“As conceived in this book, economics is the science of rational choice in a world─our world─in which resources are limited in relation to human wants. The task of economics, so defined, is to explore the implications of assuming that man is a rational maximizer of his ends in life, his satisfactions─what we shall call his “self-interest.” Rational maximization should not be confused with conscious calculation. Economics is not a thoery about consciousness. Behavior is rational when it conforms to the model of rational choice, whatever the state of mind of the chooser.(…) Nor is perfect rationality assumed; rational-choice thoery allows us to assume that rationality is “bounded” because of human cognitive limitations, although another way to think of those limitations is as costs of absorbing and using information.”

—  Richard A. Posner

Source: Economic Analysis of Law (7th ed., 2007), Ch. 1: The Nature of Economic Reasoning

Adopted from Wikiquote. Last update June 3, 2021. History

Help us to complete the source, original and additional information

Do you have more details about the quote "As conceived in this book, economics is the science of rational choice in a world─our world─in which resources are limi…" by Richard A. Posner?
Richard A. Posner photo
Richard A. Posner11
United States federal judge 1939

Related quotes

“Unlike pure theorists, we shall not assume at the outset that rational behavior exists or that rational behavior constitutes the topic of economic analysis. We shall study economic behavior as we find it. In describing and classifying different reactions, as well as the circumstances that elicit them, we shall raise the question whether and in what sense certain reactions may be called “rational.” After having answered that question and thus defined our terms, we shall study the fundamental problem: Under what conditions do more and under what conditions do less rational forms of behavior occur?”

George Katona (1901–1981) American psychologist

George Katona (1951). Psychological Analysis of Economic Behavior. McGraw-Hill, New York. p. 16; as cited in: Erik Angner and George Loewenstein. "Behavior economics," in: Philosophy of Economics, (2012), p. 657

Richard A. Posner photo

“Central to this book is the further assumption that man is a rational utility maximizer in all areas of life, not just in his “economic” affairs, that is, not only when engaged in buying and selling in explicit markets. This idea goes back to jeremy Bentahm in the eighteenth and early nineteenth century, but received little attention from economists until the work of Gary Becker in th 1950s and 1960s.
The concept of man as a rational maximizer implies that people respond to incentives.(…) From this proposition derive the three fundamental principles of economics.”

Richard A. Posner (1939) United States federal judge

Source: Economic Analysis of Law (7th ed., 2007), Ch. 1: The Nature of Economic Reasoning

“Since economics deals with human beings, the problems of its scientific treatment involves fundamental problems of the relations between man and his world. From a rational or scientific point of view, all practically real problems are problems in economics. The problem of life is to utilize resources "economically," to make them go as far as possible in the production of desired results. The general theory of economics is therefore simply the rationale of life. - In so far as it has any rationale! The first question in regard to scientific economics is this question of how far life is rational, how far its problems reduce to the form of using given means to achieve given ends. Now this, we shall contend, is not very far; the scientific view of life is a limited and partial view; life is at bottom an exploration in the field of values, an attempt to discover values, rather than on the basis of knowledge of them to produce and enjoy them to the greatest possible extent. We strive to "know ourselves," to find out our real wants, more than to get what we want. This fact sets a first and most sweeping limitation to the conception of economics as a science.”

Frank Knight (1885–1972) American economist

Source: "The limitations of scientific method in economics", 1924, p. 97 (2009 edition); Lead paragraph

Leon Trotsky photo

“Having rationalized his economic system, that is, having saturated it with consciousness and planfulness, man will not leave a trace of the present stagnant and worm-eaten domestic life.”

Leon Trotsky (1879–1940) Marxist revolutionary from Russia

Literature and Marxism (1924)

Herbert A. Simon photo

“Broadly stated, the task is to replace the global rationality of economic man with a kind of rational behavior that is compatible with the access to information and the computational capacities that are actually possessed by organisms, including man, in the kinds of environments in which such organisms exist.”

Herbert A. Simon (1916–2001) American political scientist, economist, sociologist, and psychologist

Simon (1955) "A behavioral model of rational choice", The Quarterly Journal of Economics, Vol. 69 (1); As cited in: Gustavo Barros (2010, p. 462).
1940s-1950s

“Other than pleasure-seeking and consumerism, it seems that the only fruit of our social development is a cancerous overgrowth of "the rational economic man": maximize personal gain, and that's all.”

Liu Xiaobo (1955–2017) Chinese literary critic, writer, professor, and human rights activist

The Spiritual Landscape of the Urban Young in Post-Totalitarian China" (2004)
No Enemies, No Hate: Selected Essays and Poems

Herbert A. Simon photo

“Global rationality, the rationality of neoclassical theory, assumes that the decision maker has a comprehensive, consistent utility function, knows all the alternatives that are available for choice, can compute the expected value of utility associated with each alternative, and chooses the alternative that maximizes expected utility. Bounded rationality, a rationality that is consistent with our knowledge of actual human choice behavior, assumes that the decision maker must search for alternatives, has egregiously incomplete and inaccurate knowledge about the consequences of actions, and chooses actions that are expected to be satisfactory”

Herbert A. Simon (1916–2001) American political scientist, economist, sociologist, and psychologist

attain targets while satisfying constraints
Simon (1997, p. 17); As cited in: Gustavo Barros (2010, p. 460).
1980s and later

“Economic logic requires that we maximize the productivity of the limiting factor in the short run, and invest in increasing its supply in the long run. When the limiting factor changes, then behavior that used to be economic becomes uneconomic. Economic logic remains the same, but the pattern of scarcity in the world changes, with the result that behavior must change if it is to remain economic. Instead of maximizing returns to and investing in man-made capital (as was appropriate in an empty world), we must now maximize returns to and invest in natural capital (as is appropriate in a full world). This is not “new economics,” but new behavior consistent with “old economics” in a world with a new pattern of scarcity.”

Herman E. Daly (1938) American economist

Herman E. Daly (1994) in: AnnMari Jansson. Investing in Natural Capital: The Ecological Economics Approach To Sustainability. 1994. p. 24

David Orrell photo

“Economists often talk about the benefits of choice, but rational economic man doesn't actually have much freedom to chose, because he is a slave to his own preferences.”

David Orrell (1962) Canadian mathematician

Source: The Other Side Of The Coin (2008), Chapter 5, Male Versus Female, p. 160

Herbert A. Simon photo

“It is impossible for the behavior of a single, isolated individual to reach a high degree of rationality. The number of alternatives he must explore is so great, the information he would need to evaluate them so vast that even an approximation to objective rationality is hard to conceive. Individual choice takes place in rationality is hard to conceive… Actual behavior falls short in at least three ways, of objective rationality:”

Herbert A. Simon book Administrative Behavior

1940s-1950s, Administrative Behavior, 1947

Related topics