An anthropologist friend of mine, Eli Thorkelson, recently asked for my comments on an article by feminist economist Julie Nelson. The article is a critique of rational choice theory (RCT) and I think it has some glaring omissions and misleading claims, but before I get to them I want to briefly offer the positive case for mathematical models, of which rational choice models are a subset.*
Markets and other social phenomena are complex. We’re never going to have a theory that perfectly describes everything we might want to know about them. Modeling is one way we can get some insight. In a model we make some simplifying assumptions and then work out their implications. Then, and this is key, we do empirical work; we analyze data to see how well our model captures various aspects of the phenomena we are interested in. Ideally a model will make predictions that are novel, in the sense that the researcher would not have made them before studying the model, and in the sense that they distinguish one model from another in a way that can be tested rigorously.
What about those simplifying assumptions? If they turn out to be false, doesn’t that mean the model is junk? Nope. George Box famously said, “All models are wrong, but some are useful.” If a model matches reality perfectly in some circumstances, but not so well in others, then we can simply use it where it works. Newtonian physics, for example, is accurate enough for many engineering problems, but according to Einstein, Newton’s laws of motion are false.
In addition to accuracy, there are a number of other criteria by which models are evaluated. For example, all else equal, simpler models are better because they are easier to understand (and some would argue, are more likely to be true). More general models are also better, because they can be applied in more contexts and are subject to more stringent tests.
A lot of social scientists are hostile to mathematical models. I think that one major reason for that is that they see the required unrealistic assumptions, and then dismiss the whole approach without studying them long enough to understand the value they provide. Of course, formal modeling could never replace the primary forms of theorizing in psychology, sociology and anthropology, but with time I think more social scientists will come to see its strengths.
*To be clear, Eli has not endorsed the Nelson article, and has even dabbled in some mathematical modeling himself!