Jan 8, 2011

Why did the chicken cross road?

Because it maximized his utility, this is the answer from Charles Wheelan and his Naked Economics.

Because he is forward-looking, I guess this is my answer. If one has chance to grow up in a traditional farm (either American style or non-American style), he or she may have a good observation on the behavior of a chicken. Can a chicken step back like other animals or a human being? I guess no. So when a chicken is searching for food (normally, this is the only utility maximization activity), he always searches forward and by chance he may cross the road under danger. This logic does not seem to make too much sense, but the point is that a chicken crosses the road by instinct. And mostly, the instinct of a chicken involves searching food and surviving from danger, which are all featured by his forward-looking behavior.

It can be argued that forward-looking behavior is common in the natural world. But we should bear in mind the fact that a chicken never rolls forward, and, a badger does this often time. It turns out rolling forward behavior is pretty efficient in the world of a badger's existence. Now let's ask the question again, why did the badger cross road? One possible answer is that he is constrained. Because when we build a road, we keep the slope of road from this side to another side minimized to prevent roll-over. Hence, there is no slope for him to roll forward, there is a physical constraint.Of course, this does not necessarily conflict with the possibility that his utility is maximized by doing this.

So for different animals, the answer to this question tends to be different and varies by their instinct and nature of their existence. How about human beings? We are the most organized animal on the earth. We have a very complicated society and hence we are called advanced animal by ourselves. When we are not self-sufficient (almost surely everyone in U.S. is not self-sufficient at least), we play a role in the market economy, where we exchange everything possible for different level of needs. And every of us in the market can be called a businessman or entrepreneur, the only difference comes from the scale of each one's business.

Again, the same question, why did the businessman/entrepreneur (potentially every of us) cross the road? Charles Wheelan answered the question this way: because he could make more money on the other side. I agree with him since utility of every of us (a market player) is highly correlated with money in different patterns or formats. Therefore, if an individual is not out of mind (for different reason, subjective or objective) at a specific moment, then he or she crosses the road for a purpose. And the purpose is somehow connected with money making or utility maximization.

My another question is that, in terms of economics study and research, can we really study the economic behavior of any individual beyond this highly organized human being society? Put other way, is economy a specialized word and only applicable in human being society? I tend to say yes, otherwise it is hard to differentiate instinct from utility maximizing behavior. And this may also be the reason why I get confused when I come across some parts of experimental economics, a new field of economics.

Reference:
1. Charles Wheelan, Naked Economics, 2002, New York, pp.8-11.

0 comments:

Post a Comment

 
Locations of visitors to this page