Without an economic perspective, changes in household living arrangements, fertility, and other social phenomena are often automatically attributed to changing “norms” (or “preferences” or “attitudes”). A more careful examination, however, might reveal that the changes are the result of shifts in income or prices within a stable set of preferences. The distinction is more than a semantic one; a clearer description of what is happening facilitates clearer thinking about causes and consequences. After all, when we observe people buying more filet mignon in response to rising income, or when we see a decrease in the quantity of coffee demanded as a result of an increase in its price, it is neither accurate nor helpful to say that people’s “preferences” for filet
mignon or coffee have changed.
One further point helps clarify the economic approach to understanding behavior. Economists, as a rule, are not concerned with the internal thought processes of the decision maker or in the rationalizations that the decision maker offers to explain his or her behavior. Economists believe that what people do is more relevant than what they say. The novelist I. B. Singer epitomizes this point of view in a story he tells about a boy who came to the cheder (Hebrew school) where Singer studied. The boy said, “My father wanted to box my ears.” The teacher said, “How do you know that?” The boy replied, “He did it.”