Sunday, October 16, 2011

The Law of Unintended Consequences

I think the Law of Unintended Consequences does a fantastic job of highlighting the difficulty that is apparent when we try to maximize the utility of our actions and decision making. There is no way to foresee every unintended consequence and it would be senseless and costly to attempt such an endeavor. Through science, via experimentation and reflective contemplation, we venture to make more educated decisions, but I’m not sure that science will always be completely utilized in the decision making process.

Opinions are diverse and people are always operating in a state of rational ignorance, it is just too costly for everyone to have a perfect knowledge of everything. So we have a problem… The general public is rationally ignorant and has been overwhelmed with a multitude of obstacles which need to be addressed and responded to immediately. These obstacles have to do with necessities: food, water, and housing, waste disposal, transportation, etc. What will we do?

The general public elects officials (AKA scapegoats) to take charge and help create legislation and regulations that will help it past these obstacles. We like to believe these officials have a greater comparative advantage when it comes to guiding policy or decision making, but perhaps this isn’t always the case. Politicians, it seems, have more of an incentive to make decisions based on public opinion, than to make decisions based on science. Public opinion gets them elected, but public opinion isn’t necessarily rational and is often stupefied further by appeals for short term conclusions. In light of this, perhaps economists should be less concerned with elected officials implementing poor legislation, and more concerned with influencing the general public to have a greater appreciation for science and education.

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