The Rationality behind Irrationality

It has been more than 5 years since I have been studying economics and believe me, nothing has intrigued me more, than this concept of rationality. I still remember my very first economics lecture and the professor, as any economics professor would introduce economics to us, started with the unit ‘Consumer Theory.’ If I remember correctly, exactly 10 minutes into the lecture, I was introduced to my very first assumption of economics which was, “The consumer is rational.” My brain went on like, how can I simply assume anything at all on the first day? It was only later on I discovered that the whole of my career will be built on a magnitude of assumptions, a little bit of analysis and a stack of ambiguous conclusions.

Rationality, in layman terms, is simply a belief that anything we do in our lives is backed by reason and logic. However, my definition of rational behavior or rationality might differ given I am an economics student. According to Investopedia,

Rational behavior refers to a decision-making process that is based on making choices that result in the optimal level of benefit or utility for an individual.

My professor taught me a rather simpler version of this definition which was, a rational consumer will always make decisions which will provide him with the highest level of utility. At that moment, I was astounded because I was 18 at that time and I did make quite a few significant decisions in my life without being aware of this concept of rationality. Neither did I ever calculate utility before making simple life choices.

It’s been 6 years since my first encounter with rationality and I still believe that no consumer can depict a perfectly economic rational behavior while making decisions in life whether pecuniary or non-pecuniary. I am familiar with the theory of consumer choice and yet I completely forget about my economics background when I make choices, how can we expect for others to keep in mind their utilities during decision making.

However, I am aware of the fact that there is some sense of logic and reason associated with our decision making but I am also convinced that we are primarily humans. We, as humans, often put our emotions first rather than logic.

Hence, economic rationality is rather subjective and is usually constrained. In my opinion, consumer rationality is a mixed bag of logic and emotions. Humans are complex creatures and it is rational when we are being irrational. We are only capable of bounded rationality or as some like to call it ‘irrationality’.

I still have a long way to go to find rationality behind such irrationality and I don’t think I will ever get a satisfactory answer. Though it is funny that I am still in my early 20s and here I am trying to predict human behavior. Maybe when I have some grey hair on my head and weaker bones in my body, then I might be able to find a reasonable answer to my futile concern of consumer rationality.