Emily Cummins received a Bachelor of Arts in Psychology and French Literature and an M.A. and Ph.D. in Sociology. She has instructor experience at Northeastern University and New Mexico State University, teaching courses on Sociology, Anthropology, Social Research Methods, Social Inequality, and Statistics for Social Research.
Rational Choice Theory
How do you approach making a decision? Do you always make the most rational choice? Do you always make the choice that is the most efficient or saves you the most time or money, for example? If so, you're probably what economists would call a rational actor. In this lesson, we'll talk about rational choice theory, which is a principle in economics that theorizes people will always try and make the most economic and efficient decision when given a choice between one or more things. Let's talk a little bit about what we mean by this.
In economics, rationality means making the most efficient choice that will result in the greatest benefit to an individual. So, when you think about two different choices you have, which one will provide the most benefit to you? Which choice will give you the most reward? One of the major assumptions of rational choice theory is that people make the decision that maximizes reward while minimizing cost. When making a decision, we also take into account an idea in economics known as utility. Basically, utility is the satisfaction we get out of something. So, this could mean how much use we get out of something we buy or how much pleasure something brings us, or how much easier something makes our life. For example, if you're deciding on a consumer good, part of what you're likely to consider is how much you will use it. This is the utility of that item.
Let's take an example. Say you're planning out a grocery list for the week. You'll take into consideration the amount of money you will have to spend in order to fulfill your need to eat. You'll maximize the reward to you (having food to eat) by figuring out the most efficient way to get food for the week.
Rational choice theory is all about how people decide to do something. So, we start by looking at all of the options available to us. Then, we'll make the choice we most prefer, based on different factors. For example, some factors that influence your grocery shopping might be how far one grocery store is versus another, which store carries your favorite foods, or which store has better sales that week.
So where does rational choice theory come from? Much of the ideas can be traced back to the economist Adam Smith. Smith, who wrote in the 1700s, tried to make sense out of how people come to make choices, especially economic ones. Basically, Smith wanted to know how an economy can work when everyone is basically self-interested and making choices based on this self-interest. Smith argued in his famous treatise The Wealth of Nations that people ultimately act in their own self-interest but that they also take into consideration the wider society or greater good. So, it's not simply that we're all just selfish, even if we're making decisions based on our self-interest. We're calculating our best choice but we're also thinking about the larger social context, which brings us to a difference between sociology and economics.
Social Interaction and Rational Choice
Both economists and sociologists have written about what might motivate us to make the choices that we do. Classical economics emphasizes money as a factor that encourages us to make different choices. But sociologists have expanded this to note that we might consider a multitude of other factors outside of money when we make choices.
Key here is that social interaction also shapes our decisions. Sociologists posit that things like our time, what others think of us, and our search for status also motivate us. We might consider how our decision will be rewarded by our social group. For example, we might make a decision that is based upon getting approval from others. This can make us feel good and work as a motivator in the same way that money might.
How do people make choices? Do they always make a rational one? In the social sciences, the idea of rational choice theory seeks to explain people's decision making. Rational choice theory suggests that people will always make the decision that is the most economical and brings the greatest reward at the lowest cost. It assumes people are rational actors and will always seek the most efficient choice.
Early economists like Adam Smith wanted to understand how people make rational decisions that are self-interested but still consider the common good. We tend to think about the utility of a decision, which means the reward or use we will get out of something. Many things can motivate us to make a decision. While economists have emphasized money as a main motivator, sociologists have noted that social interaction can also influence our decision. Things like approval from others might be just as powerful in motivating us as money.
So, the next time you're making a decision, stop to think about what's motivating you.
To unlock this lesson you must be a Study.com Member.
Create your account
Rational Choice Theory: History & Theorists Quiz
Instructions: Choose an answer and click 'Next'. You will receive your score and answers at the end.
Which of the following best explains a major difference between sociology and economics when it comes to rational choice theory?
Register to view this lesson
Unlock Your Education
See for yourself why 30 million people use Study.com
Become a Study.com member and start learning now.Become a Member
Already a member? Log InBack