Decision Making as Output and Bounded Rationality

  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra

Romanticizing Poverty


There is morbid captivation to romanticize poverty, sentimentalise filth and squalor, put rural life on a pedestal, and idealize urban low income neighbourhoods and slums. To a Western tourist, watching from the stands if one can call it so, exhibition of poverty might be a spectacle however morose it might appear. It might not be dissimilar to their melancholic interests in viewing African Negroes brought as slaves and further parading as human travelling zoo.  To add, is the tendency of many Indian commentators not merely to self-flagellate but add a mystique to the business of public celebration of poverty. It would not be wrong to say the advocacy on poverty eradication are its biggest enemies. If poverty were to be zero, perhaps Mother Theresa would be without a job! Paradoxically for the perpetual existence of poverty alleviating organizations, poverty has to be everlasting.

To people in poverty, living in over-crowded chawls or slums in cities, inhabiting rural places far away from basic amenities, life is continual struggle for subsistence. Yet there a recreational povertarianism among the upper strata of human society. At a simplest level, it is essentially a barrier of entry. Given the movement and positions at the upper echelon are ethereal, there is constant fear of displacement from below. A method to perhaps minimize the challenge is to highlight the negatives of wealth and positives of poverty. Nonetheless for all the deification of poverty, not a single individual or family at the top would contemplate abandoning wealth and embracing poverty. There is ample poverty tourism conceivably the best example being Mahatma Gandhi himself. In Sarojini Naidu’s words, it cost thousands to keep the Mahatma in poverty. 
               
Yet for Gandhi, apart from moral element, there was stout political factor too. If he had to mobilize against the British imperialism, he needed the support of the masses. If the Indian National Congress had to transform from class based to mass based party, it had to embrace the living in the masses. Gandhi by being one of them through his dress and conduct sent an authoritative signal of his identification and thus managed to get their unqualified and total backing for his immediate priority. His advocacy of rural industry might have good meanings but practically infeasible and subject to diminishing returns and discord.

To his successors from Nehru to Indira Gandhi and beyond, poverty was convenient excuse to keep India from adopting technologies and also to hide their failure in governance and public services delivery. A case in point is the spread of telecom network. It was believed that since 90% of Indians cannot afford a post card, there was no reason for the rich to flaunt their wealth by owning a telephone. The socialist shibboleths ascribed negatives to conspicuous consumption and wealth display. There was hardly a thought to the spill-overs that accompany embracement of technologies that could aid poverty removal. Garibi Hatao became a expedient ruse for Amiri Hatao! Empathising with the poor translated into anti rich, anti-wealth and not fostering opportunities to poor to elevate standards of living.

To many Western writers and of course with part wilful collaboration with their Indian counterparts from the literary and media circuit, exalting slums and accompanied externalities added a touch of romantic enhancing their own version of TRPS viz book sales. There is an inherent inquisitiveness however macabre it might be about peep into the lives of those who live in impoverished habitats. A description fitted with language in full flow of literary and artistic expression added to the mystique. Any deviations from the narrative would invite censure and perhaps castigation from the club. It may be only a VS Naipaul who could survive by being extremely critical of poverty romantic story. Sob stories often earned sympathy and brownie points in the West and India cinema movement was not behind to capitalize on the same. Whether is fantasy embedded Bollywood or their counterpart in the parallel or art cinema movement, the race to add a sense of mystery to poverty did not diminish. It was the form and presentation that perhaps differed but not the theme.

Political tools, monetizing opportunities, morbid fascination of humans, barriers to entry into the elite club, failure in governance and public services delivery all add to the touch of romanticism to the same. There is a celebration of rural or low income urban clusters foster community integration, solidarity, collaboration, cooperation, Vasudeva Kutumbakam etc. In face there is very little to celebrate since these arise out of the contextual constraints and not of wilful mechanism. Glorifying food poor eat as best or something not found in any five star hotel, a political tool often used Rahul Gandhi and his team was condescending to say the least. The often talk of how poor live happily while the rich are sleepless while fearing loss of property is insulting to the notion of dignity. 

Aside of the same, there exists a propensity of looking back into the days of poverty with nostalgia. Many Indians have come up from poverty lines into leading lives of dignity and prosperity (latter in varying degrees). Barring small percentage of population, large sections or at least their immediate ancestors have lived their life in rural belt or in urban chawls or slums before graduating upwards. With the passage of time, the painful experiences of living these conditions slowly disappears from the mental horizon.  Daniel Kahneman terms it as peak-end experience. The experiences one undergoes is reflected in the peak experience and the final outcome of that situation. The rest are basically lost in memory. It applies equally to both positive and negative experiences. For many who grew out of poverty, the increasing time gap will shrink away the bad memories. Moreover, the touch of reminiscence will make them look back at those struggles with sense of certain romanticism and a perhaps a feeling of achievement of overcoming those barriers. Indubitably, one tends to view them as challenges in upward mobility in socio-economic ladder. Confronting and succeeding in breaking those barriers, naturally instils a sense of pride.

A casual glance at popular writings and movies suggests no apparent drought of stories of positive correlation between poverty and contentment and negative correlation between richness and happiness. This fallacy is best demolished through simple economics concept.  Utility theory assumes rational individual aims for maximization of utility and reveals property of non-satiation. Yet the frontier of utility is never unbounded. There exists constraints like income etc. which restricts the attainment of intended utility. If utility were to be measured, there is an intended utility and the utility that can be achieved given the current conditions. Therefore any individual even living in extreme poverty will seek to maximise his or her utility given the constraints they face. Implied is in their own small universe full of constraints, they seek to satisfy themselves to the fullest extent possible thus exhibit ‘happiness’. This is what is sought to portrayed in literary and artistic domain as proof of virtues of poverty. Beyond doubt, these ambassadors of poverty want to maximize their utility subject to their constraints and hence acting perfectly rational. The context therefore is ample signal of how happiness is sort of mirage sought to be projected by certain interests. Missing in these dynamics is the non-fulfilment of satiation inherent in the individuals of all strata.

Poverty might be far from romantic, yet differing motivations and interests some external and some internal end up creating large than life romance of poverty.

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