Psychology Implies Paternalism? Bounded Rationality may Reduce the Rationale to Regulate Risk-Taking

Behavioral economists increasingly argue that violations of rationality axioms provide a new rationale for paternalism – to “de-bias” individuals who exhibit errors, biases and other allegedly pathological psychological regularities associated with Tversky and Kahneman’s (in Science 185:1124–1131, 1974) heuristics-and-biases program. The argument is flawed, however, in neglecting to distinguish aggregate from individual rationality. The aggregate consequences of departures from normative decision-making axioms may be Pareto-inferior or superior. Without a well-specified theory of aggregation, individual-level biases do not necessarily imply losses in efficiency. This paper considers the problem of using a social-welfare function to decide whether to regulate risk-taking behavior in a population whose individual-level behavior may or may not be consistent with expected utility maximization. According to the social-welfare objective, unregulated aggregate risk distributions resulting from non-maximizing behavior are often more acceptable (i.e., lead to a weaker rationale for paternalism) than population distributions generated by behavior that conforms to the standard axioms. Thus, psychological theories that depart from axiomatic decision-making norms do not necessarily strengthen the case for paternalism, and conformity with such norms is generally not an appropriate policy-making objective in itself.     

An exploratory analysis of composite choices: Weighing rationality versus irrationality

Humans are engineered neurologically to make rational and irrational choices. This paper introduces a new paradigm for decision making – a composite choice model – in which economic agents are constantly weighing rationality versus irrationality when encountering options. In an exploratory, deterministic, two-period model, an assumption of a two-way cross-embedment (i.e., a two-way interaction between the rational and irrational components) results in a paradoxical phenomenon, an outcome of either tending toward bliss or abyss at the end of the first period. This implies, for instance, a psychological struggle between two selves within the mind. The paradigm proposed is compared to the dual-process theories recently developed by the cognitive sciences. Future research will explore implications for public policy design and implementation.     

Is sociology the science of the irrational? Conceptions of rationality in sociological theory

This paper explores the role of the concept of rationality in (especially classical) sociological theory. This exploration is prompted by widely held views, especially among economists and rational choice theorists, that classical sociology is the science of the irrational lacking a conception of rationality. By using pertinent examples (mostly) from classical and post-classical (or early contemporary) sociological theory, the paper casts serious doubt on such claims. Specifically, classical sociological theory is characterized by the following features in analyzing rationality: conceptual and methodological pluralism, theoretical and empirical richness, treating rationality as a complex social phenomenon, differentiating economic and noneconomic rationality, acknowledging the social character and foundation of (economic) rationality, and contrasting epistemological or scientific rationality and ontological or reallife irrationality, including the revelation of the irrationality of extreme (economic) rationality.     

Procedural Justice and the Cooperative Worker: An Interactional Model of Union Participation

Using data collected from a United Steelworkers of America local, we examine the extent to which fair union decision-making processes (procedural justice) and member disposition interact to promote union-supportive behavior. Although results indicate both procedural justice and a collectivist work disposition are positively related to union-supportive behavior, hierarchical regression reveals that procedural justice influences the behavior of members with individualistic work dispositions but not the behavior of members with a collectivist work disposition. So, employers who adopt human resource practices consistent with the high- performance work paradigm may foster increased levels of union-supportive behavior, and unions may need to take member disposition into account when selecting training programs aimed at fostering union-supportive behavior.     

Consequences of the increasing rationality of music: A reassessment of Weberian rationalization

Max Weber's theory of the rationalization of music is used to demonstrate that there is a nexus between the tonal structure of music, which is formally “rational” in the Weberian sense, and the fundamental irrational properties on which it rests. It is posited that Weber, although failing to differentiate between types of irrationality, was primarily concerned with only two forms: harmonic‐structural and interpretational. Ironically, there is another more sociological type of irrationality that Weber failed to address. This type may be termed “interactional” irrationality. The importance of recognizing this element within the musical organization is critical, as the balance between rationality and irrationality becomes increasingly delicate. Case studies of professional, classically trained symphonic musicians and conductors illustrate the irrational consequences of growing rationality within the social organization of symphonic music.     

Rationality is anti-entropic

The article explores the fruitfulness of assuming all economic behavior to be non-rational unless special factors intervene to make it rational. The definition of rationality applied is that of intentional or calculative rationality. This is deemed to be a variable, not a trait of a species. The association of rationality with three kinds of investment is indicated. Prior research on information costs, learning curves, habit and impulse buying are shown to be compatible with the article's core thesis. So is the evidence about rational behavior being ‘cool’.     

What forms of rationality for sustainable development?

