Chapter 33 - The Human Agent, Behavioral Changes and Policy Implications

Abstract

Proponents of the Chicago school of thought perceive the human agent as completely rational. In their seminal article “A theory of rational addiction,” Becker and Murphy present a human agent who anticipates everything and chooses between two options as a function of their derived utility. The agent, in principle, knows he is going to become addicted because he is discounting the future, and discounting the future at the interest rate. There is a fundamental difference between the economic analysis—or the Chicago economic analysis—and what most psychologists feel to be the case. Psychologists and economists adopt very different perspectives of the mainsprings of behavior and decisions. Psychologists tend to take a retrospective view of the consequences of action. For example, looking at someone who began smoking at a young age, and suffering and regretting it later, psychologists would say that it was not worth it. This retrospective view of the whole arc stretches from the decision to the consequences. An economist's perspective is solely based on the point of decision. Theirs is a forward-looking perspective.