Inclusive Rationality: Struggle and Aspiration

Abstract

In Escaping Paternalism: Rationality, Behavioral Economics, and Public Policy Rizzo and Whitman challenge behavioral economics and paternalism on multiple levels, from conceptual underpinnings and the meaning of rationality to more applied implications and policy recommendations. This paper delves deeper into Rizzo and Whitman’s conception of inclusive rationality and places it within a larger historical tradition of purposeful behavior, internal conflict, and endogenous preference formation and change. I make a case to more carefully study two human characteristics – struggle and aspiration, to further the research program of inclusive rationality and behavioral economics. I argue that to extend this research program economists must: (1) have an idiom for struggle that does not deem a behavior rational or irrational either by assumption or by the normative standard set by an external expert; (2) take the process of endogenous preference formation and change more seriously; (3) have a language to model and explain aspiration or becoming; and (4) think about edge cases like relapsing addiction.