At the foundation of economics stands a single, spare, immensely productive idea: that a person, faced with alternatives, chooses the one he most prefers. He has, the model supposes, a complete and consistent ranking of everything he might have — every basket of goods, every use of his hours, every gamble over an uncertain future — and from the options his budget and his circumstances leave open to him, he picks, without error, the one that stands highest in that ranking. This is rational economic man, and he is the protagonist of very nearly every story the discipline tells. He is a creature of breathtaking simplicity, and the simplicity is the point: from the bare supposition that he maximizes something, subject to what constrains him, an astonishing range of human conduct can be made to fall into order.
Set out plainly, the figure is almost embarrassingly thin, and his thinness is his strength. He is not wise, nor far-seeing, nor good; he is merely consistent. He wants certain things more than others, and his wanting has only to hang together — to rank the alternatives in some settled order that does not double back on itself — for the machinery to grip. Give him that ranking and the limits he faces, and his behavior is fixed: he climbs to the highest point on his ranking that his constraints allow, and stops. The whole of consumer theory, of the theory of the firm, of how a man divides his day or his life, is the working-out of this one act under different constraints. The model never asks why he wants what he wants, nor how he knows his own mind, nor whether he reasons or merely blunders into the right answer. It asks only that, however he does it, he end where a maximizer would — and from that single demand it draws an entire science.
He was not always so bare. The economists of the classical age reasoned about a fuller creature: Adam Smith, whom a careless memory enlists as the apostle of greed, gave the better part of his labors not to the wealth of nations but to the theory of moral sentiments — to sympathy, conscience, and the longing to be thought well of. The narrowing began with Jeremy Bentham, who held that all human action could be understood as the pursuit of pleasure and the avoidance of pain — that conduct was at bottom an arithmetic, a summing of satisfactions against their costs, each of us forever totting the ledger and acting on the balance. It was a philosopher's conceit, and an austere one, and it would have astonished Bentham to see how wholly the economists took him at his word. For in his felicific calculus lay the germ of the entire later apparatus: the human being as a calculating machine for the maximization of his own satisfaction.
What Bentham sketched, the economists made exact, and in the making stripped away what was human in it. The marginal revolution of the eighteen-seventies, the subject of its own plate in the volume on the margin, recast the pleasure-seeker as a precise calculator of utility at the margin, weighing one more unit against its price and stopping where the two just balanced. For a time the new science spoke as if this utility were a real quantity, a measurable stuff of happiness in the mind. But it soon saw that it needed no such thing: nothing in the theory turned on how much a man enjoyed his apples, only on whether he preferred them to his oranges. So the next generation discarded the unmeasurable pleasure and kept the bare ranking it had stood for. The chooser was purified of his psychology — and what had begun as the portrait of a feeling creature ended as a list of axioms about consistent order, with the feeling nowhere in it.
Purified, the maximizer proved astonishingly mobile, and the discipline followed him outward in every direction. For if economics is the study of choosing, it is bound to no particular subject: wherever ends compete and means are too scarce to serve them all, there is a choice and a maximizer to make it. Lionel Robbins drew the boundary of the science just so — around the form of choice rather than the stuff of commerce — and at a stroke the chooser's writ ran far beyond the marketplace. Gary Becker pressed hardest, turning constrained maximization on what economists had always left to others: the crime weighed like an investment against its expected punishment, the spouse sought like the best available match, the having of children, the giving to charity, the keeping or breaking of a promise. The maximizer went where the economist had never dared and brought the economist's confidence with him, until there was little in human life that someone had not tried to render as the solution to a maximization problem.
Against all this stands the plainest of objections, and the model's answer to it is the first thing to grasp about its strange invulnerability. The objection is that the thing is simply false: no actual person carries a complete ranking in his head, computes the optimum, and acts on it; real people muddle, guess, follow habit, choose by feel. Quite so, the defenders reply — and it does not matter in the least. A theory, Milton Friedman argued, is judged not by whether its assumptions are realistic but by whether its predictions come true; and people may behave as if they were maximizers without performing, or being able to perform, any such feat. The billiards expert sinks his shots as though solving the equations of motion he has never heard of; the leaves of a tree arrange themselves as if each had calculated the angle to catch the most sun. The assumption need not describe what happens within. It need only yield, without, the conduct we observe.
