Most of the models and theories of social sciences like economics are based on assumed rationality in human behaviour. Economists believe that people will make choices to make optimal use of resources and there will be equilibrium in society. But that does not happen always, rather it happens rarely. Why? Because we do not behave rationally as assumed by those economists. Simply because in life, career, marriage or market, we do not follow our brain but heart, we behave less logically and more emotionally. It is not the requirement but preference that matters more to us. Inherently, there are human behaviours which cannot be explained by economic models.

If we behave based on economic theories, no one will ever make charity because it takes away money from your pocket. But people do donate, out of pocket, out of own time and skills and end up losing in pure theoretical terms. However, if asked, that loss gives them utmost happiness that otherwise they could not achieve. Not only social decisions, but even in economic decisions, people behave more on the basis of their gut feelings than rationale. People do invest in companies that promise more return, only because their desire to earn better return leads them to develop justification for investing in a company which later turns out to be a fiasco. It is not always due to lack of information, but because of not listening to logic.

People smoke, drink and gamble – with full knowledge that it may harm them financially, emotionally, socially and even physically. While they make a choice, they are aware that it will make them choiseless one day. But some kind of urge compels them to still go ahead with that behaviour. The simple reason for this behaviour – or misbehaviour – is that we are humanbeings, with emotions and preferences. We pay more for a match or concert ticket than its actual price because of perceived notion of value. Those who have ticket of a match may not sale out even at double the price, knowing fully well they will be in profit. Because their preference of pleasure over profit is stronger than economic principles.

Frankly, if everyone starts behaving in purely profit and loss terms, this world will end up being much worse than it is today. Everyone do not make decision simply on the basis of profit or benefit and therefore they think of own emotions, other humans, society and values. It leads to behaviour which may be inexplainable in economic theories but perfectly acceptable in human society. It will be interesting to examine what choices are you making in real life which are based your strong preference but cannot be justified in economic models.

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