Circumventing cost-benefit: why ‘irrational’ decisions might be right

Does rationality even make sense when we cannot measure upsides and downsides?

Are we rational or not? Many of the charges that human decision making is irrational are questionable. We really do not knowingly make decisions that plainly hinder us in achieving our long-term goals. But that doesn’t mean decisions cannot look puzzling, and difficult to explain.

Why, for example, would governments round the world maintain the practice of putting the clocks forward in the spring, and back again in winter, given that there is little or no evidence that it conserves energy, and that it causes more traffic fatalities? Why would many people prefer living in a world where they earn less, but more than others, to living in a world where they earn more, but others earn even more than them? Isn’t that odd?

“Irrational” tells us nothing worthwhile

Dismissing such examples as irrational is tempting, but unconstructive. It immediately raises the question: whyever would we do something ‘irrational’? Policy makers have surely discovered that shifting to daylight saving time (DST) and back does little for reducing overall energy use. A natural experiment by Matthew Kotchen and Laura Grant…