Rational Choice Theory Analysis - Essay Example

Researching politics  Discuss the main strengths and limitations of rational choice theory.  Thomas Hobbes was the first architect of the rational choice theory. As per as the definition of rational choice theory is concerned it is difficult to arrive at a particular definition. There are two important senses in which the theory is used. The first is in the informal sense which says that choice qualifies to be rational only when the choice made is deliberative and consistent in nature. In this case the choice maker can give the proper justification of the choice made. Taking time for a particular choice and making particular things as choices makes the choice of the individual consistent in nature. At the same time there lies one problem with this definition of informal sense because all decisions made are deliberative and consistent in nature and therefore it becomes difficult to distinguish between the rational and the irrational. Taking cue from this we can say that everything comes under the definition of informal choice. (Grundmann et al, 2001, p. 106) The second sense in which the professions use the rational choice theory is more formal in nature. This definition of the rational choice theory says that consumers have transitive choices and they try to maximize their utility from the set of preferences they have. The consumers in fact try to maximize their benefits from the choices in spite of the various constraints which they face while making their choices. Some of the economists find the formal sense of the theory so very obvious that they believe that it can have no limitation.  The critics of the formal definition of the theory on the other hand say that even the formal one is tautological in nature like the informal definition. They have tried to say that there is almost no behavior that does not seek to maximize the utility through their choices. The second criticism about the informal sense says that one can show some inconsistencies or puzzles in the notion of transitive preferences. (Grundmann et al, 2001, p. 106-107) Researchers have said that the rational choice theory is very helpful in formulating hypothesis regarding market behavior. They have given five reasons as to why the rational choice theory is of much use. First of all it is seen that the theory allows the economists to make predictions about economic behavior and those predictions are mostly based on the empirical evidence. For instance the rational scenario predicts that the when the wage rate increases all the other factors remaining constant the supply of labor increases. (Grundmann et al, 2001, p. 107) Secondly the rational choice theory is also used by the economists when there is deviation from the predictions of price theory in such a case the economists use the rational choice theory to explain the behavior of the consumers without having to predict that the consumers are irrational. Thirdly by a slight emendation of the rational choice theory the economists can predict behaviors which are anomalous to the rational choice theory. In the fourth place the economists’ taking cue from the rational choice theory and believes that only the rational consumers will prosper whereas the irrational consumers will squander their resources. Last but not the least Professor Gary Becker had said that even if the consumers behave irrationally, the predictions of the standard price theory will always hold true. (Grundmann et al, 2001, p. 108- 109) A very important characteristic of the rational choice theory is that it has a collective insight which makes the theory in most of the situations right and justified. The fact which convinces us that it is very much right in nature because it deals with the real problem which the real people have. Moreover it can be said that the most important factor about the rational choice theory is that there is no other way to assume the collective insight apart from the rational choice theory. (Waters, 2000, p.49) The collective insight in turn helps us to understand as to why we have environmental and social problems and also why we fail to correct the existing problems. At the same time it provides a theoretical checklist to assess the real life situations as to how the people managed the environmental problems and other collective action problem. (Waters, 2000, p. 50) Another very important benefit associated with the rational choice theory is that it helps in the deeper understanding of the society. The rational choice theory alerts and makes us look carefully at both the material and the non-material costs and also it takes into note the benefits associated with both the settings. The rational theory is universalistic in nature and it takes into account a lot of varieties among people, their preferences, and their social institutions and at the same time it was found that the rational choice theory was more compatible with cultural relativism than with ethnocentrism. (Waters, 2000, p. 51) The rational theory has the capacity to include empirical factors and at the same time identification of the causal factors. Moreover the rational choice theory has ample theoretical adequacy. Thus it can be said that the rational choice theory has more validity compared to other theoretical propositions. Shepsle has said that the advantage of the rational theory lies in the fact that it derives theoretical propositions and at the same time it advances theoretical arguments. He has said that the empirical evidences are secondary in nature. (Parsons, 2005, p.150) It is true that the rational choice theory has a lot of advantages but at the same time we cannot deny the fact that rational choice theory has a lot of limitations. It has been said that the theory is not adequate in the case of