Professor Marshall

LESSON 7: Rational Choice Theory

Rational Choice Theory

By definition, rational choice theory requires us to ask the main question: What is the meaning of __________? Theories of rational choice want us to make viable choices. This theory rests on the notion that THERE IS A PRICE FOR EVERYTHING AND EVERYTHING HAS A PRICE. The answers to the two key questions:

  1. How do we exist? In a state of CHOICE, active in our pursuit of our desires.
  2. How do we change? When we decide (CHOOSE) to exchange what we have with others.

This theory is a BRIDGE theory, in that it attempts to examine how the MACRO (structure) of society is explained by the MICRO (the choices we make).

Now, let's review some of the historical concepts which lay the foundation for rational choice theory.

Historical Interpretations

Historically, many philosophers and economists have emphasized individual choice and activity as a foundation for action. This way of thinking is built on the ideas of economist Adam Smith, who asserted that the way to understand economic activity was to look to the individual who has to make decisions and choices every day.

Connections to Anthropology

Early sociologists didn't place a lot of emphasis on this kind of thinking, however, early anthropologists did. Malinowski and his contemporaries came up with a few observations about social life:

→ The role of the GIFT: the reciprocity of gift giving and receiving binds society together through mutual obligations. This helps to increase social cohesion.

→ GIFTS are often indicators of where the power is in a society: gift receivers can be at a disadvantage if they can't reciprocate with an equal gift.

→ When gift giving is unbalanced, power is created.

Exchange Theory

Basic Rational Choice Theory (RCT) has a few characteristics which set it apart from other sociological theory:

→ THE INDIVIDUAL: this theory begins at the viewpoint of the individual and her/his interests.

→ ASSUMPTIONS: this theory starts with a few ideas about the individual and tries to explain the structure of society based on the choices the individual makes.

→ MODEL: this theory assumes that there is ONE universal model of the individual which can be applied in all circumstances.

While, at a glance, RCT seems "logical," it does present us with a few problems. First, it tends to explain ALL behavior as rational and as serving our own self-interests. This means that everything we do is reduced to a "this is good for ME" type of mental guide. As such, this theory tries to explain everything as guided by the choices you and I make and not as influenced by anything other than our own personal estimation of the cost/benefit to self.

Max Weber (you'll remember him from our lesson on Conflict Theory) was all about rationality. He used the concept to explain why people acted a particular way. He focused on an efficient way to reach personal goals, and concentrated on individual decision making as a rational social force which has impacts on all parts of society.

Contemporary Interpretations

Connections to Economics

Contemporary sociological RCT finds its roots in economic theory and in the work of Adam Smith, a Scottish philosopher from the 1700s. He asserted that individuals will be led as if "by an invisible hand" in order to best serve the interests of the public. Smith asserts that competition will lead not to the unequal distribution of scarce resources, rather that it will lead to efficient allocation of economic resources (Reintsma 2007:35). Smith's work gave rise to the Pareto model, which states that if an economy changes by making one person better-off while making no one worse-off, then social welfare has improved. Smith and Pareto have served to influence modern day economics and by association, modern social policy.

Adam Smith

Originating from the ideas of Adam Smith, contemporary economics uses a four-part model to explain human action:

Economic Rational Choice Theory

Does this model make sense? Can we apply it to contemporary America? Sociologist are more interested in situations where the profit/cost scenario is difficult to measure. However, in contemporary society, some of these ideas might be problematic.

Connections to Sociology

George Homans

George Homans' interest in RCT was in the area of small group interactions (at the micro level). He theorized a set of assumptions which he called the basic principles of human action, In this development of basic RCT, Homans says that there are three types of action in social groups (rationality, derivation/satiation, and aggression/approval). Here, Homans theorizes, we make choices based on these three broad propositions. He goes further to explain that there are some underlying principles which will determine which of these three choices a person makes:

Homans Propositions

 

Peter Blau

Unlike Homans, who focused on small group interactions, Peter Blau's focus has been on RCT and the social structure (at the macro level). Blau views exchanges as one important aspect of social behavior, but he does not see exchange behavior as being the guiding factor to interactions. While he agrees that exchanges have a broad meaning (creating trust, enforcing conformity, developing values, etc.) he sees exchanges as having two main purposes:

  1. To build friendship. In this concept, Blau sees the individual as managing how others see them so that their "value" can be maximized and their presence is sought.
  2. To establish subordination or domination. Here, Blau sees the establishment of status as a significant factor in the creation of power and distance from inferiors.

