Rational Decision-Making

 Posted by on 17 October 2005 at 6:20 am  Uncategorized
Oct 172005

In her essay, “Causality versus Duty,” Ayn Rand indicates the general pattern of rational decision-making:

In order to make the choices required to achieve his goals, a man needs the constant, automatized awareness of the principle which the anti-concept “duty” has all but obliterated in his mind: the principle of causality — specifically, of Aristotelian final causation (which, in fact, applies only to a conscious being), i.e., the process by which an end determines the means, i.e., the process of choosing a goal and taking the actions necessary to achieve it.

In a rational ethics, it is causality — not “duty” — that serves as the guiding principle in considering, evaluating and choosing one’s actions, particularly those necessary to achieve a long-range goal. Following this principle, a man does not act without knowing the purpose of his action. In choosing a goal, he considers the means required to achieve it, he weighs the value of the goal against the difficulties of the means and against the full, hierarchical context of all his other values and goals. He does not demand the impossible of himself, and he does not decide too easily which things are impossible. He never drops the context of the knowledge available to him, and never evades reality, realizing fully that his goal will not be granted to him by any power other than his own action, and, should he evade, it is not some Kantian authority that he would be cheating, but himself (PWNI 99).

Decision-making is the process of selecting goals and the means to achieve those goals. As a living organism, man must make decisions constantly. He must continuously select ends and means, and the quality of his selections will determine the quality (and quantity) of his life.

Moral principles identify man’s broadest ends and means, his most fundamental values and virtues. “‘Value’ is that which one acts to gain and keep, ‘virtue’ is the action by which one gains and keeps it” (FNI 121). To act on principle means to select your values according to the proper standard of value (Man’s Life), and to choose your actions according to the proper standard of virtue (Rationality).

But Man’s Life and Rationality are very abstract, and it takes mental effort to apply them to specific cases. Man must act in accordance with moral principles, but moral principles do not automatically tell man how to act. Within a valid principle lies a range of legitimate options. Philosophy tells you that you must work, for example, but whether you will be a waiter, a doctor, or a philosopher is up to you.

When choosing among legitimate options, it’s imperative to identify the costs and benefits of each option, but it’s a mistake to conclude that all decision-making involves this sort of cost/benefit analysis. Moral principles play an essential role, and just as it’s wrong to dispense with moral principles altogether, so it’s wrong to say that man merely uses moral principles to identify costs and benefits, thereafter weighing those costs and benefits in order to make a self-interested choice. This is the David Kelley error. Responding to Kelley’s view, Peter Schwartz writes:

Moral judgment, and not some pragmatic calculation of losses and gains, is what must precede any decision about whom to associate with. As Dr. Peikoff makes clear (in his lecture “Why Should One Act on Principle?” and, much more extensively, in [OPAR]), there cannot be any “cost-benefit analysis” of justice versus injustice, or of not sanctioning versus sanctioning evil (or of the alleged pro’s and con’s of any proper moral principle). The moral is the practical. No matter what the short-range appearances may be, there are no real “benefits” in acting unjustly, and no “losses” in acting justly. There can be no value in pretending that the irrational is rational. The moral principles of Objectivism identify the kind of action — the only kind of action — that is in accord with the demands of reality and therefore beneficial to man’s life. If an action is consonant with moral principles, then and only then can the question of costs versus benefits legitimately arise. Only then can various alternative courses offer genuine advantages and disadvantages that need to be compared. But the immoral — the unjust, the dishonest, the irrational — is by its nature the anti-life and can offer no value.

Decision-making, according to Schwartz, consists of two stages: first, a man uses moral principles to determine his valid options, and, second, he examines the costs and benefits of each valid option to determine the best course of action.

What Schwartz doesn’t say (because it’s outside the scope of his article) is how to determine the costs and benefits of a given course of action, and how to weigh them against each other to determine the best course of action.

The answer isn’t obvious. On the contrary, many people have a skewed picture what constitutes a cost and what constitutes a benefit. Kelley, for example, says “A benefit is a value, and a cost is a disvalue” (T&T 21). Decision-making, in this view, consists in pattern of the following:

Say Gary is trying to decide whether to stay up late to read Atlas Shrugged. Many people would assume that Gary, if he wants to be rational, should say to himself, “Reading Atlas Shrugged would be a value, but being tired tomorrow would be a disvalue. So let me think: does the value of reading Atlas Shrugged outweigh the disvalue of being tired?”

But this question represents an improper understanding of what costs and benefits are. It is based on the Kelley premise that man should pursue the “best mix” of values and disvalues. But that’s precisely what Schwartz proved man shouldn’t do — the very purpose of moral principles is to rule out the pursuit of disvalues. A disvalue is not a cost; it’s something actively destructive to human life. If life is the standard, man must never pursue destruction.

