Introspection, Revealed Preference and Neoclassical Economics: A Critical Response to Don Ross on the Robbins-Samuelson Argument Pattern

D. Wade Hands, University of Puget Sound

Abstract

Don Ross’ Economic Theory and Cognitive Science (2005) is a very important contribution to the philosophical debate over the nature, significance, and scientific adequacy of neoclassical economics: particularly the relationship between neoclassical theory and contemporary cognitive science. Although I am skeptically intrigued by Ross’ general argument, this particular paper will make no attempt to evaluate the success or failure of his overall project. I would also note, a fact that may not be obvious from what follows, that there is much in the book that I agree with, as well as many parts that have substantially changed the way that I think about various issues. It is an important contribution to the literature—much to learn and much to challenge—that will be discussed for a long time. I will only attempt to slice off a small portion for examination here.1 The only portion of the argument considered here is the historical part: Ross’ defense of the so-called Lionel Robbins and Paul Samuelson argument pattern (RASP). Although he offers various characterizations of RASP in the text, the bottom line is that he considers it to be textbook microeconomic theory—primarily ‘‘neoclassical consumer theory’’ (p. 29).2 The relevant agents are assumed to havewell-ordered preferences (a utility function) and act optimally (maximize) given the constraints they face (scarcity of means): A loose ‘‘Robbins-Samuelson’’ conception like this is, plausibly, thought to be right by many contemporary economists, whatever confused buzz of noises they make when trying to take recent behavioral-experimental evidence seriously. It captures, after all, what they still generally say in undergraduate textbooks when they’re trying to simplify matters for students (p. 117). I will summarize Ross’ position in the next section, but the bottom line is that the neoclassical economic agent is not dead; or at least should not be dead according to Ross, because such agents still have a lot to offer behavioral science. Although this is not an unusual position in economics, it is an unusual position for a philosopher, and the particular way that he defends this position puts him at odds with almost everyone writing on the philosophy of neoclassical theory. On one hand, there are many critics who use the negative empirical results from recent experimental economics, behavioral economics, and experimental psychology to argue for the elimination of the utility maximizing agent from economics and the other disciplines where it now appears. Ross is certainly not in this camp; he defends both the practical usefulness and scientific adequacy of neoclassical choice theory. He argues that a research strategy based on evolutionary game theory, when paired with the insights from cognitive science that he provides, ‘‘preserves rather than displaces the core philosophical assumptions of neoclassicism’’ (p. 70). On the other hand, there are many defenders of the status quo who insist that none of these recent criticisms represent a serious challenge to the old microeconomic workhorse. Ross is not in this camp either, in part because he finds many of the criticisms raised by experimental and behavioral economics—specifically preference reversals and time inconsistency (pp. 177–89)—to be right on target, and in part because he disagrees with the particular way some economists (specifically Gary Becker) characterize the theory they are defending. The bottom line for Ross, unlike most other commentators, is that neoclassical theory is appropriate and scientifically legitimate, even though many of these recent criticisms are essentially correct. He argues that in recent years economists have greatly improved the way they model exchange and other social interactions, but, unlike many of those who would agree with this view of recent developments, he also believes that utility maximization is just as useful in this new theoretical environment as it was in the Walrasian milieu of the mid-twentieth century.As noted above, I will not attempt to challenge (or defend) Ross’ general position about how well neoclassical theory fits (or can be made to fit) in with recent theoretical developments such as behavioral economics and evolutionary game theory. Nor will I challenge (or defend) the various philosophical resources that Ross enlists in his defense of rational choice theory, such as Daniel Dennett’s ‘‘intentional-stance functionalism.’’ Mysubject will be Ross’ characterization of Robbins and Samuelson—in particular, his characterization of how these two economists justified (or how they should/could have justified) the particular versions of rational/consumer choice theory they supported. My argument will be that whether one accepts or rejects Ross’ claims about neoclassical theory, its relationship to contemporary cognitive science, or Dennett’s intentional stance, his extensive discussion of Robbins and Samuelson should be independent of that assessment. These are simply not resources that can be used persuasively in this way 454 JOURNAL OF THE HISTORY OF ECONOMIC THOUGHT if one maintains fidelity to the arguments made by Robbins and/or Samuelson. Ross is not defending just any-old version of neoclassical theory—he is defending a particular version (RASP) that will be able to do certain things, accommodate certain recent theoretical developments, live up to certain philosophical standards, allow for a broad characterization of agency, and so forth—and my argument is that Ross’ version of rational choice is simply not in the writings of either Robbins or Samuelson (and is, in many respects, in conflict with both the economic theories they advocated and the philosophical defense they provided for those theories).