Blau argues that social and economic exchanges are very different types of exchanges in that economic exchanges rely on tangible exchanges:

money equation

It is easy to see how MONEY gets you THINGS, but how do we measure social exchanges? How can we measure, for example, how social exchanges get us SATISFACTION? Or, how social exchanges get us STATUS and POWER? What is the importance or significance of what happens when two people meet--and can the outcome be measured? Blau would say that we can measure the output of these exchanges in terms of the TRUST they establish between people and small groups which helps to form the structure of society:

stick people

Blau asserts that when we have exchanges with other people and those exchanges turn out satisfactorily for both of us (we've had a good exchange of RATIONAL CHOICES), we build trust with each other. These instances of trust combine with other groups over time to form the structure of society--without TRUST, Blau would most certainly argue, society cannot exist. Who would leave their house if a foundation of trust in other people was not fixed in society? If we cannot trust others to observe the same social rules as we ourselves observe, society quickly turns to an unstable place:

Why did these people take to the streets? RCT gives us some insight into this social movement in that the TRUST between individuals and structure was violated. Some very powerful people acted in the interests of their own power and status, and in the dust, most Americans suffered. So, Blau and other RC theorists want us to examine what happened to the TRUST we need to make sure protest does not happen. In this case, the social contract (the TRUST we have in others which allows us to go out of our homes into a world of people we don't know and be sure that they won't harm us) was violated, and our trust in powerful people (and our government and elected officials) was severely damaged.

But, for RCT theorists, there are many questions that need to be addressed:

  • For whom were rational choices made?
  • How was the bond of social trust violated, and for whom?
  • How do the protestors see their actions as rational?
  • How do the bankers see their choices as rational?
  • What happens when the rational choices of two groups clash?

James Coleman

Coleman argued that the micro and macro perspectives could best be explained and described using RCT. He was also interested in how the actions of individuals could have suprise effects on the structure of society. He felt that, based on a person's particular interests, they would "trade" their control (or perception of control) over some things to gain greater control over others. He also elaborates on the concept of "trust" by asserting that it is a fundamental element of human interaction (Wallace and Wolf 366).

→ TRUST IS THE OUTCOME OF REPEATED INTERACTIONS.

→ TRUST IS BUILT UP OVER TIME.

→ MODERN LIFE DISTORTS EFFORTS TO TRUST OTHERS.

Coleman also develops his thoughts about how norms are created, and says that underlying social norms is the idea of "rights." He explains:

→ SOME RIGHTS ARE PROTECTED BY LAW.

→ RIGHTS PROTECTED BY LAW ARE EASIER TO ENFORCE THAN RIGHTS WHICH ARE NOT PROTECTED BY LAW.

→ RIGHTS ARE ONLY RIGHTS WHEN THEY ARE RECOGNIZED BY SOCIETY AS SUCH.

→ RIGHTS CAN CHANGE OVER TIME.

When conflict occurs, Coleman argues, rights are coming into question. It takes many people in a society to agree on a particular idea in order for rights to develop. Thinking about Coleman's ideas in the context of the Civil Rights Movement can help us to understand the development of rights in a society:

Another of Coleman's contribtutions is that of "Social Capital:"

→ SOCIAL CAPITAL: ASPECTS OF THE STRUCTURE WHICH MAKE IT EASIER FOR PEOPLE TO ACHIEVE THINGS.

→ SOCIAL CAPITAL HELPS PRODUCTIVITY: HIGH LEVELS OF TRUST HELP SOCIETY.

As Coleman theorizes about the future, he says that modern societies will experience problems with maintaining TRUST and will also experience problems maintaining NORMS and SOCIAL ORDER. He asserts that the shift away from a solid family structure which has great control and influence over the children in the family is the biggest contributor to this lack of trust and cohesiveness.


Conclusion

Let's use a current news story to illustrate some of the issues and concerns we have with theories of rational choice:

It would be easy to say that the choices made by many people involved in the Penn State Scandal were irrational and leave it at that. But, if we use rational choice theory to try to analyze this scandal, then we can begin to see the complexity of the problem. We have to ask why the key players chose to "cover up" the sexual abuse of children. What were the motivations? We can quickly trace the reasoning of the decision makers in this scandal as related to power. The Penn State football team, their "beloved" coach Paterno, the power of the college president and other officials--all of these people likely felt that, should they contact the authorities (which, by the way, they were required BY LAW to do) they would lose power--personal power and the power of the football program and the university. And, rather than expose the college to sanctions, they chose to protect their own power.

While we see the actions of the key players in the Penn State scandal as irrational, if we consider things from the key players' points of view, then we can see how the choices they made might have seemed RATIONAL TO THEM.

This example can also enable us to see how RCT provides a good link between the micro and the macro. The individual decisions that Sandusky, Paterno, and the college officials involved in the cover-up made contributed to an unethical atmosphere which was accepting of many layers of wrong doing. Many of these men were powerful not only in the college adminstration, but also had some power with the NCAA and with the local and state government officials.

It all brings us back to the theorizing of Peter Blau, who said that one of the functions of rational choice was to create status via superordinate/subordinate relationships. The men participating in this cover-up made choices which only powerful men would make and they thought they could continue to cover up the scandal for as long as they needed to. And, as these types of decisions are made, they "trickle up" and become embedded in the structure of our society.

We should always think about whether or not action is rational, and for whom the action is rational. We should not simply assume that people are being irrational when we disagree with them--rationality is in the heart of the actor. RCT encourages us to try to understand action from the point of view of the actor and not from our own perspectives (this is similar to both Weber's VERSTEHEN and Mills' SOCIOLOGICAL IMAGINATION). We can look at actions and behavior from the outside and make assumptions about how irrational they are, but that's the "easy way out." To try to understand another's reasons for behavior is difficult, but it also allows us a possibility to stop behaviors which are not acceptable to the group.