So if a cost isn’t a disvalue, what is it?

Consider the thing most closely associated with the concept “cost” — money. When you pay five dollars for a sandwich, that five dollars (the cost) is not a disvalue. You aren’t trading a disvalue for a value: your trading a value (money) for a value (the sandwich).

Costs are values — the values you give up and forego in order to gain a different value.

Weighing costs and benefits doesn’t consist of assessing values and disvalues, and trying to maximize the former and minimize the latter. Instead, it consists of identifying your legitimate options and the values each option offers, then consulting your hierarchy of values and (if your rational) pursuing higher values rather than lower ones. The costs of a decision are actually opportunity costs — the values surrendered and foregone as a result of making a particular decision.

Cost is opportunity cost — the cost of anything, whether you buy it or produce it, is what you have to give up in order to get it. The cost of an A on a midterm exam for one of my students may be three parties, a night’s sleep, and breaking up with his current significant other. The cost of living in my house is not only taxes, maintenance, and the like, it also includes the interest I could collect on the money I would have if I sold the house to someone else instead of living in it myself. (David Friedman, Hidden Order, 32)

So, for example, the opportunity cost of staying up late to read Atlas Shrugged is the value of the additional sleep Gary missed out on. He’s not trying to weigh reading Atlas against being tired the next morning: he’s weighing the value of reading Atlas that night against the value of more sleep. A cost/benefit analysis proceeds by translating each option into the values it makes possible, and then identifying which option leads to your highest values.

So how do you decide which is a higher value? In a lot of cases it’s obvious. The differences are apparent. It doesn’t take much thought to realize that you prefer, say, taking your dog for a walk to watching the latest episode of Punk’d. But in some cases it’s not obvious, such as the previous example where Gary is deciding whether to read Atlas Shrugged or go to bed. Is the rational solution for Gary to plot out his entire hierarchy of values and determine which option is slightly more preferable?

If it were, few of us would be rational. We make plenty of decisions like this without in-depth analysis, and we do so for a very good reason: choosing to think about which option is preferable has its own opportunity cost. After all, it’s generally preferable to do either activity rather than think about which to do. As General Patton put it, “A good plan today is better than a perfect plan tomorrow.” In cases where it’s difficult to distinguish the hierarchical standing of various values, we can, with certain exceptions, safely choose either option.

The exceptions are cases where the decision involves crucial values, e.g., choosing which college to attend. There the relative value of your prospective choices can be excruciatingly difficult to discriminate, but given the values at stake, you have to take the time to do it.

Consider a case that calls for this type of scrupulously rational decision-making.

Suppose Pamela just graduated from college and she’s trying to decide between two potential jobs. Job One requires that she move to a part of the country she’s unfamiliar with and pays slightly less, but it will put her in a better position to ultimately do what she really wants to do. Job Two doesn’t require that she move and pays better, but is not as geared toward the work she eventually wants to do. Both Job One and Job Two have their advantages and disadvantages. It’s not obvious which one Pamela should select. So how does she choose between the two?

Her first question needs to be: what is her primary goal? What higher value is the job intended to serve? Is she trying to make as much money as possible as quickly as possibly? Is she trying to gain prestige? Is her primary purpose to network? Most decisions involve several competing purposes, so it’s necessary to be clear on what you’re really pursuing — that’s the only way to know what’s most important in a given context.

Pamela’s primary goal is to pursue her long-range productive purpose. It’s against this standard that she’ll be defining and weighing the costs and benefits of each option.

Does her standard imply an obvious choice? Well, Job One is better geared toward what Pamela ultimately wants to do, but say what she wants to do is very competitive, and she’ll need to know people in the field. It might be better to take Job Two if it helps her network. There is no clearly better choice. Pamela will have to analyze the costs and benefits of choosing either job.

To perform such an analysis, she’s going to identify the values each job offers (with the standard of value being her long-range purpose), and consider the means to getting each job, as well as which other values she must forego in making each choice. (This last includes, not only the values inherent in the other job (e.g., more money, better location), but all the values Pamela will miss out on by making her choice. For example, if she takes a job that requires her to move, her opportunity cost includes her current friends.) Pamela will make her final decision by identifying all the values each job has to offer, accounting for the opportunity cost of each job, and choosing on the basis the highest values she can gain relative to her goal.

To make a rational decision, then, you must choose a life-affirming goal, use moral principles to identify the various valid means of achieving that goal (including any constituent sub-goals), translate each valid means into the positive values it promises, and then evaluate those values within the context of your hierarchy of values, choosing the course of action that will yield the biggest payoff.

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