A second defense fortifies the model further, by dissolving the very thing the objection attacked. The critic complains that we cannot see into the chooser's mind to check his ranking — the preferences are hidden, unobservable, perhaps fictitious. Paul Samuelson turned the complaint into a foundation. We cannot observe a preference, true; but we can observe a choice, and let the choice stand for the preference. Say that a man prefers what he is seen to take when he might have taken otherwise, and the whole edifice of ranking can be rebuilt from the record of his conduct, with no appeal to any inner state at all. This is the doctrine of revealed preference, and what remains of rationality under it is a bare consistency: that the man who chose the apple over the orange, both available, not later choose the orange over the apple. The wanting is read off the doing, and to be rational is merely to act without contradicting oneself.
The two defenses together make the model very nearly impossible to refute — and that, on reflection, is exactly what should trouble us. For if a preference is whatever a choice reveals, then the central proposition of the theory, that people choose what they prefer, collapses into the claim that people choose what they choose, which no observation could contradict because it says nothing. Whatever a person does, the theory can pronounce it the maximization of some preference — the one, conveniently, that his doing it reveals. The spendthrift maximizes his taste for spending, the miser his taste for hoarding, the martyr his taste for martyrdom; each is rational, because rationality has been defined so that no one can fail to be. But a proposition that forbids nothing foretells nothing, and a theory that absorbs any conceivable behavior has, in buying that safety, spent its power to explain. The maximizer, armored against every refutation, stands in some danger of meaning nothing at all.
And yet the model is not empty, only incomplete, and seeing just where it stops is the beginning of all this volume has to say. Grant the maximizer his preferences and he is a powerful engine, grinding them into choices with a precision no rival account can match; the trouble lies in what he is handed at the start and never asked to justify. The model is a theory of choosing, not of wanting. It takes the preferences as given — fixed, finished, the chooser's own — and sets to work, never inquiring where they came from, whether they are stable, whether they are even his. The omission is not small, for it installs at the base of the science the one thing the science declines to examine: the wants themselves, treated as bedrock, as data of nature, as the part of the human being that may simply be assumed. A price is a verdict on a hidden contest, mistaken for a fact of nature; and the preference, the maximizer's unquestioned starting point, may be the deepest such verdict of all — a thing made, and made in part by others, wearing the look of something merely found.
Grant him his preferences and the maximizer is irresistible — but it is the granting, not the maximizing, where the whole question lies.
So the figure at the foundation is two things at once: the most powerful instrument the discipline owns, and the carrier of its largest unexamined assumption. As an engine for deriving conduct from desire the maximizer has no equal — it is why economics can say so much, of so wide a range of life, from so little. But it earns that reach by holding the desires constant, by treating the wanting as the one thing it need not explain; and in a science built to expose how contingent the apparent facts of economic life really are, that is a strange thing to leave alone. The remainder of this volume is the inspection of what the maximizer takes for granted. Where does the ranking come from, and is it the chooser's? Does anyone truly possess the consistency the model demands? Can a creature so calculating be the whole of the human being who chooses? The maximizer asks none of these. He only maximizes — and waits, blandly, to be told what he wants.
He is the right place to begin, this tireless optimizer, because he is the assumption every other volume has quietly leaned upon — the chooser behind the wage and the price, the firm and the trade, the saving and the spending. To understand him is to understand the engine of the whole machine. But to begin is not to end, and the plates that follow examine all this first one has set aside: the formal axioms that say what his consistency amounts to, the biases by which he breaks it, the bounded mind that cannot meet his standard, the divided self that is not one chooser but several, the welfare we presume to read from his choices, and, first and deepest, the tastes he is simply handed at the start. A price is a verdict on a hidden contest, mistaken for a fact of nature; and the maximizer is the machine that turns such verdicts into the look of free and reasoned choice. What feeds the machine is the question. The argument remains open.