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The Rational Consumer

by rdf Fri Aug 22nd, 2008 at 02:21:16 PM EST

This story gets to the heart of the economic basis of our society - that we are all "rational" consumers:

An Update on Gardasil: Marketing Trumps Science - Billions Spent; Risks Remain Unknown

Just a short summary, if you don't want to read the link. Gardasil is a vaccine that protects against some kinds of cervical cancer. It is being widely promoted in countries that can afford to pay for the treatment, but not in poor countries. The facts should be of interest to all women (and those who have women in their lives). The evidence about its long-term benefits aren't known and its value from a cost-benefit perspective is open to question as well.

The "rational consumer" belief is that we will all make the best choices in our purchases and the aggregate of this demand in a "free market" will lead to optimal results.

However, in the real world we find that misinformation, unknown and unknowable facts, monopoly, corruption and propaganda can make it difficult, if not impossible, to decide what the best course of action should be. With such a lack of clear information how is one to be a "rational" consumer?

Things get especially bad when government becomes part of the corrupt enterprise by allowing the regulatory agencies and scientific studies to be influenced by the business interests they are supposed to monitor. This has gotten especially out of hand in the US, but this vaccine is being promoted in other developed countries as well. I don't know if EU authorities are any better are resisting corporate pressure.

Reagan got it almost right:
It's not that "government is the problem", it's that "corrupt government is the problem".

How to fix it is the big question.

Bounded rationality - Wikipedia, the free encyclopedia

Some models of human behavior in the social sciences assume that humans can be reasonably approximated or described as "rational" entities (see for example rational choice theory). Many economics models assume that people are hyperrational, and would never do anything to violate their preferences. The concept of bounded rationality revises this assumption to account for the fact that perfectly rational decisions are often not feasible in practice due to the finite computational resources available for making them.

The term is thought to have been coined by Herbert Simon. In Models of My Life, Herbert Simon points out that most people are only partly rational, and are in fact emotional/irrational in the remaining part of their actions. In another work, he states "boundedly rational agents experience limits in formulating and solving complex problems and in processing (receiving, storing, retrieving, transmitting) information" (Williamson, p. 553, citing Simon). Simon describes a number of dimensions along which "classical" models of rationality can be made somewhat more realistic, while sticking within the vein of fairly rigorous formalization.

You can ask, though, whether it isn't the 'fairly rigorous formalization' that is the problem.
by nanne (zwaerdenmaecker@gmail.com) on Sat Aug 23rd, 2008 at 07:04:56 AM EST
... proximate source of the most egregious biases.

When "analytical rigor" has a higher priority than the persuasiveness of the causal and effect explanation, then  no matter how many "dimensions" are introduced that permit more realism, the initial point of departure for each analysis is compatibility with the analytical toolkit, and the marginalist reasoning itself will hold that the result of the trade off between analytical tractability will be less success in offering cause and effect explanations than if persuasiveness in offering cause and effect explanations were the starting point.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sat Aug 23rd, 2008 at 01:01:42 PM EST
[ Parent ]
Transparency, first.

Words and ideas I offer here may be used freely and without attribution.
by technopolitical on Sat Aug 23rd, 2008 at 03:37:37 PM EST

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