“The first time I heard of food stamp was in my social work class years ago. The senior social worker told us that the reason we want to give people food stamp instead of cash is that people sometimes cannot make the best choice for them, they simply cannot control themselves. They would probably use cash to buy alcohol, cigaratte even knowing it is wrong. By giving people food stamp, they would at least buy a certain amount of things that are truly good for them.
But by saying food stamp sometimes make people unable to get to the optimal choice, are you suggesting even if the opitimal choice is more soda, more alcohol, more drug, less food, it is still better than the kink? When you said the fact that people can only choose kink rather than the old basket is where this policy is inefficient, I was wondering: isn’t this what food stamp is designed for? The purpose of the food stamp is maybe to drive you to the kink, right?
I do understand that here saying the policy is not efficient, we assume government only cares about cost. But still I want to ask you about the “utility” and talk with you about the real situation instead of problem sets.
My understanding about this is that the definition of utility and maybe the whole economics theory is based on the assumption that human being is rational and would make the best choice for themselves. Under this assumption, even if people choose more soda and less food, the utility is still higher than the opposite way. Or maybe I could say, the utility we talked about is the utility perceived by people, instead of necessarily the true utility for people? So what if this assumption is false and people are not rational at all? Is this the key about whether food stamp policy is good or not?”
This is part of the email I sent to discuss with economics teacher.
My own background is communications and psychology, and I have studied a lot about why and how people are not rational. I am scared by economics since it is so dominant in today’s social management. In country like China, people used to rely on philosophy and history to manage society, however, now it is all about economics.
And economics keeps failing us. I have been wondering why. Now the answer begins to be more clear: what if the assumtion is false?
What if people can’t make the “best” choice for themselves, instead they just act by emotion and impulse, usually misled by something?
What if people, even if the smart ones, can’t understand the undergoing information and do rational analysis, instead they just follow people, and follow intuition?
What if people are constrainted by bias, and they fail to recognize the flaw of the system they rely on to recognize something?
For many people, you can say no that’s not the truth. However, I have been studying this for long time, and I know such things are true. When it comes to crowd instead of individuals, it is even more true.