This article aims to help the decision-making process in the matter of sustainable development. The real dividing lines between different analyses of sustainable development are drawn on the basis of two methodological questions. The first concerns the effective inclusion or exclusion of the ecological dimension; the second concerns the choice of a rationality hypothesis. From this perspective, we explain that neoclassical theory and conventional ecology are both insufficient because they rest respectively on an economic or ecological substantive rationality. Then we posit that the analysis of the London School constitutes an attempt to combine the ecological and economic dimensions of development. However, this approach does have its limitations, ultimately using an hypothesis of expanded economic rationality that nevertheless remains basically substantive. Last, we show how an “ecological-economic” approach based on a procedural conception of rationality also employing economic- and energy-based valuation methods seems to cover more comprehensively the issues of sustainable development involving the coordination of diverse rationalities and diverse dimensions of sustainability.     

Problems faced by migrants and their family members,particularly second generation migrants,in returning to and reintegrating into their countries of origin

The growing tendency in Europe and other countries to introduce return migration as an element of migration policy has provoked a number of migration studies. Some of the problems faced by returning migrants and their families have been identified and are outlined here. First generation returning migrants face problems with social and economic assimilation: 1) returnees often practice conspicuous consumption which is resented by local people as the behavior of the new rich; those without the opportunity to migrate are particularly resentful. 2) The receiving country most often views the returnee as identical to the migrant who left years ago; problems with sociocultural reintegration are not recognized and no action is taken in that direction. 3) The homeland's economic situation and employment situation may not be strong enough to introduce social programs for returnees. 4) Returnees may have trouble finding new friends and community support. 5) Returnees are often underutilized in their home countries because the economic system is unable to absorb them. The second generation's problem in remigration may be classed into problems with social adjustment, integration into the educational system, and integration into the labor market. 1) Adolescent girls are likely to encounter difficulties because they are forced more frequently than boys to conform to traditional behavior patterns. 2) Youngsters have to learn that everyday life is heavily family-oriented, and that social control is very strong. 3) Lack of compatibility between the educational systems in the 2 countries disfavors the returnees; they may be barred from the school system because of language deficiencies or because priority is given to local students. 4) Many countries receiving youngsters have extremely high unemployment rates and cannot absorb these returnees into their labor force. 5) Although girls are generally better educated than boys, they work in lower-ranking jobs. The return movement calls for cooperation between the countries of immigration and remigration. More detailed research and observation are needed, particularly in defining differences between returnees and nonreturnees, between the sexes, and among age groups.     

What is sociological about economic sociology? Uncertainty and the embeddedness of economic action

Conclusion This article argues that the problem of uncertainty represents the central limitation of efficiency-based approaches to the explanation and prediction of economic outcomes. The problem of uncertainty reintroduces the Hobbesian problem of order into economics and makes it possible to connect questions of economic decision-making with social theory. The emphasis lies not, as in the behavioral theories of the Carnegie School, in the influence of uncertainty on the actual decision process, but in those social devices that actors rely on in decision-making, i.e., that structure the situation for the agents. If agents cannot anticipate the benefits of an investment, optimizing decisions become impossible, and the question opens up how intentionally rational actors reach decisions under this condition of uncertainty. This provides a systematic starting point for economic sociology. Studies in economic sociology that argue from different theoretical perspectives point to the significance of uncertainty and goal ambiguity. This contribution reflects theoretically why economic sociology can develop a promising approach by building upon these insights. It becomes understandable why culture, power, institutions, social structures, and cognitive processes are important in modern market economies. But it should be equally emphasized that the maximizing paradigm in economics will not be dethroned without a causal theory of the relationship of intentional rationality and social rigidities.     

The unconscious in economic decision-making: Convergent voices

Mainstream economics assumes that decision-making is a conscious cost-benefit process, ignoring the pervasive role of unconscious thought processes. Recent research in neuroimaging, genomics, and psychoanalysis exposes the role of unconscious and “nonconscious” processes, providing tools for analyzing economic decision-making. Neuroimaging reveals examples of brain function that modulate decision-making, but are not under conscious control. Psychoanalytic research provides evidence of the role of emotions and the unconscious in human behavior and decision-making. We advance the case for integrating psychoanalysis and neuroscience for a new perspective on the role of the mind in decision-making and economic behavior.     

Group identity,social distance and intergroup bias

This paper studies how group identity, social distance and intergroup bias may affect economic decision-making. Two types of experimental groupings are created, and subjects are then paired with either an in-group member or an out-group member in a number of two-person games. The result of this experiment shows that out-group members face a risk of being discriminated against. The cause of the discrimination is not hostility toward out-group members; the discrimination is triggered because of higher expectations or favoritism of in-group members. This type of behavior holds, regardless of the grouping procedure.     

