Rational vs. Reasonable: The Aha! Moment

by JT McGee

I had one of those moments the other day—you know, where a light bulb ignites with color and an idea comes to life?  They’re awesome, no doubt.

I was sitting in my economics class when my professor offered up an explanation to an idea I had myself, but one that I could just not explain.  His very simple words were “rational isn’t always reasonable.”

“Aha,” I thought, “That’s it!”

Was I on to the next big breakthrough? No, but those four words provided an excellent start to concept that I, until that class, couldn’t explain—the difference of rational and reasonable.

That’s it? Seriously?

Uh…yeah, that’s pretty much it—he said four words.  Doh!

No, really though, the light bulb moment came from the concept.

You see, in economics, anything you do is said to be “rational” because you, as a thinking human being weigh the pros and cons of each decision (even if you don’t notice it) and then select the choice that best fits you.  That is the definition of rationality.  We think (some of us more than others 😉 ) then we act—simple stuff.

However, our rationality leads us to many decisions that are not reasonable, and in many cases, actions that aren’t very sensible.  We weigh the perceived pros and cons, but then we make a decision that does not provide the best outcome, and do so rationally.

Take, for example, a drug addict.  Addiction does not come as a result of thinking sensibly nor reasonably, but it is a rational decision.

Pre-addiction, the addict did decide to do/use X substance rationally, knowing most of the pros and cons, as well as the inherent risk.  During addiction, the addict continues to use, a rational decision, because the uncomfortable action of quitting is not seen to be worth the benefit of quitting.

Is it a reasonable decision?  Of course not, but it is rational.  The addict says that addiction is more comfortable, the benefits plenty and the costs justifiable, but only after considering the alternative, of course.

Meshing with Market Failure

So you’ve probably heard the term “market failure” before—it was used all the time during the health care debate—right?

Market failure: when the actions of all market actors create a negative outcome, or fail to supply enough of a certain good, service.

There are many different things people perceive to be market failures—pollution, poor resource allocation, etc.  These many things, though, aren’t exactly market failures.

Everything that is on this earth…well, most everything is a by-product or a direct product of the human consciousness.  Every man-made thing came to being as a result of human action and decision-making.

Are dolphins being killed by floating 6 pack can holders because of the market, the economy?  Or is it because the perceived benefit of plastic holders outweighs the value we believe dolphins are worth?

Is China polluted because of a market failure, or is it because Americans, most of whom will never see first-hand the carnage of manufactured plight, value inexpensive goods higher than a healthy eco-system halfway around the world?

You know, the market can’t fail on its own.  And market failures don’t happen as a result of stupidity, or even recklessness; instead, these problems happen as a result of a rational thought process.

Go back to the drug addict.  When we looked at the addict, his or her decisions were unintelligible!  How could he or she have ever decided to become an addict.  They didn’t.

Just like you didn’t choose to strangle Dolphins, you just wanted a cold six pack.

Does it mean you, him, her or the next person are all bad people? No, of course not.  But it does mean that maybe we should consider better the inevitable from each of our decisions.

What’s the Takeaway?

Every day the world’s dumbest decisions, errors, and critical oversights are made by the most rational people in the world. You and I are two of them. 😉

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