Amartya Sen

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One of Sen’s strongest oppositions to classical economics is against the choice behavioral assumptions. In classical economics, egoism is accepted as the core behavioral trait of all agents who act rationally through their pursuit of self interest maximization. Sen has two problems with this practice: 1) assumption that people act rationally by acting consistently and seeking self-interest maximization 2) self-interest drives the success of capitalism. Sen believes is ludicrous to connect actual behavior with rational behavior. In Economic Behavior and Moral Sentiments, he writes: “The world is certainly filled with Hamlets, Macbeths, Lears, and Othellos. The coolly rational types may fill our text books, but the world is richer,” (p11, Sen). Classical economics makes the assumption that people act rationally by acting consistently and maximizing their self interest. Consistency does not constitute rational behavior. If a person consistently acts irrationally, they are not acting rationally. People do not always act in order to maximize their self-interest. People do make ethical actions. In Economic Behavior and Moral Sentiments, he makes the point: “To try and use the demands of rationality in going to battle on behalf of the standard behavior assumption of economic theory (to wit, actual self-interest maximization) is like leading a cavalry charge on a lame donkey,” (p16, Sen). Many economics have argued that self-interest is sole force which propels market based economies. Because self-interest leads to ‘pareto optimal’ outcomes, economists have presumed people act accordingly. Self-interest is a widely claimed notion in economics, but there is little empirical evidence to back it up. The success of capitalism and free markets does not necessarily imply that self-interest is the sole motivation of actors in free markets. In the case of Japan, there has been strong empirical evidence that industrial success was driven agents acting with duty, loyalty and goodwill. Sen argues that self and non-self motives lie behind agents in an economy. This is especially true with how groups, (social classes, unions, families), act in an economy. The combination of selfish and unselfish actions is an important part of group loyalty.

Classical economics does not include ethics and morals in its behavioral assumptions. If ethics is allowed into decision making, Sen discovers some very interesting results. First, in Rational Fools, Sen writes: “It is possible to define a person’s interests in such a way that no matter what he does he can be seen to be furthering his own interests in every isolated act of choice,” (p322, Sen). There is more to be said here though. Sen points to two types of concepts that govern ethical actions: sympathy and commitment. The words themselves are not important, but the concepts behind them are important. An act of sympathy corresponds to situations where concern for the other directly affects one's welfare. “If the knowledge of torture of others makes you feel sick, it is the case of sympathy,” (p326, Sen). Sympathy is form of egoism. An individual’s utility is directly effected by the position another individual or individuals are in. A person’s welfare is directly related to the welfare of others. Commitment is a separate issue and is directly correlated with one’s morals. If something does not make you worse or better off, but you are intent on doing something about it, than it is problem of commitment. Sen proposes an example which illustrates this complex circumstance and how it differs from sympathy.

The contrast between sympathy and commitment may be illustrated with the story of two boys who find two apples, one large, one small. Boy A tells boy B, “You choose.” Boy B immediately picks the larger apple. A is upset and permits himself the remark that this was grossly unfair. “Why” asks B. “Which one would you have chosen, you were to choose rather than me?” “The smaller one, of course,” A replies. B is now triumphant: “Than what are you complain about? That’s the one you’ve got!” (328, Sen)

If A’s rationale was based on sympathy, he would have lost nothing by B choosing the larger apple. However, his reaction to B’s choice indicates that was probably not the case. Commitment was the issue. Traditional models are not offset by the existence of sympathetic actions. People still act to improve their own welfare. Commitment, on the other hand, “drives a wedge between personal choice and personal welfare,” (p329, Sen). This wedge impedes this relationship which many traditional economic theories relies on. Sen sees ‘commitment’ as a very important issue. It drastically complicates how agents make decisions. He writes, “Commitment does not presuppose reasoning, but it does not exclude it; in fact, insofar as consequences on others have to be more clearly understood and assessed in terms of one’s values and instincts, the scope for reasoning may well expand,” (p344, Sen). Economic models need to incorporate and explain ‘commitment’ issues.