Family use of community services in economically stressed rural counties

This study focuses on stresses, coping strategies, and satisfactions of respondents in eight economically distressed rural counties in the state of Washington. An adult sample is divided into two groups: those who indicate specific economic problems and/or are unemployed (n=236) and those who are still employed and do not report specific economic stresses (n=190). Although those with specific economic problems show higher levels of perceived stress and financial dissatisfaction, there are no differences reported in over-all family satisfaction. Results point to the importance of providing specific employment-related community services to family members in these types of communities.Dorothy Z. Price, Ph.D. is a Professor in the Department of Child and Family Studies, Washington State University, Pullman WA 99164-2010. Her research interests include decision making and consumer behavior. She received her Ph.D. from Michigan State University.Lonnie J. Dunlap, M.A., is a Graduate Research Assistant in the Interdisciplinary Ph.D. Program, Washington State University, Pullman, WA 99164-2010. Her research interests include work and family interactions and career development.     

Behavioral finance and retirement plan contributions: how participants behave, and prescriptive solutions

Behavioral research has made important, relevant contributions to retirement saving and investing. This work has cast a new light on participant behavior and its underpinnings: By and large, individuals are inert--with good intentions, poor follow-through, and bounded rationality. Loss aversion and decision-making biases often lead to unfortunate outcomes, including a poorly funded retirement. Further, behavioral economists have demonstrated that education and communication programs alone may not be effective in changing behavior. Instead, with their behavioral insights, they have offered new retirement plan design alternatives and empirically tested their efficacy in overcoming identified suboptimal behavior. These efforts are helping to pave a path of least resistance that should lead to greater retirement security. The Pension Protection Act of 2006 appears to support these alternatives by providing incentives to plan sponsors that implement automatic features such as automatic enrollment and deferral rate escalation. It also allows plan sponsors to choose more aggressive investment defaults. Perhaps implicit in this support is some advice to sponsors to accept participant behavior and to think more about changing their own by embracing automatic plan features.     

Employment income of immigrants in metropolitan areas of Canada, 1980

This paper examines the economic achievements of immigrant groups and compares them with those of the Canadian-born population. Employment income in this study is income for members of the labor force who worked 40 weeks or more, full time, during 1980. The information is from the 1981 Census. The 15 birthplace groups considered in this study are classified into 2 major groups: those from traditional sources and those from non-traditional or new sources. Traditional sources are the US, UK, and Europe. The new sources are Africa, Asia, South and Central America, the Caribbean, and Oceania. More than 1/2 of the immigrants from traditional sources arrived before 1960, whereas more than 1/2 of immigrants from new sources arrived after 1970. The analysis is only for those areas called Census Metropolitan Areas. Results of analysis show that 1) immigrant men and women in metropolitan areas earned 1.9% and 5.9% respectively less than their Canadian-born counterparts; 2) when differences in age and educational attainment were considered, incomes of immigrant men and women were about 7.5% below those of their Canadian-born counterparts; 3) the new immigrant groups earned far less than those of the Canadian-born counterparts; 4) traditional-source immigrants' incomes were equal to or slightly higher than Canadians'; and 5) as length of residence increases, most immigrant groups improve their relative economic position and achieve incomes comparable to Canadians'. The authors discuss the economic adaptation of immigrants in the light of various models: assimilation, Marxist class conflict, ethnic stratification and segmentation, structural pluralism, and structural change. No theory can be applied to the economic adaptation of all types of immigrants. Finally, refugees and sponsored relatives, who are not admitted on the basis of education and occupational need, are likely to have more difficulties than independent immigrants.     

Partner Violence and Street Violence among Urban Adolescents: Do the Same Family Factors Relate?

Few studies have evaluated how participation in violence that occurs on the streets as part of criminal or delinquent behavior relates to violence that occurs as part of dating or marital relationships (partner violence). Using longitudinal data from 141 African American and Latino male youth (15–19 years old), the relation between family characteristics and participation in one or both types of violent behavior was evaluated. The youth in this study were more likely to report use of violence in relationships if they were also participating in violence as part of other criminal behavior. However, there were distinct groups of offenders. Among those males reporting involvement in a dating or romantic relationship, four groups were identified: (1) those who had not participated in either type of violence, 57%; (2) those who had participated in partner violence only, 14%; (3) those who had participated in street violence only, 12%; and (4) those who had participated in both, 17%. Discriminate function analyses significantly differentiated the group who had participated in both types of violence from the nonviolent group, with the former group having poorer functioning families. These two groups were also differentiated from the partner violence‐only and street violence‐only groups. No differences were found between the partner violence‐only and the street violence‐only groups. Implications for intervention and prevention are discussed.     

