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Should Economists Study Maximizing Utility or Acts of Choice?

Summary:
In James Buchanan's classic essay "What Should Economists Do?" he argues famously that economics properly practiced is not a science of choice, but a science of exchange relations and the institutions within which exchanges take place.  But he also argues in that essay that human action cannot be understood as an exercise in utility maximization, but instead that our utility functions -- if we have them -- emerge only within the very act of choice itself.  This is a theme he stresses again in his Cost and Choice. But was Buchanan's position so unique among economists?  He argues in Cost and Choice, as well as in LSE Lectures on Cost, that he is following an intellectual tradition that has roots in the Austrians, in Wicksteed, in Knight, and in the LSE economists.  This matters

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In James Buchanan's classic essay "What Should Economists Do?" he argues famously that economics properly practiced is not a science of choice, but a science of exchange relations and the institutions within which exchanges take place.  But he also argues in that essay that human action cannot be understood as an exercise in utility maximization, but instead that our utility functions -- if we have them -- emerge only within the very act of choice itself.  This is a theme he stresses again in his Cost and Choice.

But was Buchanan's position so unique among economists?  He argues in Cost and Choice, as well as in LSE Lectures on Cost, that he is following an intellectual tradition that has roots in the Austrians, in Wicksteed, in Knight, and in the LSE economists.  This matters because opportunity cost reasoning is foundational to economic theory.  But how we understand that concept and deploy it to make sense of human action and interaction is just as foundational.

Watch and listen carefully as Becker and Coase discuss a critical aspect of this.

Peter Boettke
Peter Joseph Boettke (January 3, 1960) is an American economist of the Austrian School. He is currently a University Professor of Economics and Philosophy at George Mason University; the BB&T Professor for the Study of Capitalism, Vice President for Research, and Director of the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at GMU.

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