≡ Menu

Quotation of the Day…

… is from page 227 of the late, great UCLA economists Armen A. Alchian’s and William R. Allen’s Universal Economics (2018; Jerry L. Jordan, ed.); this volume is an updated version of Alchian’s and Allen’s magnificent and pioneering earlier textbook, University Economics:

Knowledge is a valuable (economic) resource. To assume it is free is, for example, to deny that teachers perform a useful and desirable service. A substantial fraction of our wealth is devoted to gathering information of one kind or another. Do not suppose that ignorance is always irrational, ridiculous, or the result of inefficiency or lying.

DBx: Because we humans aren’t gods, we spend huge amounts of time gathering knowledge. But because time is scarce (and, hence, valuable), we waste it if we do not rationally choose which sorts of knowledge to pursue and which to ignore.

Ignorance – that is, the absence of knowledge – being what it is, we prospectively can only make reasonable guesses about which sorts of knowledge are worthwhile to pursue and which to not pursue. What we subsequently learn might well – indeed, often does – reveal to us that our earlier decisions are ones that we would not have taken had we then knew what we later come to know. Such is the inescapable fate of us mere mortals.

Yet no person will knowingly spend his or her scarce time and effort acquiring knowledge that he or she believes will be of no use to him or her. I chose the above photo to accompany this quotation because each semester I teach my freshman students about “rational ignorance” – meaning, ignorance that it is rational not to dispel. There in a classroom, I ask my students “Without looking up, how many of you can tell me the correct answer to this question: What’s the number of lightbulbs in the ceiling above your heads?” I have never had a student offer an answer to this question.

I then point out that knowledge of the number of lightbulbs that are in the classroom ceiling is very easy knowledge to acquire. First graders can gather it. Yet no college student – or their professor – has an answer to this question. The reason for our ignorance, I inform my students, is that that piece of knowledge is utterly useless. Gathering this piece of knowledge isn’t worth spending even the tiny amount of time and effort required. So this ignorance is rational. Acquiring this knowledge would be wasteful and irrational.

Even the smartest and most well-informed human who has ever lived or who will ever live will come to know only an invisible fraction of the total amount of knowledge available to be known. One of the great challenges of an economy is to prompt individuals to acquire knowledge that is worthwhile to acquire while not tempting them to waste time and effort acquiring knowledge that is pointless.


Next post:

Previous post: