Economic Utilities and Anthropological Critiques

A certain brand of economics (most closely associated with Milton Friedman, Gary Becker, and the Chicago School) posits actors for whom calculations of maximum material utility is paramount: given a particular set of preferences, individuals act (rationally) to maximize their returns. Deirdre McCloskey terms this the Max U. paradigm, and argues for the recognition and inclusion of “S” variables (such as the social and the sacred).

Such neoclassical economics is, at its core, about cost/benefit analyses. In theory, the models are nimble enough to account for any individual decision (if we include cultural, moral, emotional, and other sorts of utilities and preferences). In practice, they reflect a strong, overriding, bias toward material and financial costs and benefits. (After all, this is what can be measured, and the price one is willing to pay for an item is said to reveal one’s true preferences.)

These models make some key assumptions that anthropologists have trouble with: (1) a focus on individual behaviors and decisions—methodological individualism—that diminishes the importance of the social, (2) given the complexity of human behavior, models have to be stripped down, making broad assumptions about rationality and consciously leaving aside crucial areas of motivation because they are not readily measurable or observable; (3) the “self” in self-interest varies substantially across cultures, and indeed the whole notion of a singular, autonomous, sovereign “self” is problematic; and (4) what anthropologists find so interesting is what makes up that black box economists term “preferences.”

Economic modeling is not bad, but it does have some implicit political/moral values. And it could be made more robust by taking into account moral and cultural factors, as a number of economists on the cutting-edge are doing, but they are often hindered in an ideological attachment to key assumptions built up around the neoclassical model.