Between a rock and a hard place: Multisystem resilience and Honduran youth migration intentions

More is known about how ‘push factors’ motivate emigration and how immigrants adapt to their new environment than about psychological factors associated with migration intentions for those experiencing adversity in their country of origin. This paper explores the association between multisystem resilience and migration intentions among youth in Honduras. In this context of high economic need and contextual violence, higher levels of resilience are associated with higher levels of migration intentions among those who have a job and thus the ability to navigate or negotiate access to resources – economic, social and psychological – that make it possible to consider migration. Among those who have not been victims of violence and consequently may not have that motivation to migrate, higher levels of resilience are associated with lower migration intentions.     

Factors Associated with Adoption and Adoption Intentions of Nonparental Caregivers

ABSTRACT

Data from the 2011–2012 National Survey of Children's Health and the 2013 National Survey of Children in Nonparental Care were used to fit a multinomial logistic model comparing three groups to those who never considered adoption: those who ever considered but are not currently planning adoption, those planning adoption, and those who adopted. Adoption may be more likely when the caregiver is a non-kin foster parent, a foster care agency was involved, and/or financial assistance is available. Those with plans to adopt but who have not adopted may face adoption barriers such as extreme poverty, lower education, and being unmarried.     

Sexual Behavior,Mental Health,Substance Use,and HIV Risk Among Agency-Based Male Escorts in a Small U.S. City

Abstract

Relatively little research has examined the personal sex lives of indoor male sex workers (MSWs) or possible connections in this group between sexual behavior and factors related to HIV risk. As part of a larger project, this study collected data from 30 agency-based indoor MSWs (mean = 22.4 years) about their sexual behavior, mental health, and substance use. Few HIV risk behaviors with clients occurred. Drug use and mental health problems were relatively frequent, but not related to increased risk behavior. Instead, MSWs appeared to employ rational decision-making and harm-reduction strategies. Conceptualization of MSW sexual behavior may be required where HIV risk is not attributed to sex work per se, but to other influences such as economic and relational factors.     

Rational Choice Theory or Pretense? The Claims,Equivalences, and Analogies of the “Economic Approach to Human Behavior”

The article argues and demonstrates that classical–neoclassical economics generally does not pretend or claim that its principles apply to domains beyond the economy, specifically wealth, and does not equate the economic and the noneconomic, and the rational and the nonrational. By contrast, the “economic approach to human behavior” or “rational choice theory” precisely does this to legitimize itself by invoking classical–neoclassical economics as supreme authority and its representatives as venerable precursors. The article reveals the economic approach to human behavior as a set of grand theoretical and methodological claims, equivalences, and analogies from the standpoint of conventional economics itself, as well as sociology and other social sciences. It identifies and examines certain indicative instances of such tendencies. The article aims to contribute to understanding better the relations—or rather lack thereof—between conventional economics and contemporary economic and sociological rational choice theory. The economic approach to human behavior is not new, even outside the market sector. The rational choice model provides the most promising basis presently available for a unified approach to the analysis of the social world by scholars from different social sciences. — Gary Becker With respect to those parts of human conduct of which wealth is not even the principal object, to these political economy does not pretend that its conclusions are applicable. — John S. Mill But economy does not treat of all human motives. There are motives nearly always present with us, arising from conscience, compassion, or from some moral or religious source, which economy cannot and does not pretend to treat. These will remain to us as outstanding and disturbing forces; they must be treated, if at all, by other appropriate branches of knowledge. — William Jevons A science, therefore, based on the hypothesis (of universal rationality) would yield a general form of the social phenomenon having little or no contact with reality … — Vilfredo Pareto     

Risky business: emotion,decision-making,and addiction

Although metabolic abnormalities in the orbitofrontal cortex have been observed in substance dependent individuals (SDI) for several years, very little attention was paid to the role of this brain region in addiction. However, patients with damage to the ventromedial (VM) sector of the prefrontal cortex and SDI show similar behaviors. (1) They often deny, or they are not aware, that they have a problem. (2) When faced with a choice to pursue a course of action that brings an immediate reward at the risk of incurring future negative consequences, they choose the immediate reward and ignore the future consequences. Studies of patients with bilateral lesions of the VM prefrontal cortex support the view that the process of decision-making depends in many important ways on neural substrates that regulate homeostasis, emotion, and feeling. Parallel lines of study have revealed that VM cortex dysfunction is also evident in subgroups of individuals who are addicted to substances. Thus, understanding the neural mechanisms of decision-making has direct implications for understanding disorders of addiction and pathological gambling, and the switch from a controlled to uncontrolled and compulsive behavior. On the clinical front, the approach to treat addictive disorders has been dominated by a diagnostic system that focuses on behaviors, physical symptoms, or choice of drugs. The article emphasizes the concept of using neurocognitive criteria for subtyping addictive disorders. This is a significant paradigm shift with significant implications for guiding diagnosis and treatment. Using neurocognitive criteria could lead to more accurate subtyping of addictive disorders, and perhaps serve as a guide for more specific, and potentially more successful, behavioral and pharmacological interventions.