[Viewpoint] Making rational choices as a society

Is man a rational animal? It depends on how we define rationality. In economics, if an individual or a group chooses a series of behaviors to arrive at a particular end, they are perceived to have made a rational choice. Most economic theories start with the premise that individuals forming a society are reasonable beings. The free market principle that advocates the laissez-faire philosophy relies on this utilitarian assumption that man makes rational choices.

The rational choice theory has been heavily attacked by many sociologists and psychologists. Yet economists remain steadfastly dedicated to the approach, as no other theory can better explain the human behavior of weighing benefits and costs before making a purchase. But such a belief is strongly challenged these days as psychology and neuroscience offer empirical evidence that consumer behaviors can be systematically irrational.

Economists pose a serious question about rationality from a different perspective. If each individual is rationally motivated, can a social group act reasonably as well? The negative answer cites the prisoner’s dilemma. Two suspects are arrested by the police without insufficient evidence. They are put in separate interrogation rooms. The police offer the same deal: If both suspects remain silent, they will both get a minor charge, and if one testifies against the other and the other remains silent, the betrayer can walk free. But if each betrays the other, each will get a heavy sentence. In this case, both suspects pursuing their own interests usually testify against one another and end up with severe sentences. Even the smartest individuals can collectively make a foolish choice when placed in particular situations.

Similar examples are found everywhere. Two countries racing to get ahead of each other in military power increase their defense spending. But such competition to build up militaries ends up with a heavier tax burden for their people. It’s like trees in a forest, all trying to stretch higher to get more sunshine. But if all the trees compete to get more sunshine, the dense canopy will block sunshine, making the ecosystem completely vulnerable.

Korean universities generally give their graduating classes the highest of scores. But their generosity in grades only ends up undermining the university’s innate function of encouraging students to study harder, which acts as a filter to provide able manpower for society.

To induce more rational choices, a society can set guidelines and censure
those who violate the rules. A society’s members do not necessarily all need to be reasonable, each and every one, and the rule makers do not have to be smarter than other members of the society. International bodies like the World Trade Organization exist to provide guidelines and to adjudicate disputes in the arena of tariffs and trade.

We can apply the same rule to resolve the private tutor costs that heavily weigh on Korean society. Our households are like the trees in a forest competing with one another to get the greatest amount of sunshine.

As a result, family budgets are wasted on tutorial spending, overseas education and the burden of supporting the cost in their middle age. Our children are debilitated mentally and physically in the fierce competition to get into good universities. The country is now saddled with lowest birthrate amid this fear and obsession over education.

In this circumstance, a referendum could probably be employed to ban late-night and weekend private tutoring rather than to vote on a new municipality design over Sejong City.

If education authorities believe they can wipe out the scourge of private tutoring by reviving the function of public education and introducing the admissions officer system to select students for universities, they need to examine the state of international schools operating in Korea. The schools offer quality liberal education and most students apply for overseas universities and are screened by admission officers there. Yet these students still seek expensive private tutoring more than their peers in local schools.

Banning tutoring can be unconstitutional. It would also be hard to launch a sweeping crackdown on the private tutoring sought by rich families. But in the eyes of an economist, the fallout in a prisoner’s dilemma may bring a much heavier toll on society than the tutoring itself.

*Translation by the JoongAng Daily staff.
The writer is a professor of economics at Sogang University

By Song E-young