really want? what will really make me happiest? I don't know, I don't know, I don't know." Humans do that, but not most other animals.
To be rational, choices must be coherent. The second assumption of rational choice theory is that preferences are transitive, that is, if A is preferred to B and B is preferred to C, then A is preferred to C.
A test of the transitivity of an animal's preferences requires three objects, for example, three toys, or three pieces of three types of food, or some combination of toys and food.
- Present animal with each possible combination of the three objects, for example, chicken v. tofu, throw toy v. chicken, throw toy v. tofu. Follow the experimental protocols described above, that is, present each pair of two objects simultaneously.
Transitivity means that, if the animal chooses tofu over chicken, and chicken over a throw toy, then, given a choice between tofu and the throw toy, he should choose the tofu.
If a dog fails the transitivity test, does it mean that he is irrational? Not necessarily. He might simply be indifferent between the various options. Alternatively, he might feel full after so much sniffing and snacking, and want to play a game instead. The assumption is that "all else being equal" preferences are transitive - but a hungry animal is not equal to a well-fed animal. Finally, it is extremely difficult to avoid framing the animal's decision by, for example, making one object easier to reach. Such framing, however, can distort an animal's choices, making them appear to be less than fully rational.
Textbooks usually add non-satiation, which means "more is preferred to less" to the list of assumptions economists make about preferences. The non-satiation test is simple:
- Give an animal a choice between a small amount of something delicious, such as chicken, and a large amount of something delicious. The rational animal will choose the super-sized option.
Researchers have found that animals as diverse as parrots, horses and salamandars "go for more" when presented with two options. John Henry Kagel, Raymond Charles Battalio, Leonard Green, in their book Economic Choice Theory: An Experimental Analysis of Animal Behavior provide extensive documentation of the rationality of animals in general. Indeed, with phrases such as "Labor supply curves (number of lever presses) for two rats working in a closed economy...." they give a whole new meaning to the phrase "rat choice."
But if rational choice theory is so simple and universal that it can explain the behaviour of monkeys, rats, salamanders and pigeons, why do some people find it controversial?
First, it does not have as much predictive power as perhaps one might like. Rational choice theory says that people will act instrumentally, trying to achieve their goals and desires. But it is silent on what those goals and desires actually might be. So while almost any behaviour can be explained after the fact as a rational choice, predicting behaviour before hand is a little trickier.
Second, like Newtonian mechanics, rational choice theory isn't a precisely accurate representation of how the world actually works, as can be demonstrated by a simple experiment. WARNING: do not try this with any animal who is aggressive, or whose temperament is unknown.
- Take two identical desirable objects, for example, two identical bones. Give one object to the animal and let her enjoy it for a while. Then take the first object away from the animal and attempt to replace it with the second object. Observe the animal closely. Does the animal exhibit "loss aversion", that is, snarl, growl, or otherwise object to having the bone taken away? Does the animal exhibit "status quo bias", that is, prefer the bone she has to the new bone?
The whole field of behavioural economics is dedicated to documenting ways - like loss aversion and status quo bias - in which individuals' behaviour fails to correspond to predictions of intermediate micro level rational choice theory.
A third issue with rational choice theory - at least when applied to people - is the normative content of the theory. Economics typically argue that what people choose is what makes people most happy. Some go further, arguing that the role of government should be limited to maintaining the institutional framework that allows people to make choices: providing information, ensuring competition, and monitoring product quality.
When it comes to dogs, cats and rats, we don't think this way. An average dog might prefer, say, chocolate over dry kibble. Yet an average dog owner has no qualms about ignoring the dog's preferences and feeding the dog kibble over chocolate. Chocolate can kill a dog.
In the same way, an average human might prefer, say, soft drinks over water. Excessive soft drink consumption leads to a variety of health problems, such as increased risk of diabetes. Yet any attempt to encourage people to consume water rather than soft drinks through, for example, soda taxes, or bans on super-size soft drinks, is extremely controversial.
Why is it acceptable to limit animals' choices, but not humans'? The obvious response is "humans and animals are different." Yet as we learn more and more about ourselves, and about other animals, the more we discover that humans and other animals are not that different after all.