Challenging Rational Action Theory

In neo-classical economics it is assumed that individuals, as separate economic agents whose 'preferences' or 'tastes' are already given, make selfish cost-benefit type analyses in order to maximise their personal utility. People act, in other words, as 'rational economic man'. While on occasion the 'taste' for 'leisure', 'welfare' or 'pleasure' more generally is included in the definition of utility, this is usually operationally defined in monetary terms. Preferences are assumed to be consistent and stable, with consistent ranking of alternative preferences, independent of the behaviour of everyone else. Using these assumptions, mathematical models based on differential calculus and the technique of constrained maximisation can symbolise rational actors working on the principle of marginal utility. In turn, this mathematics is seen to allow the natural-science like prediction of behaviour. Neo-classical economics is thus claimed as a universal theory potentially applicable to most of human life. On the one hand theory predicts behaviour, while the econometric and statistical manipulation of data sets can measure this behaviour in practice. While other social science disciplines may be interesting and useful enough in describing the outcomes of this economic behaviour, or even in accounting for the origin of tastes and preferences, they remain essentially peripheral to the explanation of social behaviour. Thus Nobel prize-winner Gary Becker, an avid exponent of the universality of neo-classical economics, can use this model in his latest book Accounting for Tastes (1996) to explain why people take drugs, give money to beggars and fall in love. Explaining how and why people act in welfare states is a comparatively trivial problem seen in this light therefore, and indeed there is a burgeoning econometric literature on this theme. In the guise of 'rational action theory' this approach has colonised much of social science.