Maximization vs. Balance

[flwyd]

If someone tried to eat as much food as possible, we wouldn't call that rational. So why do we say that maximizing income is the goal of rational agents?

Comments

[mackys.livejournal.com]

I think the traditional economic formulation is "maximize utility". Where "utility" = usefulness or pleasurability or what we think is best.

It says a lot about mainstream America that most of them believe "utility" == "money".

[altamira16.livejournal.com]

I don't know. I have become more convinced that economists are a bunch of morons lately though.

[bike4fish.livejournal.com]

Only recently?

[altamira16.livejournal.com]

I always thought that maybe some of them had a point. But it seems the more I read, the more they are looking to apply overly simplistic models to a world that refuses to fit them. And yet this does not stop them from trying over and over again.

[flwyd.livejournal.com]

It's as if they want to be closer to the world than mathematicians, but they aren't willing to be engineers.

[bike4fish.livejournal.com]

No, maximization of income is the goal of irrational agents.

Of course, rational agents are about as rare as unicorns, anyway.

[arazel.livejournal.com]

This is very clever and true. Can I quote it?

[flwyd.livejournal.com]

Please do! Also, let me know if you find a better way to phrase it.

[arazel.livejournal.com]

I changed "agents" to "people" to avoid confusion.

[vvvexation.livejournal.com]

Perhaps because income is something that you have a choice about what to do with once you've amassed it--and when you can choose to get rid of the excess, that does make an excess better than an insufficiency.

income and happiness

[(Anonymous)]

I attended a researcher's presentation on the relationship between income and happiness. Happiness is lowest among individuals living in poverty, and rises with income, but only until people reach around $35,000/$40,000 annual income. The increases in happiness past that point are minimal: happiness basically levels off. So, if the goal of a rational agent is to maximize happiness, it would be rational for the agent to try to maximize his/her income until s/he reached around $35,000/$40,000 a year. This yearly income might increase somewhat (but presumably not a great deal) depending on how many dependents the agent has, the cost of living in his/her area, and other factors.

income and happiness

[aquaopal.livejournal.com]

I attended a researcher's presentation on the relationship between income and happiness. Happiness is lowest among individuals living in poverty, and rises with income, but only until people reach around $35,000/$40,000 annual income. The increases in happiness past that point are minimal: happiness basically levels off. So, if the goal of a rational agent is to maximize happiness, it would be rational for the agent to try to maximize his/her income until s/he reached around $35,000/$40,000 a year. This yearly income might increase somewhat (but presumably not a great deal) depending on how many dependents the agent has, the cost of living in his/her area, and other factors.

Re: income and happiness

[flwyd.livejournal.com]

Alternatively, one should pursue an interesting career which pays at least $35K (presumably with a locale adjustment).

I make significantly more than $40K, but that's because my field of choice has a pretty high market rate. There are lots of jobs with an equivalent salary in which I'd be unhappy. I'd also be happy to do what I'm doing for significantly less money.