Vilfredo Pareto's Theory of Action: An Alternative to Behavioral Economics

30 Pages Posted: 21 Sep 2016 Last revised: 21 Apr 2018

See all articles by Rosolino Candela

Rosolino Candela

Mercatus Center at George Mason University

Richard E. Wagner

George Mason University - Department of Economics

Date Written: September 20, 2016

Abstract

In recent years the term behavioral economics has arisen in consequence of the growing effort of a significant set of economists to import psychological methods and findings into economics. This body of work issues strong challenges to the use economists have made of rationality in economics. Unfortunately, this recent work illustrates unnecessary and misguided creativity. Vilfredo Pareto explored the same analytical territory nearly a century ago, and to superior analytical effect. Pareto recognized that the substantive content of action depends on the environment in which action occurs. Some environments elicit logical action while other environments elicit non-logical action. Both types of action are species of rationality, only they are recognizably different. In this paper we explain why Pareto’s approach to human action points toward a superior analytical agenda than does the present orientation of behavioral economics.

Keywords: Vilfredo Pareto, logical vs. non-logical action, rationality, behavioral economics

JEL Classification: B31, B41, D11

Suggested Citation

Candela, Rosolino and Wagner, Richard E., Vilfredo Pareto's Theory of Action: An Alternative to Behavioral Economics (September 20, 2016). Il Pensiero Economico Italiano, vol. 24, no. 2 (2016): 15-28. Available at SSRN: https://ssrn.com/abstract=2841529 or http://dx.doi.org/10.2139/ssrn.2841529

Rosolino Candela

Mercatus Center at George Mason University ( email )

4400 University Drive
Fairfax, VA 22030
United States

Richard E. Wagner (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
334 Enterprise Hall
Fairfax, VA 22030
United States
(703) 993-1132 (Phone)

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