I think Sen's piece speaks to many of the debates we have had concerning self-interest and human behaviors. The notion of rationality is particularly interesting to me, and I think Sen eloquently articulates the struggles modern economics faces if it wishes to universalize rational behavior. Rationality takes on so many different forms. What is viewed as rational by one individual can be viewed as completely irrational by another individual.
Economists devised the price theory mechanism and created
the supply and demand model, which give a broad outline of how markets work, by understanding how people face preferences and opportunity cost. However, as Sen mentions, people can behave very unpredictably or "irrationally," when making decisions, such as if the means don't align with the ends, so how can we normalize rational behavior to all individuals?
I also thought Sen's discussion of applying economic thought to the individual versus to groups was interesting. Although outcomes can be Pareto optimal, they can lead to significant misery, which is why political powers are so essential to a stable society.
In fact, it looks as though irrationality, for Sen, can come in at various points. Not only can agents fail to make rational choices of the means to satisfy their ends, they can fail to have rational ends. Notice that that is implicit in the economic notion of rationality as self-interest: agents can fail to pursue self-interested ends, in the economists sense, and in such cases will fail to act rationally. For example, it appears that for the standard economic account it is irrational to act ethically (!!!)
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