----------------- HES POSTING ----------------- 
Published by EH.Net (January 2003) 
 
Amartya Sen, _Rationality and Freedom_. Cambridge, MA: Harvard University 
Press, 2002. vii-736pp. ISBN 0-674-00947-9. 
 
Reviewed for EH.NET by Robert D. Tollison, Robert M. Hearin Professor of 
Economics, Department of Economics, University of Mississippi 
 
Professor Sen has been at the forefront of modern economics for many years, 
a fact signified by his receipt of the Nobel Prize in Economic Science in 
1998. He has in particular devoted a significant amount of effort to 
welfare economics and social choice theory, where his immense creativity 
has energized an otherwise sterile and highly technical part of the 
discipline. He is equally good in math and words, so that his work in this 
area is accessible to most economists and scholars in other disciplines. H 
e is not just a puzzle solver; he is a deep and significant thinker on such 
issues. The essays in this book represent some of his most important work 
in these areas. While not denying their importance, these are not 
literatures that I have followed closely, so I will abjure from making any 
other comments on these aspects of Sen's work. 
 
Sen has also been a leading constructive critic of rational choice theory 
(recall his terminology-rational fools). In this regard he joins other 
modern critics of economic methodology, who have created a virtual cottage 
industry of anomalies and other claims of the refutation of the 
implications of rational choice theory (RCT). Many of the essays in this 
volume present Sen's criticisms of RCT, and since this is an issue in which 
I am interested, I will focus my review on this aspect of Sen's collection 
of essays. 
 
First, this is not the first time that RCT has come under assault by 
scholars arguing that economic actors do not conform to a maximization 
hypothesis. Recall the extensive debate about whether firms maximize 
profits in the late 1940s and 1950s. This was a useful interlude in 
economics, but it mostly served the purpose of forcing scholars to be more 
careful in framing maximization hypotheses, and as a consequence, the 
profit-maximization hypothesis is basically a non-issue today. Does a 
similar fate await the criticisms of RCT? Time will tell. 
 
Second, many of the criticisms of RCT by Sen and others are equivalent to 
letting the best become the enemy of the good. No one can reasonably argue 
that RCT is a convincing theory of human behavior at all times and under 
all circumstances. It cannot explain why the soldier throws himself on the 
grenade to save his compatriots. Maybe it will in the future, but this is 
not the point. The point is that it provides a reasonable explanation of 
choices in the vast majority of cases of ordinary behavior, and ordinary 
behavior in market and non-market settings arguably constitutes the bulk of 
human existence. Given this empirical regularity, we depart from the use of 
the model at our own analytical peril. Why discard a useful theory because 
it does not explain everything, but almost everything? And needless to say, 
with what do we replace homo economicus? Homo Boobus? 
 
Third, the charge from Sen and others that economics is about narrow 
self-interest is entirely misplaced. When I was taught RCT as a graduate 
student, it was made clear from the start that economics is silent on what 
people want. Rather, given what they want, individuals pursue their goals 
efficiently. Hence, there is room for all types of behavior in RCT. 
Individuals may be sinners or saints, angels or alligators, but 
self-interest, scarcity, and the law of demand are the best predictors of 
their actions. RCT is a big tent whose scope has expanded radically over 
the last half century, and it continues to expand each day as scholars 
continue to find new areas of application. Narrow self-interest is a canard 
that has unfortunately captured the interest of a few otherwise thoughtful 
economists. And the fact that practitioners in other disciplines do not 
understand RCT except as a caricature of narrow, greedy behavior should 
come as no surprise; in some cases RCT threatens to overtake their 
disciplines and devalue their human capital. 
 
Fourth, I have not done the basic research on the issue, but I wonder what 
the scorecard is in the anomalies business? My impression is that 
practically every anomaly has been met with empirical evidence suggesting 
that RCT is the preferred explanation of the postulated choice outcome or 
experimental evidence. In any event, it would be a useful exercise to 
catalogue every proposed anomaly and what the evidence shows in each case. 
We need to know if the set of verifiable anomalies is an empty economic 
box. And if an issue is unresolved, this can be a separate category on the 
scorecard. 
 
Fifth, modern economic theory does not assume that all actors are equally 
rational (whatever this may mean). People pursue their self-interests with 
different degrees of skill, either naturally acquired or learned. It has 
always seemed to me that this point is not fully appreciated by the critics 
of economics or by economists themselves as they go about their business of 
explaining human behavior. And I am not talking about bounded rationality, 
but rather innate differences in the ability of individuals to pursue their 
goals effectively. Many anomalies seem to derive from this basis or at 
least from the absence of repeated play formats wherein such differences 
would be mitigated through learning. 
 
Of course, the main advertisement for a modified economic methodology is 
the fact that someone as smart and insightful as Sen (as well as some of 
the other critics) sees a need for such a change. I, nonetheless, perhaps 
simplistically, do not see the promise of a new economics. RCT is doing 
fine, and while anomalies add spice to the defense of RCT, in my view, in 
the end, they will come to nothing. Professor Sen is to be applauded for 
forcing our profession to examine our paradigm more closely, but the shot 
across the bow, correcting the course, in the end falls harmlessly into the 
ocean. 
 
 
Robert D. Tollison teaches economics at the University of Mississippi. His 
principal areas of research are public choice and industrial organization. 
 
 
Copyright © 2003 by EH.Net. All rights reserved. This work may be copied 
for non-profit educational uses if proper credit is given to the author and 
the list. For other permission, please contact the EH.Net Administrator 
([log in to unmask]; 513-529-2850; Fax: 513-529-3308). Published by 
EH.Net (January, 2003). All EH.Net reviews are archived at 
http://www/eh.net/Bookreview. 
 
 
------------ FOOTER TO HES POSTING ------------ 
For information, send the message "info HES" to [log in to unmask]