If People Act Differently Than Economists Want Them to Act, It Doesn't Mean They Are Irrational

Economists like to think that they get to define the word "rationality." They don't. Economists tend to define a certain type of narrow behavior as "rational," implying that anything else is "irrational."

Binyamin Appelbaum falls into this trap at the end of an interesting piece on Stanley Fisher, when he refers to work by Janet Yellen and others which he says assumes that people are "predictably irrational." Actually much of the behavior assumed in this work is entirely rational, even if it...