Sunday, June 25, 2006


What are shrinks for?

In our intermediate micro courses, we assume that a person's knows what makes him or her happy, and that they will try and maximize that happiness given their budget constraints.

But if that really were the case, then why do we have psychiatrists? Or Dr. Phil? Or Oprah Winfrey? Or any of the other gurus out there that people employ to teach them how to live their "best life"?

To phrase my question another way, why do some people put locks on their refrigerators? If their utility was maximized by eating less, then why do they have to worry about falling victim to other urges?

Maybe people don't know what makes them happy? Or maybe they know, but they just aren't good at making themselves happy? It's something to consider the next time we talk about how the economy "really" works. Or how people "really" behave.

I think some of this (Locks on refrigerators for example) have to do with time preferences. Eat now or be thin later. It's sometimes difficult to make decisions because of this trade-off. If it were a choice between an ice cream sandwich now and being thin now it'd be a lot easier.
I think by in large the masses are more like sheep than they'd like to admit. Most like to be "herded" around and told what to do and what will make them happy. By being told by gurus how to act, they can target those individuals as scape goats when something fails either be it because of lack of motivation or otherwise. Plain and simple, if given the choice to follow orders or give them, (while most won't admit it), most will go for following's far too easy of an option to consider.
I think Jenna may have something with the time-preference (depends on the discount rate). Additionally, you might include an assymetric information problem, or perhaps even the clash of preferences in the utility-maximizing family. Some have called them "inter-familial externalities". A parent (having the income and power) has preferences that influence or potentially force 'non-utility maximizing' constraints upon a spouse or child. These contrasting preferences likely distort the individual's utility-maximizing equation (and ability) and happiness might not be so straight forward.
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