social division. With regard to issues like social division it may be found that sometimes functional explanation is a much better alternative. For example the transition from capitalism can best be elucidated with the functional explanation than with the rational choice theory. The rational choice theory sometimes is also indeterminate in nature. Sometimes it depends on the preference schedules which in turn need further explanation. The rational choice theory also fails to deduce the human motivations. (Carling, 1991, p. 417) Although economists are of the opinion that the rational choice theory is superior to all the other social science theories but even they cannot deny the fact that the rational choice theory is limited to a large extent with regard to the formulation of public policies. It is true that the rational choice theory is used extensively but the problem lies in the fact that the definition of rationality remains very unclear in nature. The most common criticism which is applied to the rational choice theory is that it is not possible to quantify the goals especially in the case of public policies. This particular criticism has been disregarded on the claims that the rational theory does not need to quantify desires and wants. That does not mean that it we can make the concept of rational choice theory free from limitations. The other limitations which peril the theory are that the theory focuses only on means and not on ends. We can only get a little clue from the rational choice theory as to how we should make choices among the various competing goals and we also a get a little clue with regard to where tradeoff between goals are necessary. The rational choice theory tells us how to act efficiently but it does not tell how to select the goals efficiently. For example in case of the criminal justice system the rational choice theory advises us to consult our values and ideologies but it does not give us any proper guidelines about the choice of proper goals. Arrow holds the opinion that putting forth the individual preferences may give rise to social irrationality which again may be not very suitable in producing a consistent collective insight. (Nagel, 1979, pp.89-92) A very important feature of rationality is how one perceives a situation but the rational choice theory fails to explain as to how one perceives of a situation. Thus it can be said that it is one of the major defects of the rational choice theory. It is also said that the rational theory has become very orthodox in nature and sometimes it is also claimed that rational choice theory has a hegemonic nature. The rational theory is also limited in the sense that it does not take into account the roles which mistakes by ordinary individuals of limited capacity have in decision making. Thus we here we can say that the rational choice theory does not take into account individuals with different capacity because the rational theory is strongly grounded on the concept of collective insight. (McCaffery and Slemrod, 2006, pp. 384-385) Chalmers Johnson has said that the rational choice theorists are of the opinion that they know what all the other people in the world want and desire and hence they leave no room for culture or ideology. A major problem of the rational choice theory is that it does not eliminate the fact that humans make more long term choices than short term choices.  It also does not rule out the possibility of individual cooperation and trust among the people. The criticism of rational choice theory which has proper validity is that with the help of this theory the individuals determine an order of their choices but do not decide upon the behavior which enables them to make those particular choices. It can also be criticized in the sense that it overlooks the possibility that sometimes individuals make choices based on their behavior and hence they do not have the scope for clear choices. The rational choice is sometimes criticized on the ground that it fails to explain the origin of choices. (Waters, 2000, p. 45) A careful study about the rational choice theory has given us a clear idea about the definition of the theory. It has also been understood from the study as to how the rational choice theory is used and in which fields is it applicable. We have also got a clear idea about the strengths as well as the limitations of the theory. It has been clearly understood that if we consider the rational choice theory from a broader perspective it will be seen that all aspects of our life will fall under its realm because at every step of our life decision making is closely related but at the same time if we look into the theory carefully we will see that the theory fails to give a detailed explanation as to how the preferences originate. Moreover it is one sided in the sense it takes into account the fact that rationality and utility has a similar nature for all individuals but the actual scenario differs from this assumption because all individuals differ in their definition of rationality and utility. We can also say that the theory is utopian in nature but at the same time this theory has been used by the economists to determine market behavior.  REFERENCE  1. Carling A, 1991, Social division, Verso, (London). 2. Grundmann S et al, 2001, Party autonomy and the role of information in the internal market, Walter de Gruyter, (Berlin). 3. McCaffery E and Slemrod J, 2006, Behavioral public finance, Russell Sage Foundation, (New York). 4. Nagel S, 1979, Policy studies and the social sciences, Hoepli Editore. (Italy). 5. Parsons S, 2005, Rational choice and politics: a critical introduction, Continuum International Publishing Group, (New York). 6. Waters N, 2000, Beyond the area studies wars: toward new international studies, UPNE, (New England). Read More