Rational choice as a straw man

Recently at a sustainability forum at an un-named university, a historian decided to try to make me into a whipping boy for economics.

The snotty historian was one of those hippie throwback types who came to professional gathering in dirty clothes and spent her time during her presentation reading to us from her blog. There’s something that nobody but an accomplished historian could do.

At one point in the day, we were discussing the problem with defining environments as commons, and I noted that Elinor Ostrom had just received a Nobel in acknowledgement for her work on how collectives can and do successfully manage commons. Snotty historian sneered “It always amazes that in economics you win prizes for pointing out that people aren’t rational.”

How do you respond to such cattiness?

Well, first, I don’t feel like I need to defend economics per se. Criticisms from a washed up historian at a backwater university are like throwing spitballs at a tank in terms of the influence that economics has over policy and the social sciences.

On the other hand, I have trouble with the “people are irrational frame,” too, or “people aren’t rational” positions. I find that these type of people, again, want to use this as an excuse for NEVER having a formal model or theory for the descriptive work that follows. A bit like reading to us from your blog and trying to say that’s research.

Andrew Gelman has a post up that captures my feelings exactly. Here’s the money quote:

People have many overlapping reasons for anything they do. For a behavior to be “rational” does not mean that a person does it as the result of a reasoned argument but rather that some aspects of that behavior could be modeled as such. This comes up in section 5.2 of my article with Edlin and Kaplan: To model a behavior as rational does not compete with more traditional psychological explanations; it reinforces them.

I think that people do the best they can–they optimize–based on their constraints, information, concerns (family, friends), and needs. Why is that so controversial?

Mikhail Chester and Arpad Horvath and High Speed Rail Life Cycle Assessment

Yesterday, I presented at Berkeley for the Goldman School of Public Policy and their Center for Environmental Policy symposium on California High Speed Rail. Two presentations stood out as very good. I’ll cover one today and one tomorrow. Mikhail Chester is a Berkeley post-doc researcher who worked with Arpad Horvath to create a comprehensive life cycle cost analysis of California’s High Speed Rail. You can download a summary of the research from Access magazine.

The estimates reinforce how important forecasting is. According to their analysis, the environmental ROI for energy is 14 to 51 years. For greenhouse gas emissions, the estimate is 26 years to 51 years. NOx is 37 years to never, depending on fast ridership catches on.

It’s possible to shake up this analysis if the state were to pursue the greenest construction possible, using low-carbon-impact concrete.

On the GHG emissions payoff, they did something particularly cool: they took into account the additional radiative costs associated with the timing of the GHG costs and savings. The upfront emission costs occur during construction, and they weigh more heavily than those savings that come later (because they are contributing to the warming problem before they alleviate it). That pushes the ROI for GHG to 25 to 40 years after the project starts running.

I understand that advocates argue that we’re planning for the next 100 years–fine by me. But we can’t really accept a lot of excuses if the ridership doesn’t meet hopes. (I think it should–there are a lot of people who will want to use the system, and if it comes down to this, California will just pour enough operating subsidy into it until they can offer fares cheap enough to get the ridership they need.)