An elderly man at a pub, the day after Boris Johnson advised avoiding public spaces. Credit: Matthew Horwood/Getty images


March 25, 2020   5 mins

Why won’t people stay at home? Why did the Government have to order the pubs to close to stop people huddling together in the sweaty bundles of humanity that Covid-19 loves so much?

When and if the coronavirus crisis is contained, there will be many reckonings and re-evaluations, not least about the relationship between the state, individuals and markets. In this, Boris Johnson’s decision to order pubs, clubs and restaurants to close — and the seemingly inevitable follow-up, lockdown — will be significant.

It is well-known that the Prime Minister is inclined to want to keep the state out of mundane personal business. He also likes to court people who like to go out for a drink, hence his regular schtick about free-born Britons’ ancient right to a pint of beer. His reluctance to see the state telling people what to do was abundantly clear in his Mother’s Day press conference, when he spoke breezily about the joys of being out and about on a fine sunny day.

But Johnson’s worldview is a topic for someone else. What interests me is other people. What does it say about human nature that despite repeated urging and warning, despite a bombardment of information, people continued to congregate and mix in ways that put them and others at non-trivial risk of a potentially fatal disease?

And what, in turn, will the necessity to ban such congregations mean for our future understanding of the way the state should view and treat people as they go about their economic lives?

I am not a libertarian, but I think libertarianism deserves some acknowledgement for its optimism about human nature. In short, this suggests that when people are left to their own devices, they will, in the end, do sensible, collaborative and even kind things.

Here’s David Boaz of the Cato Institute in The Libertarian Mind:

“The great insight of libertarian social analysis is that order in society arises spontaneously, out of the actions of thousands or millions of individuals who coordinate their actions with those of others in order to achieve their purposes.”

Free marketeers, explicitly or otherwise, tend to rest their argument for unfettered market interactions on the idea that these are dealings between rational actors. In markets, as in life, people left to make their own decisions will, in aggregate, make spending choices that benefit themselves, thus allowing markets to price and allocate resources in the most efficient way.

This is the ‘rational agent’ theory of economic behaviour and it’s one of the most fundamental ideas of our age. It’s the basis for most economics teaching and the foundation of most ideas of market operation, regulation and consumer law (even if there are quite a few people who argue, quite persuasively, that it’s wrong).

Now let’s go back to the people, in London and elsewhere, who last week continued to crowd into pubs and gyms.

Why did they do it? Why was it necessary for Boris Johnson, instinctively liberal, to order the pubs to close? You only need to take such measures if people are either not nice or not rational. Neither explanation bodes well for libertarianism or free markets.

How rational were the choices made by those pub-goers or the folk crowded into parks and markets? Were they coolly assessing the pleasure they would derive from a few drinks or a stroll with friends, and assigning it a value that outweighed the risk they and others would face resulting from their choice?

If so, I think that raises a significant problem for libertarian views of human nature as benign. People who think their enjoyment of a pint of lager justifies risking the lives of others do not measure up to that nice idea that, left to our own devices, we generally do the right thing.

Or here’s another explanation for pub-going in a time of coronavirus. Maybe the people who continued to mingle were being neither good nor bad but merely inaccurately estimating the consequences and costs of their actions. Here we get to those other economists, the behavioural ones, who argue that we make our allocative choices not on the basis of neat, orderly mental spreadsheets weighing cost and benefit, but because of messy, complicated human frailty.

The decision to keep going to the pub during a pandemic looks a lot like an illustration of what Daniel Kahneman called the availability heuristic, the tendency of people to over-state the probability of familiar things they can easily imagine, and underestimate the chance of hard-to-concieve things happening.

How many of us can easily conjure up a simple mental picture of an invisible virus spreading exponentially through a population of tens of millions, and be clear in our minds about who we might be harming by popping down the local for one last pint or a walk in the park? I don’t think the Londoners who continued to go out drinking or strolling were callous. I think they just couldn’t easily conceive the potential consequences or the probability of those consequences.

The choice to go on going out was, in other words, hard to describe as rational, even in the narrow terms of rational choice theory. And if people aren’t rational about a situation that risks tens of thousands of lives and deep damage to our society and economy, how much weight should we put on the idea of rational actors in future?

Arguably, this shouldn’t even be a debatable point. There’s a good case to be made that the 2007/8 financial crisis should have put more of a dent in the idea of rational economic actors.

When no less a figure than Alan Greenspan admitted that markets did not work the way he had believed they did and that he had “made a mistake in presuming that the self-interest of organizations, specifically banks and others, was such that they were best capable of protecting their own shareholders” then policymakers the world over should have shown more scepticism about ‘rationality’.

Maybe this time really will be different. Maybe this time, when the dust settles on the graves of the last Covid-19 victims, we can start a serious conversation about how and why human beings really do what we do. And about the role of the state in markets that are made up of frail, human people who we cannot expect — or require — to be either nice or rational.

I am no fan of narrow, classical, rational agent economics, but I do admire the optimistic view of humanity that underpins the libertarianism that is its intellectual cousin. I like to think that with a bit of help, most people will mostly make the right choices. But the refusal of many people to do the sensible and altruistic thing over coronavirus leaves me gloomily wondering about that.

If people cannot be trusted to make decisions that can make the difference between life and death, if they and others must be protected from the exercise of their free will in something so fundamental, where else should restraint be imposed by the state, for the good of the individual and society? Put it another way: once you’ve closed pubs and banned people from going outside, imposing, say, a tax to deter people from consuming sugary drinks is going to seem like a very small thing indeed.

This, not the size of the state or the tax burden, will be the real change the virus brings to countries founded on liberal ideas of human nature.


James Kirkup is Director of the London-based Social Market Foundation

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