How We Make Decisions

Sometimes, I just have a metaphor or analogy which I need to get out of my brain by writing it down, so I'm just going to put it out there without a lot of evidence or citations to prove that it's worth considering. Either you like it or you don't, but either way that part of my brain which says "write this" will be satisfied.

Conscious reasoning, is like the government. Not only in the sense that we use our conscious reasoning ability (at least sometimes) to restrain our impulses. They are also similar in the way they operate. Things are elaborated in a verbal way, at least aspirationally logical, and often by a series of rules. The law says x, and this other law says y, therefore we have to do z. It's a deliberative and rule-bound process.

It's also hierarchical, and at times little more than a fig leaf for other, less rational urges. The government may in fact dance to the tune of money, or religion, or some other force, but it will at least attempt to pretend that it is making decisions by some rational, deliberative process. It doesn't take too much time pondering how people rationalize their decisions about food, romance, purchases, etc. to see the analogy here. We may in fact just be doing what our primitive instincts tell us to (smoke that cigarette, eat that dessert, etc.), but often we have some kind of smokescreen verbal justification for why it's excusable this time.

Market mechanisms, on the other hand, are more like the subconscious. They are multilateral, not as hierarchical. There isn't someone in charge of determining the prices of things (if it's a market based system), and if you trace out the influences on prices they look at lot like a neural network. No one part of the market is aware of everything that is, collectively, being decided, which can lead to the spectacle of the stock market's participants being surprised by the actions of the stock market, even though they are (collectively) the stock market; and also we can be surprised by our own emotions when they bubble up from the subconscious.

Our rational thinking, like our political processes, are not without their defects in regards to fairness. However, even compared to the mediocre record of rational thinking/politics, the market and our emotions are unfair. The decision method is distributed and parallel, and no one node is considering the fairness of the end result. You may attempt to make yourself like the person who needs it more than that selfish jerk you actually like, or try to buy from the company that pays their workers better instead of the one that sells its wares cheaper, but in either case you are swimming against the stream. The system is not built for fairness, and all we have access to is the conclusion, not the way in which it was reached. Psychologists and economists both do a poor job of deciding how things really work in their respective fields.

Which brings us to the root of the problem. We know that there are some decisions we can make better if we think through them rationally and consciously, and some which we will make better if we go with our gut instinct. For me, just as an example, I do better in math if I double-check my work, but in spelling I need to go with my first instinct because if I think about it too much I no longer have any idea what is right. Athletes who overthink what they're doing will choke, and even mathematicians have to develop an intuitive sense of what makes for an elegant solution or what to try next. On the other hand, if you go with your gut instinct on whether or not to smoke another cigarette, or what to buy in the grocery store when you go there hungry, you will not make wise choices.

What we don't seem to have, is a good way of determining which kinds of decisions are better done with a deliberative, rules-based process, and which kind are better made with a parallel, non-hierarchical, non-rules bound process. Libertarians, progressives, and conservatives all have ideas on which kinds of things should be decided by markets vs. politics, and it's clear to me (and I realize I may be in the minority here) that none of these three groups use anything more than "which system gives me the answer I want" when deciding what should be decided by laws and what should be decided by prices.

When and if I come up with a better way of making that call, I'll be sure to let you know.