Tuesday, February 13, 2007

Best post of the day

From the Free Exchange:

"BEHAVIOURAL ECONOMICS has been embraced enthusiastically by the left, because it challenges the model of the rational decision-maker. If people systematically make errors in their decisionmaking, then doesn't that open up a need for the government to step in and fix things?

I've never quite understood this argument, of course; where are we getting the human beings who make the decisions for the government? Do they come out of a different pool from the ones who flunk the basic rationality tests posed by the behavioural economics? In fact, as public choice theory shows, government has a whole set of special decision-making problems that can make the normal human mistakes of those decision-makers even worse."