We do insist that people are rational - no, really

It’s fair enough to say that people aren’t quite as calculatedly rational as the most simplistic economic model might assume as a starting assumption. On the other hand most people are, most of the time, largely rational about their own interests. This is why we’ve more off sick these days:

Sickness benefits are worth £3,000 a year more than a minimum wage job, according to a new analysis of Britain’s worklessness crisis.

An investigation found low-paid workers are now trying to get themselves signed off with ill health in order to boost their income.

Analysis by the Centre for Social Justice think tank found people on the top level of sickness benefits now earn an average of £23,900 a year while those on the minimum wage take home just £20,650 after tax.

If sickness benefits are as generous - or, perhaps, more so - as working for a living then more people will be sick. Which gives us a certain tension, obviously. We’d not really and wholly want the vicissitudes of a fragile physique to result in poverty but we’d also probably prefer to have people who could work doing so. The difficulty being that solving both at the same time isn’t really one of those possible things.

Thus, as we remarked:

But if there is going to be such a system then there will be those who claim to be sick who might not, quite, be as sick as is being claimed. Humans can be lazy and greedy after all.

There is no solution to this. Only trade offs. For people are, largely, by and by and enough, rational about their own interests. The same income for not working as working? There will be more not working.

Tim Worstall