218 8: Rational Choice Th eory and Irrational Behavior
of how to distribute welfare benefi ts. Rational choice theory would suggest more
generous benefi ts reduce the incentive to work, particularly if the eff ective tax rate
when employed is high. Yet, as reported in the New York Times, that is not what
is happening in several Scandinavian countries where the employment rate and
tax rate are both high, along with generous welfare benefi ts that make it easier to
work (Irwin 2014). Countless more mundane examples of public-sector behavior
support the contention that whatever comprises the average civil servant or citi-
zen utility function, it is not adequately accounted for by the traditional portrait
of a rational utility maximizer.
Some of these criticisms are built from the same intellectual tools that rational
choice proponents use to expose the weaknesses of orthodox public administra-
tion theory. For example, rational choice advocates are quick to cite Simon’s work
as a mortal blow to the orthodox intellectual tradition, but Simon also explicitly
rejected the economic concept of the rational utility maximizer. Simon’s admin-
istrator was a satisfi cer, not a maximizer; that is, a decisionmaker equipped with
limited information, driven by habit and values, who settled for decisions that
were “good enough” to deal with the situation at hand, not those that maximized
individual utility (Simon 1947/1997). Simon drew his concept of bounded ratio-
nality out of psychology rather than economics, and his portrait of administrators
was more psychologically complex than the cost-benefi t calculator that shows up
in Niskanen’s formal models. Simon argued that the economic concept of human
rationality at the heart of rational choice theory fails the empirical acid test set by
Buchanan and Tullock (Simon 1985). Simon may well have helped undermine
the Wilsonian/Weberian theoretical tradition, but his arguments are no less cor-
rosive to the core assumptions of rational choice.
Th is mixed empirical and theoretical record is discomforting because there
is another side to Smith’s insight that the pursuit of individual self-interest can
produce collective benefi ts. Scholars have also long known that individuals who
pursue self-interest can impose collective costs. Th is is known as the “tragedy of
the commons” problem, and was most famously articulated in a 1968 essay by
biologist Garrett Hardin. Imagine a public pasture, open to any cattle owner who
wants to put his herd out to graze. A rational herdsman will seek to maximize
his gain from this public resource by putting as many cattle out to graze as he
can. Th e problem is that if every herdsman does this, the grazing of the cattle will
quickly exceed the carrying capacity of the pasture. When the common resource
has been exhausted, all the herdsmen will face ruin because they rationally sought
to maximize self-interest.
Hardin took some pains to point out that the tragedy of the commons was
more than a cautionary parable; indeed, numerous real-world examples range
from the exhaustion of certain fi shing stocks to the overuse of national parks.
Th e tragedy of the commons is, in fact, a problem as old as man, and all societies
are forced to create mechanisms to preserve the common good from the corro-
sive eff ects of individual self-interest. Adam Smith recognized that self-interest