The Economics of Szasz: Preferences, Constraints, and Mental Illness

In the paper, The Economics of Szasz: Preferences, Constraints, and Mental Illness, Bryan Caplan summarizes Thomas Szasz’s views on mental illness and translates them into the language of economics. Caplan is an economist with a wide variety of interests. He is an interesting writer, thinker, and regularly provokes conversation on Twitter and his blog. Caplan won the Thomas Szasz Award in 2005 for the above-mentioned article. Caplan mentions on his blog that having a conversation with Szasz was a “highlight of my intellectual life“.

Unlike many of Szasz’s admirers, it seems Caplan has actually read much of Szasz’s work and understands Szasz’s main arguments. I liked how Caplan takes the meat of Szaszian thought and translates it into his own economic way of thinking. Caplan states his aim of the paper as follows:

Do we want two types of accounts about human behavior – one to explain the conduct of sane or mentally healthy persons, and another to explain the conduct of insane or mentally ill persons? I maintain that we do not need, and should not try, to account for normal behavior one way (motivationally), and for abnormal behavior another way (causally).

In the book Heresies, Szasz makes a similar point. He says:

The very existence of disciplines like psychiatry and ab­normal psychology authenticates the “reality” of mental diseases and disorders.

Many disciplines deal with the study of human behav­ior without, however, splitting themselves into normal and abnormal, healthy and sick, subdivisions. There is no “developmental economics” dealing with booms and “ab­normal economics” dealing with busts; no “develop­ mental political science” dealing with peace, and “ab­normal political science” dealing with war. But there is a “developmental psychology” dealing with conforming be­havior and “abnormal psychology” dealing with deviant behavior, and a “psychiatry” dealing with diseased be­havior. (p. 114)

In short, splitting behavior into “normal” and “abnormal” is a prescription about how one should behave, not a diagnosis of a sickness. Caplan points out that economists are usually quick show that words such as “sick” or “irrational” are normative judgments, not medical claims. Yet, when it comes to proclamations of mental health experts, economist regularly give them a free pass.

Different People, Different Values

Caplan gets to what I believe is the heart of Szaszian thought when he says:

For Szasz, the most salient fact about human motivation and thought is the vast heterogeneity.

In all of Szasz’s writings and lectures, Szasz always demanded that we view each person as an individual with unique preferences and unique ways of viewing the world. Those who beat to their own drummer are often labeled as “mentally ill”, not because they disturb themselves, but because they disturb others. Caplan goes on to say:

Indeed, one of the lessons of literature is that characters’ superficially inexplicable behavior becomes intelligible once you see it from their perspective.

For Szasz, one does not have to invent mental illness to explain bizarre human behavior, such behavior is part and parcel of what it means to be human. For Szasz, life is no picnic — we adapt in various ways that make sense for our lives. Our choices often do not make sense to others looking in from the outside with different lives and values.

Caplan goes on to explain:

What makes you think that no human being would prefer a life of day-dreaming, play-acting, daily heroin use or sadism? Is this any less credible than other unusual preferences that now escape psychiatric stigma, such as being gay, entering a convent, or ‘speaking in tongues’ in a Protestant church?…From an economic point of view, however, what is so puzzling about a person who prefers consuming alcohol to career sucess or family stability? Life is full of trade-offs. The fact that most of us would make a different choice is hardly evidence of irrationality. Neither is the fact that few alcoholics will admit their priorities; expressing regret and a desire to change is and excellent way to deflect social and legal sanctions.

From an economic point of view, there is nothing to be explained about a so-called mental illness. In economic terms, there are revealed preferences and stated preferences. When you have a great idea for a new business and you ask a friend, “would you pay for such a product”, and he says, “yes”, that is called a stated preference. When you ask your friend to give you the money so that you can create the product, and he says “no” that is his revealed preference. When an alcoholic says that they want to quit drinking, they are giving their stated preference, when they continue to drink they are revealing their actual preference.

Brain Science, Genetics, Hallucinations, and Delusions

Caplan goes on to write about other aspects of the Szaszian approach to mental illness such as the impact of genetics, brain science and the “hard-cases” of hallucinations and delusions.

When it comes to genetics, Caplan points out that twin-adoption studies show that so-called mental illness has a heritable component. But, this does not tell us whether so-called mental illnesses are, in fact, bonafide illnesses.

The same goes for brain science. All human behavior has some association with brain chemistry. As I type these words right now, there is concomitant brain activity. This does not tell us anything about whether or not such activity is a disease.

Caplan describes hallucinations and delusions as “hard-cases”. Caplan asks, “why are religious beliefs exempt from the stigma of hallucinations and delusions? As Szasz has said, “one man’s diety is another man’s delusion”. If you hold a delusion that Jesus is the son of God and lives in your heart, that is called a belief, if you believe you are Jesus, you are delusional.

Delusions and hallucinations may be a way attributing personal significance to an insignificant life. According to Caplan, people “largely become schizophrenics because they find reality too unpleasant to cope with”. This is supported by schizophrenic John Nash’s words about his experience with schizophrenia.

