Eat the Salad! - An Introduction to Irrational Economics

Tradeoffs

A foundation of economic theory is the concept of trade-offs.  What economists observe in the way of how you make these trades-off are your choices.  Understanding the phenomenal complexity of even a single choice, however, is impossible, and so economists make very simple, but very powerful models.  These models use the observations of your choices (your purchases, for the most part), along with statistics, to interpret and predict your behavior.  And the models do an awesome job... in the aggregate.  The models, however, rely on the Von-Neumann/Morgenstern axioms of rationality.  What these axioms do is make it so that whatever you choose is rational, mathematically anyway.  But behavioral and neuro-economists are kinda throwing a wrench into the whole model thingy by extracting economics from the math and making it more "Human".  In other words, they introduce the possibility that people behave irrationally.  Whoa!  Are you okay there?  Well, then get back in your seat after that shocker, folks, 'cause I'm gonna dig in a bit here.

"Choice.  The problem is choice." - Neo

When we all make choices, we are usually not rational.  At least not in the mathematical sense.  You see, in order to qualify as rational, you have to become an "Econ".  A being with perfect information.  You know all of the prices and costs of things everywhere and you can easily foresee the consequences of all your tradeoffs in the immediate AND DISTANT future.  But as a "Human" your senses, personal history, memories, your mood, your habits, the environment you are in, your level of alertness at the moment, your level of creativity in the moment, among thousands of other factors, all come in to play in a single choice - not the least of which is the information you have at hand about the particular subject matter pertaining to the choice.  I made the video above to point out that the specific nutritional points made by the fear-mongering media would actually have you make a worse choice at a fast food restaurant.  But thinking people who know that vegetables are better than hamburgers can still make a good choice.  [I'll ignore the fact that if you chose the burger it is HIGHLY likely that your meal will also include a bunch a French fries and a soda automatically unless you override THAT choice with ANOTHER set of choices.]  [Duly ignored.]

Me, Myself, and I - Decisions versus Choices

It is a common adage that what you don't know can't hurt you.  But people often misunderstand this aphorism because it is meant to be ironic.  When you walk into a fast food restaurant the smell will embed unconscious decisions in your brain to target high-calorie, high-fat, high-salt, high-sugar foods since these things were hard to come by in even our very recent (say, the past 5,000 years) history as human beings.  And "Me" doesn't "know" it.  It is unconscious, which is, by definition, not able to be rationalized.  So go easy on yourself when you realize that "Me" made choices in the past that "Myself" (the parts of the brain that deal in quick absolutes like "right" and "wrong") could have made better, it was your "Me" brain, not your "Myself" brain that made the choice.  "Myself" was asleep at the switch letting instinct and habit have their way.  And lest you think those are the only two people in your head, let me introduce you to "I" the one who deliberates rationally about everything and tries really hard (sometimes, too hard) to reconcile between "Me" and "Myself".  This mess of people are your "Board of Directors" and, believe me, unless "I" is involved in helping to make a choice in the moment, either "Me" or "Myself" are going to make a snap decision and you will open your mouth or move your hands without much, if any, thought behind what you are doing.  And here's the kicker.  The fact that those guys can make good choices sometimes makes you confident that "I" is just a time-waster.  The deliberative, analytical thought that "I" uses has to overcome thousands of years of "Me's" instincts to compete for whatever resources it can get immediately and "Myself's" snap judgements that rely on faulty memories that often aren't even applicable to the current situation and start using up everyone's time and brain-power, even physically overwhelming "Me" and "Myself" (using a flood of neurotransmitters in the frontal lobe) to arrive at a better decision.  And then, somehow, "I" has to make you make a good observable choice - like choosing to gather more information (for instance, reading the ingredients list on the whole meal) or walking out and finding a place with ONLY salads.

TMI - Good Thing or Bad Thing?

Your brain makes thousands of decisions for you of which you are unaware, which is a good thing because society likes it when you decide to wear a shirt to work.  But it is also a very bad thing when it decides that it should just rely on the information it has at hand to make more important decisions, like whether or not you should drive the speed limit if everyone else is moving faster, whether you should move to a new city in case the industry you work in pays better there or you would like the lifestyle there better, or when you are choosing between a salad and a hamburger for lunch.  Until you can take the decision away from the subconscious and the conscious-but-quick-to-decide parts of your brain and begin to deliberate over it, you won't always win those fights.  Remember, making a rational tradeoff implies that you were aware of all of the alternatives and their ultimate consequences and made a choice based on that information.  This is almost never the case.  I chose to complete college so I will never know if I would have been better off quitting to go be an actress.  Based on this video, I'm saying college worked out pretty well for me.

What I can know is that I have to eat to stay alive and if I think back to what it was like before mass produced and distributed food systems, I can figure out that food was probably relatively scare not that long ago (it wasn't readily available everywhere like today in the first world) and limited in variety.  Food was probably largely restricted to minimally processed (think butchered or picked as the only processing), and so also didn't have many calories added on to its original form.  But nowadays I don't have to think to generate information.  The world brings it to me magically.  In short order, I have learned LOTS of information - scientists have discovered that my body needs fat and protein and salt and some carbohydrates and vitamins and minerals, and lots of things that I can't see.  Scientists are awesome at making the otherwise invisible known.  But that information escapes out into the "media" and now all that information seems to make things more complicated and "Me", "Myself" and "I" could get into a knock-down drag out about what is the best decision until two give up and one gets their way.  The funny thing is that all the information is hard for "Me" to process, after all that's "I" job, but "Me" also "knows" that all the "Good Things" my body needs comes in fresh veggies and fruits.  She's just forgotten since there are SOOO many other options available.  "Me" knows that her body is built so that she can move around, "Me" knows that those cute shoes are going to hurt, and "Me" knows those newer golf clubs aren't going to improve my swing.  But "Me" has a tendency to think shiny, new, and now are the main objectives.  Those are "Good" and, remember, "Myself" is easily talked into "Good".  Which is often bad.  "I", the reasonable voice in your head, thinks functional, tried-and-true, and long-term, but is often not thinking long-term enough so that you can go full circle and get back to the choice you have to make right now without a battle.  Emotions are the weaponry in these battles and they are indiscriminant - like WMDs.  Once emotions get involved "Me" Myself" and "I" entrench, that is, they get IRRATIONAL, and nobody wins.  Your emotions are very primitive features of your brain and they make you behave like Kim Jong Un on crack.  And that's always bad.

The Game of Tradeoffs

What economists have come to incorporate into the idea of tradeoffs is the idea of risk.  When Megan McCarthy was asked about her eating habits, she noted that it was a risk for her to tradeoff  a hamburger and French fries for a salad because she "could get hit by a bus tomorrow".  This was, of course her "Me" and "Myself" attempting to playout the game of life as though it would be concluded in the next 24 hours.  If "I" wants to make a rational decision, whether that decision is about food,  education, a job or career change, or a chuck-it-all-I'm becoming-a-beach-bum decision, "I" has to think about the risks of the consequences of the actual choices into the far future and use cold facts and hard logic to convince "everyone" involved of its position based on its assessment of the risks and rewards (remember a reward is as much a consequence as a bad result is to any choice).

Consolidating the hapless, Freudian trio into one single "Human", it should be clear that we non-Econs often make decisions based on very little information, or information that is so woefully limited that if we knew even the amount of information we didn't know pertaining to a single choice, we'd be utterly stymied and probably end up catatonic.  Life is a hard game to play when most of it is in a black box that we give to the triplets to shake and see if they can figure out what we should do next.  All The Geekonomist can tell you is this: The risk of you dying tomorrow is really, really low.  Eat the salad!