Tuesday, November 17, 2009

the economics of ignorance

I was on the typology central forums today and I found an interesting question: Why do people love assumptions?

First of all, I humbly suggest that the main reason why anybody makes any sort of assumption in any sort of scenario is to save time and effort. (This statement in itself is based on an assumption, because I have neither the time nor the energy to bother doing extensive research on the matter at this point in time. Hur hur, I'm so witty, hur hur.) Sometimes this is done because there isn't much of a choice, such as in a medical emergency or most other crisis situations. Sometimes, as any overworked and under-appreciated parent will tell you, this is done to divert time and energy elsewhere, such as in the pursuit of a decent social life. Often this is done simply to avoid expending time and energy to begin with.

The more interesting concern though, is why do so many people people make such ignorant assumptions? Many economists have established how and why pollution, traffic congestion and global warming are so rampant- and I'd like to apply the same principles to ignorance. To put it in simple economic terms, ignorant assumptions cost society more than they cost the individuals. They can be described as negative externalities, which are caused by a divergence between personal cost and social cost wherein the affected 3rd parties are not compensated. Let me explain:

The average ignorant individual considers the personal benefit of his ignorance (the self-perception of intelligence or superiority) to exceed his personal cost, and hence indulges in lots of ignorant behavior as he considers it personally profitable to do so. In contrast, ignorant assumptions have a net social cost- all of us collectively are worse off because of them. However, as ignorance is not significantly taxed or penalized, humanity collectively indulges in far more ignorance than what is socially optimal. Believe it or not, being a stupid twat can actually considered to be rational behavior.

Moving back to assumptions in general. Whatever the reasoning behind it, it is certain that we will have to make assumptions just to allow us to get on with our lives- we can't spend everyday worrying whether our assumption that the laws of the universe will still hold through tomorrow. (Unless you're a theoretical physicist or something, in which case you could perhaps make a living out of it.)

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