chapter  6
Pages 11

In economic textbooks, the presentation of the standard model of con­ sumer choice is often followed by a disclaimer: ‘People aren’t that smart’ (Parkin 1990: 167) or ‘We consumers are not expected to be wizards’ (Samuelson and Nordhaus 1989: 451). But, suppose the present-day economist’s model is not only a formal model that helps thinking but reflects the reality o f the maximization process of the consumer too. Then, what wriggles most? It is neither the beginning nor the end. We all intuitively accept the start: a budget constraint and a set of preferences (including Gossen’s first law of decreasing marginal utility). Didn’t econo­ mists in the early phases o f the history o f economics think that Gossen’s first law signified a real-world psychophysical phenomenon: the so-called Weber-Fechner law? We also accept the result: the optimal allocation of goods (Gossen’s second law of equi-marginality). No, what wriggles most as highly unrealistic is the maximization process that lies in between both Gossen’s laws. Whatever it is the consumer does, it certainly is not solving a Lagrangean function: the constrained maximization of a utility function. Indeed, consumers can’t be that smart.