According to the biography of Nash, by Sylvia Nassar, Nash said:

Rational thought imposes a limit on a person’s concept of his relation to the cosmos.

Interestingly, Caplan brings up people who believe they have been abducted by aliens. Are such people mentally ill? Doesn’t a person have a civil right to believe strange things? Isn’t it likely that people desire to relax their cognitive faculties in order to entertain the belief that one is so important that aliens from other planets would visit them? Caplan suggests that something similar is happening with delusions and hallucinations.


One blind spot that Caplan misses in his analysis of Szaszian thought is Caplan’s own use of disguised normative judgments.

Caplan and the field of economics routinely disguise moral judgments of (mis)behavior as “rational/irrational”. But man is not a rational being, man rationalizes. We have reasons for our life choices and behavior, even though our reasons often do not make sense to others. Our choices only make sense in light of one’s own life history.

For example, Caplan says:

Life is full of trade-offs. The fact that most of us would make a different choice is hardly evidence of irrationality.

The above quote implies that there could be such a thing as an irrational human being, if only given enough evidence. From a Szaszian perspective, this does not make sense. Rationality is not a phenomenon you can find in a human, such as the color of a person’s eyes, it is a judgment one makes about someone. It is more like calling someone beautiful or ugly.

As Szasz says in his book Words to the Wise:

The terms “rational/ irrational,” like the terms “sane/ insane,” are subjective judgments masquerading as objective, medical, scientific, verifiable assessments or determinations.

It would be more honest if instead of calling people “irrational” and “insane,” we simply said that they are wrong, ignorant, credulous, gullible, fearful, conceited, smug, self-satisfied, mistaken, or know what isn’t so.

Everyone holds false beliefs about some things, and no one holds false beliefs about everything.

The person whom the psychiatrist labels as “irrational” is rational. He differs from the psychiatrist in having different opinions, premises, and values.

Every adherent to a monotheistic religion believes, ipso facto, that adherents to the other two monotheistic religions are “irrational.”


I appreciated Caplan taking an honest look at Szasz’s thought. In an age where all human suffering tends to be medicalized, it is refreshing to see others take Szasz’s views seriously. In Szasz’s words: “Clear thinking requires courage rather than intelligence.”

2 thoughts on “The Economics of Szasz: Preferences, Constraints, and Mental Illness

  1. This article seems to presuppose a Cartesian dualist view of the mind and a libertarian notion of free will, generally not widely held positions among contemporary neuroscientists or philosophers of mind. Minds are most likely functions of brains which are made of matter and exist within a causally closed physical universe. Schizophrenics don’t have a strong “preference” for hearing voices any more than quadriplegics have a strong preference for not walking up stairs since they aren’t standing outside their heads as a homunculus steering the mind to a free choice. Whether you want to treat the mentally ill as “rational” free actors for accounting purposes in your economic models is arbitrary and entirely a function of your own perspective. Probably shouldn’t, but whatever. The more interesting perspective might be treating ordinary consumers in models as “irrational” and “unfree”, but I doubt a libertarian economist would want to go in that direction for obvious ideological reasons.


    1. James – thank your for taking the time to comment; your comments help to clarify.

      Both Caplan and Szasz do believe in free will. You can read Caplan’s argument for free will here

      As far as Cartesian dualism – Szasz does not believe in such a split. I cannot say for Caplan. Szasz believes there is only body. For Szasz, there is no such thing as “minds” as a noun, there is only minding as a verb. Mind is a metaphorical concept. One can mind, but there is no such thing as a mind. You can read more about Szaszian concept of mind in his book Meaning of Mind, which I reviewed here

      As for hearing voices. Szasz calls this “disavowed self-conversations”. Confident people such as physicist Richard Feynman talk about hearing voices when trying to work on a difficult physics problem and in fact he was denied going into the military for admitting this. He hears “voices” debating the different aspects of solving a problem. Szasz says it is interesting that there has never been anyone diagnosed as a schizophrenic for hearing voices telling him to be kind to his wife. Why is this? Because hearing voices telling oneself to be kind to ones wife is rightfully regarded as hearing one’s own voice. Only when we do not like our self-conversation do we tend to disavow it and attribute it to something else other than our own self-conversation.

      “Hearing voices” in Szasz’s words: For more than two hundred years, until the middle of the twentieth century, psychiatrists and lay persons alike regarded satisfying one’s need for sex by and for oneself—which they called “self-abuse” and we call “masturbation”—as the cause and consequence of serious mental illness. It took medical science and public opinion a long time to acknowledge that sexual self-satisfaction was a ubiquitous act, neither an illness nor the cause of one. Today, psychiatrists and lay persons alike regard satisfying one’s need for dialogue by and for oneself—which they call “hallucination” and “hearing voices,” and I call “talking to oneself” or “verbal masturbation”—as the manifestation of serious mental illness that ought to be suppressed by whatever means necessary, including lobotomy, electric shock treatment, and antipsychotic drugs. Perhaps it will take even longer than it took for masturbation for medical science and public opinion to acknowledge that talking to oneself is a ubiquitous act, neither an illness nor the cause of one.


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