On page 179 of Hayek’s Constitution of Liberty (which I’m now re-reading) is found the following passage – a passage in which Hayek recognizes, as a matter of course, some features of human decision-making later (re)discovered by behavioral economists:
[A]ll men in pursuit of immediate aims are apt – or, because of the limitation of their intellect, in fact bound – to violate rules of conduct which they would nevertheless wish to see generally observed. Because of the restricted capacity of our minds, our immediate purposes will always loom large, and we will tend to sacrifice long-term advantages to them. In individual as in social conduct we can therefore approach a measure of rationality or consistency in making particular decisions only by submitting to general principles, irrespective of momentary needs. Legislation can no more dispense with guidance by principles than any other human activity if it is to take account of effects in the aggregate.
This passage appears in a chapter in which Hayek discusses the provenance and significance of the 1787 U.S. Constitution.
Two points. First, regardless of how many other economists are, or have been, guilty of unhelpfully removing from their assumptions about human decision-making capacity humans’ proneness to error, confusion, imperfect knowledge, and myopia, Hayek was not among these economists. (It has long been my belief – and it still is – that even neoclassical economists are generally not as guilty as some behavioral economists suggest of working with unhelpfully absurd assumptions of human decision-making capacity. But certainly economists from the Austrian tradition have consistently rejected the assumptions of ‘super-rationality’ that some other economists have employed.)
Second, Hayek identifies here a reason for rules that shows such rules to be as important in the public sphere as in the private for preventing we imperfect creatures from taking steps that please our ‘today’ selves at the expense of greatly displeasing our ‘tomorrow’ selves. The notion that imperfect human decision-making requires a government with much discretionary power to oversee our private decisions is false. Rules – rules to guide our private lives and rules to constrain the pursuit of our collective fancies – are vital to a civil, peaceful, and prosperous society. Moreover, it is not wise that the rules to guide our private lives be formulated by a sovereign political power.
Among the academic papers that I’m most proud to have my name on is one that I wrote in 1993 with Adam Pritchard (now on the law faculty of the University of Michigan): “Rewriting the Constitution: An Economic Analysis of the Constitutional Amendment Process” (published in the Fordham Law Review). (All the good ideas in this paper are Adam’s.) It’s been years since I’ve looked at this paper on constitutional rules, but memories of writing it returned when I read the above passage in Hayek. I don’t recall having Hayek’s essay on the U.S. Constitution in mind when Adam and I wrote this paper. I wonder now how much, if any, of that paper would change if it had incorporated Hayek’s insights.