The Online Library of Liberty

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• Foreword
• Preface
• The Reason of Rules
• 1.: The Constitutional Imperative
• I.: Introduction
• II.: Reasons For Rules
• III.: Rules of Games
• IV.: Rules of the Road
• V.: Rules of the Market Order
• VI.: Rules of Political Order
• VII.: The Importance of Rules
• 2.: The Contractarian Vision
• I.: Introduction
• II.: Noncontractarian Constitutionalism
• III.: Individuals As Sources of Value
• IV.: Contract and Exchange
• V.: Politics In the Exchange Perspective
• VI.: Unanimity As the Contractual Ideal
• VII.: Agreement On Rules and the Veils of Ignorance and Uncertainty
• VIII.: Conclusions
• 3.: The Myth of Benevolence *
• I.: Introduction
• II.: Private Good and Public Good
• III.: Science, Truth, and Politics
• IV.: The Authoritarian Imperative
• V.: Majoritarian Democracy In the Noncontractarian Paradigm
• VI.: The Aim of Politics
• 4.: Modeling the Individual For Constitutional Analysis
• I.: Introduction
• II.: Homo Economicus In Politics: the Argument For Symmetry
• III.: Science and the Empiricist Defense
• IV.: A Methodological Defense of the Differential Interest Model of Behavior
• V.: Social Evaluation and Quasi-risk Aversion
• VI.: Gresham’s Law In Politics
• VII.: Summary
• 5.: Time, Temptation, and the Constrained Future *
• Preface
• Part 1.: Individual Private Choice
• I.: Introduction
• II.: The Ultimate Z ’s
• III.: Preferences For Preferences
• IV.: Past, Present, and Future
• Part 2.: Individual Public Choice
• I.: Introduction
• II.: Society With a History
• III.: Temporal Interdependence
• IV.: An Illustration
• V.: Moral Rules And/or Constitutional Commitment
• 6.: Politics Without Rules, I: Time and Nonconstrained Collective Action
• I.: Introduction
• II.: The Social Discount Rate
• III.: The High-tax Trap
• IV.: The Inflation Trap
• V.: The Public-debt Trap
• VI.: Other Examples
• VII.: Conclusions
• 7.: Rules and Justice
• I.: Introduction
• II.: Just Conduct and the Notion of Desert
• III.: Justice and Promise Keeping
• IV.: Justice Among Rules
• V.: Just Rules, Agreed-on Rules, and Just Conduct
• VI.: Conclusions
• 8.: Politics Without Rules, II: Distributive Justice and Distributive Politics
• I.: Introduction
• II.: Distributive Justice: the Conventional View
• III.: The Constitutional Perspective and Institutional Incidence
• IV.: The Incidence of Unrestricted Majoritarianism
• V.: Tax Rules and Distribution Under Majority Rule
• VI.: Direct Constitutionalism and Distributive Justice
• VII.: Summary
• 9.: Is Constitutional Revolution Possible In Democracy?
• I.: Introduction
• II.: Pareto-superior Change and Wicksellian Unanimity
• III.: Distributional Limits and Prospective Rules
• IV.: Status Quo Entitlements and Distributional Envy
• V.: Constitutional Change and Free Riders
• VI.: The Role of Norms
• VII.: Toward a Civic Religion

III.

Science and the Empiricist Defense

The use of the Homo economicus model requires more specific support. The most natural, and perhaps most familiar, argument is that people do, in fact, behave as the model suggests, at least on average and in the large. Due allowance must, of course, be made for the degree of abstraction necessary to introduce any generalized model and hence for instances of specific violation of the behavioral postulate. But once such allowance is made, the argument is that Homo economicus offers a better basic model for explaining human behavior than any comparable alternative. Most modern economists would probably take this position, which receives its most explicit defense from members of the modern Chicago school.7

The position is difficult to reject, and for two reasons. First, if one insists on a comparison of Homo economicus with alternative behavioral models of roughly equal levels of abstraction and generality, many of the grounds for debate are swept away. Models of behavior that are psychologically richer may be rejected because of their failure to meet the implicit austerity test. Second, and more important, Homo economicus is not well defined, and the would-be critic may find that his quarry has disappeared, only to reemerge in another guise. In specifying Homo economicus as a net wealth maximizer, for example, one may fail to explain much of what can be observed, but the observations may not be definitive because the defender of the model may resort to changes in the specification of the choosers’ utility functions. In other words, the defender of Homo economicus deflects the criticism of the content of preferences by the claim that the structure of preferences rather than content is the central element of the model.

As we shall indicate in Sections IV and V, our defense of the Homo economicus model is basically methodological rather than empirical. Nonetheless, the methodological defense requires empirical presuppositions, and we can be quite specific in this respect. We simply require that demand curves slope downward, which, in turn, requires that it be possible to identify the “goods” individuals value. That is to say, our empirical presuppositions refer to the signed arguments in individuals’ utility functions and do not involve trade-offs among these arguments. Furthermore, we require that individuals consider their own interests, whatever these may be, to be different from those of others.

For economists whose purpose is quite different from our own, who seek to provide a positive-predictive “science of behavior,” whether in market or political settings, further specification of the model is required. And as research results have indicated, Homo economicus, as an all-purpose explanatory model, runs into some apparent difficulties. Analysts are hard put to explain such behavior as individual voting in large-number electorates, individual volunteers in defense of the collectivity, and voluntary payment of income taxes. Fortunately, for our purposes, we are not required to discuss possible tests of the usefulness of the Homo economicus model in this all-inclusive explanatory sense.

The reason is that for our constitutional argument, it is sufficient to defend the Homo economicus construction as a “useful fiction,” while largely setting to one side the question as to just how “fictional” the individual in the model may be. Indeed, we make the stronger argument that Homo economicus is uniquely useful for purposes of comparative institutional analysis and for ultimate constitutional design. But as previously noted, the argument here is methodological and analytic rather than empirical.

[7. ]See, for example, George Stigler, The Economist as Preacher (delivered as the Tanner Lectures, Harvard University, 1980).