Week 2 - Passions, Hobbes, and Economics

After class this week, I was left thinking about the root of cultural differences, self-interest, and economics.  I am taking an introductory economics course with a few of you this summer, and am enjoying it greatly.  Admittedly, I may be enjoying it a little too much since I am now connecting economic theory to almost everything, including Hobbes.

As Prof. Rancatore mentioned in class, Hobbes based the foundation of his argument in Leviathan on the passions.  We are moved by passions and taught to desire and avoid different things based on experience.  These passions are influenced by environment and are constantly changing.   Hobbes also observes that these passions exist in different strengths in different people, and that these differences are partly a result of individual constitution and education (Hobbes, pg. 10).  It is in human nature to endeavor peace, and passions are the foundation of human nature.  Once triggered, our passions lead us down the road to realization, eventually coming across a choice of achieving these passions by way of reasonable or coercive practices.   Despite being self-interested, we don’t always know what is in our best interest, in which case the absolute sovereign is able to dictate what is. 

To me, Hobbes sounds like an economist.  Current behavioral economists similarly believe that our desires or passions depend on our environment, and that we naturally pursue things that we think will make us happy.  But, what makes us happy is constantly changing and self-interest often gets the best of us.  Many of our decisions are made without longevity in mind, or taking into consideration what might be in the best interest for the “greater good” (i.e. saving for retirement).  With this in mind, how can we avoid irrational decision-making in current society and guide destructive self-interest toward constructive government?

Our economics book for this semester mentions the recent book Nudge, written by economists Richard Thaler and Cass Sunstein. Thaler and Sunstein acknowledge that while homo economicus dispassionately evaluates self-interest and makes rational decisions to maximize it, homo sapiens frequently behaves differently. Real humans consistently and predictably make choices that are against self-interest, since they respond more strongly to “passions” like immediate gratification and the aversion to risk. To prevent this and to work for the greater good, Nudge advocates for libertarian paternalism, which allows people to make decisions freely, but “guides them toward a choice that a paternalistic observer would see as good for them” (Colander, pg. 493).  For example, when shopping for groceries, healthy food options would be stocked at eye-level instead of soda or other sweets.  Libertarian paternalists accept that rationality isn’t enough to ensure positive decision-making, and that a benevolent bureaucracy that guides decisions can provide protection from the passions. 

In all, libertarian paternalism doesn’t sound that bad. In return for freedom of action it sacrifices some freedom of choice, since decisions are framed in ways that favor policymakers’ preferences. This seems preferable to the processes of absolute sovereignty, in which actions are restricted to favor the sovereign’s goals.  The risk under both systems, of course, is that the interests of the policymaker (whether bureaucratic nudger or absolute sovereign) might be placed before the greater good.