chapter  5
11 Pages

Lionel Robbins and consistency of choices under scarcity

According to Lord Robbins’ illustrious definition, “Economics is the

science which studies human behaviour as a relationship between ends and

scarce means which have alternative uses” (1932: 16). Robbins continues, two decades after Pareto, in developing economic analysis based on a

concept of rationality free of hedonistic elements but, as we shall see, with

a fundamentally different ambition: Pareto shrinks the limits of the domain

of economics to that of logical actions, while Robbins expands its bound-

aries to every act of choice “conditioned by scarcity”. Furthermore,

Robbins holds that economic rationality is an obvious proposition, “the

stuff of our everyday experience”, verified simply by the means of introspection. Conversely, he cares to bind the idea of rationality as consistency

of preferences with the ability of perfect foresight. The great theoreticians

of the general equilibrium model (Hicks 1939, Debreu 1959, Arrow and

Hahn 1971) will use the same concept of perfect rationality without any

reference to psychology whatsoever – not even of the trivial introspective

kind – and yet without any concern for its empirical relevance.1