Gender Pareto: Why economics is irredeemably sexist

•  YANIS VAROUFAKIS

EUROPE: ECONOMICS has an intractable “women problem.” High-school girls avoid it. Female undergraduates abandon it. And the problem runs deeper than the difficulty of attracting enough women to mathematics, science, and engineering. Even women who have reached the discipline’s summit, like Christine Lagarde, president of the European Central Bank, consider economists “a tribal clique” and their models defective.

One reason women detest the field is the male chauvinist pig standing in the middle of it, masquerading as the avatar of economic rationality. Economic models of anything from the demand for potatoes to the effects of the interest rate on inflation and investment are founded on the assumption of Homo economicus: a fictional, Robinson Crusoe-like, hyper-rational fool who always gets what he likes and likes what he gets (among all feasible alternatives).

No sensible woman looks at this model and recognises herself in the depiction of the rational person as an algorithmic bot, ever ready to burn down the planet for the slightest private net gain, permanently incapable of doing what is right (just because it is right). Thoughtful men are also deterred by Homo economicus, leaving only the more brutish to adopt “him” as the archetype of rational behavior.

The discipline’s approach to the question of justice is similarly repulsive to women. To seem objective and impartial when Jill is demanding a change that will make Jack worse off, economists adopted the advice of the Mussolini-sympathising Italian economist Vilfredo Pareto: “scientific” economics must recommend only policies that make at least one person better off without leaving anyone worse off. In a patriarchal world, where most assets are in men’s hands, so-called Pareto efficiency constitutes a staunch defense of the sexist status quo.

That’s not all. Consider four people or groups (A, B, C, D) and three possible collective decisions (X, Y, Z) that affect them all. For example, suppose the four (A, B, C, D) are friends who, a week ago, agreed that tonight they will go to the theatre (X), rather than to the cinema (Y) or to a restaurant (Z). Say that their preferences are as follows:

– A prefers the cinema to the theatre and the theatre to the restaurant (A: Y>X>Z)

– B prefers a nice dinner to the cinema and the cinema to the theatre (B: Z>Y>X)

– C is indifferent between the theatre and the cinema but prefers either to the restaurant (C: X=Y>Z)

– D would love to go to dinner but, otherwise, prefers the cinema to the theatre (D: Z>Y>X).

The question is: Should they change their minds and, rather than the theater (as originally planned), go to the cinema or perhaps to dinner? Economics has a clear answer. If they switch from the theatre (X) to the restaurant (Z), two of them (A & C) will be worse off, thus violating the Pareto criterion. But if they switch from the theatre (X) to the cinema (Y), no one will be upset and three of them (A, B, and D) will be better off. Thus, economists would conclude that the rational and just decision is to drop the theatre in favor of the cinema.

This seems logical. But a closer look exposes the callousness of the whole approach. Note that the recommendation to switch from the theater (X) to the cinema (Y) was motivated solely by their preference rankings. Neither who these people (A, B, C, D) are, nor the reasons behind their preferences (X, Y, Z), played any role in the verdict. To see why this is scandalous, consider a drastically different story yielding precisely the same preference rankings.

A sadistic warlord (A) has led his gang to a village where they round up the inhabitants (D) with a view to killing them (outcome X). At that moment, you (B) are trekking in the area and stumble across the village to witness the horrific scene. Meanwhile, a film crew (C) is hidden in the bushes recording everything. The warlord welcomes you with open, menacing arms and makes you an offer: “If you take my gun and kill one of the villagers, at random, I shall spare the rest (outcome Y). If you don’t, I will kill them all (outcome X).”

It is highly plausible that the preferences of the four participants (A, B, C, D) over outcomes X, Y, Z are exactly as in the case of the four friends planning a night out: The warlord (A) is eager to make you his accomplice (he prefers outcome Y to X) while never entertaining the possibility of outcome Z (no one dies). The peasants (D) are begging you to do as the warlord says (to help bring about Y over X). The film crew’s members (C) don’t care what happens as long as there is at least one murder to record (X or Y).

So, what should you do if you place at the bottom of your rankings the outcome that no villager lives? (B: Z>Y>X) This is the definition of a hard choice: a clash between your ethical objection to killing an innocent and your urge to save lives.

Not so for economists, who consider it an easy decision. Structurally unable to differentiate this cruel choice from four friends debating how to spend a night out, economics instructs you to take the warlord’s gun and kill a villager (to switch from X to Y, regardless of whether Y is a cinema or a murder).

No room is left to acknowledge that some choices are wrong, whatever the decision-making calculus, and are irreducible to preference satisfaction. Is it any wonder that women, who in patriarchal societies are more in tune with context and unquantifiable reasons for action, disdain economics?

It is not just economists’ physics envy, the field’s dearth of female role models, or seminars dominated by testosterone-fueled bullies that deter women from the field. To become the “queen of the social sciences,” economics placed at the center of its models and method a male chauvinist rational idiot. Given that asking economists to drop the model that brought them enormous influence is like asking a tribe to denounce the fake creed that made it dominant, why should women want to enter a field whose philosophical sexism effectively sets them up to be the random villager?