Revealed preferences vs. misaligned incentives

Link post

Re­vealed prefer­ence the­ory (RPT) is the idea that we can’t trust peo­ple’s self-pro­claimed prefer­ences as much as we can trust their ac­tions. So if some­one claims to care about the en­vi­ron­ment but still eats meat, doesn’t re­cy­cle, and doesn’t donate any money or spend any time work­ing on the prob­lem, we might say that their ac­tions re­veal that they don’t ac­tu­ally care as much about the en­vi­ron­ment as they claim to.

One al­ter­na­tive to RPT is mis­al­igned in­cen­tive the­ory (MIT). This is the idea that when some­one’s ac­tions seem to con­tra­dict their self-pro­claimed prefer­ences, it might be be­cause their long-term and short-term in­cen­tives are not al­igned. For ex­am­ple, if some­one says they are try­ing to quit smok­ing, but in the mo­ment they can’t re­sist light­ing up a cigarette, we wouldn’t say that they must not re­ally want to quit, be­cause it could just be that their long-term goal of quit­ting smok­ing is not al­igned with their short-term de­sire for a nico­tine fix.

RPT and MIT are both use­ful frame­works for look­ing at be­hav­ior which is seem­ingly con­tra­dic­tory. Just be­cause some­one acts in a way that ob­vi­ously goes against their goals doesn’t always mean those goals are false, some­times it’s just hard to do the long-term thing when the short-term thing is so much eas­ier. Like­wise, some­times peo­ple are wrong or ly­ing about about their prefer­ences, and the only way to find out is by ac­tu­ally ob­serv­ing their be­hav­ior.

In gen­eral the RPT view is harder to ver­ify, so a prac­ti­cal solu­tion is to as­sume the MIT view by de­fault. This means try­ing to help by pitch­ing ways some­one could bet­ter al­ign their in­cen­tives. For ex­am­ple, you could recom­mend that a smoker try a nico­tine patch, which al­lows them to satisfy their nico­tine crav­ings with­out filling their lungs with to­bacco smoke. Or you could sug­gest to your friend that in­stead of just writ­ing rants against Repub­li­cans on Face­book about cli­mate change, they could use that time and write a guide for young peo­ple on how to set up do­mes­tic re­cy­cling. If these recom­men­da­tions are re­peat­edly de­nied, you now have ev­i­dence against the MIT view and can grad­u­ally switch to the RPT view.

No nominations.
No reviews.