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There is an alternative to assumming people behave rationally, which is to model behaviors based on large scale evidence, not clean ideals. This is pretty much
by altacc 7y ago
There is an alternative to assumming people behave rationally, which is to model behaviors based on large scale evidence, not clean ideals. This is pretty much why Sociology and Anthropology exist and are fairly complicated subjects.
Economic modelling often fails because they assume a small number of rational and logic rules. But people are highly variable and rational for one person is irrational for another, depending upon experience and situations.
Your claim that people with money spend it rationally is countered by evidence that poor people are often spending money rationally, given their situation, needs and income. Different situations lead to very different definitions of rational and "common sense". (Mental stress & fatigue also becomes a decision making factor at low income levels.)
- roenxi 7y ago> ... poor people are often spending money rationally ... I claimed that most people spent their money rationally. You're not countering me with that point, we're agreeing. If wealthy people make a habit of spending irrationally they go broke.
- me_me_me 7y agoThe whole point of marketing, which often account for over 50% of products' budget, is direct appeal to emotional/irrational aspect of human nature. Average person doesnt buy iphone because they need a new phone, or coke to quench their thirst.
- nicoburns 7y ago> If wealthy people make a habit of spending irrationally they go broke. This just isn't the case. Unless they're spending irrationally AND a large proportion of their wealth then spending irrationally is unlikely to make them go broke. And unfortunately some people have so much wealth that they can spend market-distorting amounts of money that are still a tiny fraction of their overall wealth.