The role of economics: Creating the sustainable rational agent

Economics is defined as the discipline that evaluates human behavior relative to the satisfaction of needs and wants in a resource-constrained environment. The process of decision-making to ensure consumption capacity over time is at the foundation of economic analysis and the allocation of resources implies an embedded sustainability assessment on the part of an assumed rational agent. However, to the extent that individual agents in the economy are unaware of the holistic impact of consumption decisions and the mechanics of market pricing, the assumption of rational agency, which is the premise for efficient allocation implied in the market mechanism, is flawed. Further, the assumption of “insatiable desires” along with “profit maximization based on cost minimization” as these relate to consumers and producers, respectively, has established an endogeneity of consumption behavior, whereby these assumptions have in effect, become accepted as indicative of inherent human values rather than taught or socialized behaviors. Additionally, the reliance on the market to appropriately allocate resources through price has allowed for implicit delegation of consumption responsibility to producers (and embedded within the same, regulators), whose incentives, such as the quarterly reporting cycle, are not directly aligned with sustainable values. This paper discusses the basis for the disconnect between the market price model of resource allocation and sustainable consumption as implied in the definition of economics. The discussion focuses on the responsibility inherent within consumption from the perspective of demand and supply. The seeming lack of holistic understanding of consumption behavior on the part of both consumers and producers provides the foundation for an implied inefficiency in market pricing. The latter forms the basis of the argument for consumer economic education to foster the graduation of reflex consumption to responsible consumption through the compulsory creation of a sustainable rational agent.