My discussion group during class was assigned to discuss the piece by Keohane and Goldstein. In the other readings for this week, it would seem that the world has to choose between ideas and interests - that a state decision could not be affected by both. Even further, as discussed in "Ideas and Foreign Policy," both realists and liberal-institutionalists have decided that for states to behave rationally, as they do, that ideas must be secondary to interests. Keohane and Goldstein, however, reject this assumption and "seek to show that ideas matter to policy, even when human beings behave rationally to achieve their ends."[1] I believe this is a more accurate version of the way in which individuals and states behave.
Interestingly enough, this concept of individuals achieving a rational outcome is something that I have been learning about this week in my Economics class. Traditionally in the field of economics, it has been assumed that all human beings are rational and will seek the outcome which will profit them the most. This is mirrored in the way that Keohane and Goldstein assess the assumption of the realists and the liberal-institutionalists which would assert that the most profitable outcome as determined by the constraints surrounding a state's interests is the only factor that will affect that state's behavior. Yet, modern economists, much like Keohane and Goldstein, are willing to look at behaviors where one did not choose the greatest output and account for the ideas behind the action, rather than just determine that one is behaving irrationally.
David C. Colander lays out a great example of this in his textbook where he discusses why people are more likely to return cash than a lampshade. When given the scenario of being given incorrect change by a cashier of $20 extra, 90% of respondents said they would return the extra money. However, when shopping at the same store, one realized that he or she had not been charged for a $20 lampshade, only 10% claimed that he or she would return to the store to pay for the item that had been left off the bill. Traditional economists would say that to behave rationally, everyone would keep the money and the lampshade if given the opportunity. Yet, a very large majority would return the money and keep the lampshade, even though they are of equal value. For a very long time, this behavior was dismissed as irrational, but recently economists have begun to account for the ideas, or "beliefs held by individuals" as Keohane and Goldstein would define them, and see a common reason and logic in these behaviors.
This phenomenon has been named predictable irrationality in the economic world. When the respondents of the lampshade scenario were asked why they would return the money and keep the lampshade, a consistent idea of fairness became the common thread. People have a value or an idea of treating one another fairly, and in the case of the incorrect change, people felt that the cashier might be penalized for the shortage in the drawer and this idea was what determined their actions. With the lampshade, most felt that this would just be counted as missing merchandise from a store and that no individual person would suffer.[2]
In the way that modern economists have been able to account for individuals behaving in a way that may not be rational in a traditionalist sense but is still targeted, deliberate, and consistent behavior, so have Keohane and Goldstein been able to assess the movements of states and allow for the influence of ideas. Ideas have their place in determining economic movement, individual behavior, and state actions. While interests may be the most dominant force in many of these situations, Keohane and Goldstein get it right by constructing analyses of the international sphere that accounts for ideas and, by result, their article is the most constructive and complete.
1. Judith Goldstein and Robert Keohane, "Ideas and Foreign Policy, Beliefs, Institutions, and Political Change," Cornell Studies in Political Economy, (1993); 5.
2. David C. Colander, Economics Ninth edition (New York, McGraw-Hill, 2013), 471.
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