*Note: This is not an attempt to reconcile the neoclassical model or integrate it with other models so much as it is an attempt to criticize its shortcomings because of its base assumption.
Neoclassical theory is a theory of economics that assumes (erroneously) that people act rationally, in that they attempt to maximize profit. Aside from citing several thousands of years of data that refutes the idea of humans being rational, I figured for this post I'd relax a bit and just cite some interesting things that go unaccounted for in this theory. I'd like to first point out how comical it is that the neoclassical model automatically gets the diagnosis wrong by assuming humans act rationally. Why does this matter?
In the Efficacy and the expanded Cost-Effectiveness 'models' for decision making, it is imperative that one diagnose, or get an accurate perception of reality, in order to understand how to go forth in managing reality. Another way of stating is this is that Accurate diagnostics are necessary for Accurate management (or action) which is necessary for a Beneficent Outcome::
Perception (Diagnosis) -> Management (How to act or react) -> Outcome (the end product of diagnosis and action) -> Evaluation (ability to process the outcome)
If one has a somewhat inaccurate diagnosis of reality to begin with, their management of the situation is necessarily limited (assuming humans act rationally is a hilarious misdiagnosis of human nature). Think of treating a patient for MS because of cerebellar signs when they really are just intoxicated with alcohol. Monumental mistake, right? It's also important to point out that management is based on evaluating hypothetical scenarios through one's mind with the goal being a benificent outcome.
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Ok, now that we have that out of the way, to the fun part of principles neglected by neoclassicists.
Time Discounting: this principle essentially states that the more delayed the outcome, the less importance 'weight' it has. A corollary to this is the dynamic aspect of time discounting:
For example, people would generally prefer $1000 today over $1100 in one year; if the same scenario played out as $1000 10 years from now compared to $1100 11 years from now, the immediacy of the $1000 is blunted, and more subjects are willing to wait for the $1100, DESPITE the fact that it's still just a one year difference. The basic principle here is that people prefer the salience of immediate rewards over greater rewards down the road. This makes sense in societies where there is high inflation (it may just be rational to accept a lower lump-sum of money now over a greater amount later in such a case, though this is purely by accident).
Addicts are notorious for time discounting, and despite it being analog for healthy people, addicts tend to be very digital in their desire for rewards (all-or-nothing, which makes sense since over time drugs becomes less rewarding* due to both a habituation which diminishes euphoria and the burnout of dopamine/opioid receptors), and one can see how this is reflected in populations of persecuted peoples where the capacity of addiction exists, such as in Cherokee Indians. The very reason Cherokees have a high frequency of the gene(s) for addiction, one could argue, is a result of the consonance the trait has with respect to an environment that is highly unstable. If a person "lives in the now", is very impulsive essentially, in an environment that is highly threatening, this increases the likelihood of their survival. If someone is planning to get something done tomorrow or disseminate reward over time in a genocidal environment--well, it's self-explanatory from there.
If anything, this points out how certain traits can be adaptive in one environment, and maladaptive in others; compare the average lifespan of an active addict to a non-addict in today's relatively stable environment, and you'll see what I mean. Intelligence is somewhat negatively-correlated with time discounting, in the sense that many intelligent people are incidentally willing to go deeper into debt earlier in their lives for advanced degrees, which have a greater long-term reward than just a BA, and are also less likely to seek out short-term pleasures like drinking on average.
Another corollary to this principle explains why addicts relapse so easily (bear with me). Because addicts' long-term goals need to be heavily weighted to be more rewarding than drug use, thus making the long-term goals unrealistic (in order to offset the value of the immediate rewards of getting high, they have to set the bar high enough to be worth striving for), they are more likely to relapse by virtue of not being able to live up to the rewards. This explains why the process of treating addiction is largely about "planting seeds", as Dr. Drew asserts openly, rather than an immediate cure.
More next time.
