2. The Methodological Constraints on the Rationality Premise

Graphical analytics ever more tightly constrain the choice of options and the motivations for choice than does mathematics because of the limited dimensions available for graphing.

The more limited the math skills of theorists, I suggest, the greater the tendency of theorists to sterilize and purify the motivations of economic actors.

In his Essay on Positive Economics, Friedman does make the useful point that physicists often make calculations about the speed of falling objects on the Earth, using the rate of decent for objects in a vacuum. The assumption about the acceleration of falling objects often works “well enough” because the “extra accuracy it (a more general theory that takes account of air resistance) yields may not justify the extra cost of using it” (Friedman 1953, p. 18). While economics may strive to be like physics in using a simplified premise on rational behavior, it is categorically different when it comes to the objects of the empirical tests. The falling ball does not have a mind of its own that would allow the ball to assess the value of the fall, and even if it did, the ball rate of decent would not be materially affected. In the case of economics, the ball, and what is done with it, depends critically on how people appraise the ball and rate of descent and how their appraisals will cause them to intervene and change the rate of descent or not allow the ball to fall in the first place. There is the added complication in economics that “balls” can be different things to different people, as well as have different evaluations by different people.

Experimental researchers have found that market institutions do influence the extent to which people are rational, exploit unexploited opportunities, and achieve the known potential market efficiency gains (V. Smith 2008).

As we will see, critics of standard economics have made an academic sport of revealing human decision frailties and “irrationalities,” all with a growing fan base within disciplines outside of economics and within the educated public (as evident by the growth in the count and sales of trade books describing economic “anomalies” and “irrationalities” (consider, for example, books by Thaler and Sunstein, Nudge, 2008 and by Ariely, Predictably Irrational, 2008, both cited in Chaps. 6 and 10 on behavioral economics). In key ways, the research agendas of behavioral economists and others have all the markings of shooting fish in a barrel.