Disciplines and Ideas in

the Social Sciences

Quarter 1 – Module 7:
Rational Choice
 What I Need to Know

This module was created and written with you in mind. It is here to help you to
understand deeper about Rational Choice. The scope of this module permits it to be
used in many different learning situations. The language used recognizes the
diverse vocabulary level of students.

This module will discuss the RATIONAL CHOICE.

After going through this lesson, you are expected to:

1. Predict the social consequences of decision making based on scarcity
( HUMSS_DIS 11-IVa-6 )
2. Analyze the basic concepts and principles of Rational Choice (MELC)
3. Apply the social science ideas and its importance in examining socio-
cultural, economic, and political conditions (MELC)
Objectives:
1. Analyze the basic concepts and principles of rational choice
2. Predict the social consequences of decision making based on scarcity
3. Apply rational choice theory in examining socio-cultural, economic, and
political conditions
 What I Know

A. On a separate sheet of paper, write the word TRUE if the statement is

correct, otherwise write false. If you get 100% correct, you may skip
the module. If you get 50%-99% correct, you may proceed with the
module.

1. Rational choice tries to explain human behavior when it comes to utility

maximization.
2. Scarcity means surplus supply of resources.
3. Scarcity is a basic problem arising from unlimited wants of people with
limited resources.
4. Social consequence means the effect upon people and their relationships
with the community that come from a particular decision.
5. Social consequence is an act of making a decision between two or more
possibilities.
6. Rational choice is a product of scarcity and demand the people to make the
right choice to maximize the use of its resources.
7. Rational choice is an approach that sees society as a complex system whose
parts work together to promote solidarity and stability.
8. Utility maximization means that a person will make choices related to
his/her goals and determine the ways to attain those goals.
9. Structure of preferences means the results of individual actions and
interactions will lead to social change or group outcomes.
10. Centrality of individuals in the explanation of collective outcomes means
that a person will choose the object that provides the greatest reward at the
lowest costs.
11. Petroleum is a scarce resource.
12. Imposing water tax to industries who are heavy users of water will result to
higher product prices due to the increased costs of production.
13. Providing incentives to individuals who practice and propagate organic
farming and other sustainable farming practices will result to polluted water
resources.
14. Making the water prices higher reduces water waste and pollution and
serves as fund for water infrastructure.
15. Use of wind energy and solar power as substitute to petroleum will result to
question of storage and disposal of radioactive byproducts from nuclear
reactors and the adequacy of power generated by windmills or solar panels.
Lesson
Rational Choice
7
Every day we make choices from simple such as choosing our outfit of the day to
complex like making a stand about the construction of dam in our community. The
choices we make today can affect us personally and can make an impact socially.
In this lesson, you will learn the concept of rational choice. Understanding this
concept can help you predict the social consequences of your decision. Thus, by
applying rational choice, you can analytically examine the socio-cultural, economic,
and political conditions of society.

What’s In

You have learned about Psychoanalysis in the last module you taken up. Let us see
if you can still remember some of the important concepts of the previous lesson.
Choose the correct answer in the box below and write it on a sheet of paper.

A. Carl Jung C. Id E. Sigmund Freud

B. Ego D. Psychoanalysis F. Superego

1. He introduced psychoanalysis.
2. It means “analysis of the mind.”
3. It is driven by the pleasure principle.
4. It deals with moralistic issues.
5. It follows the reality principle

Note for the Teacher

In order to make this lesson easy to teach by the

teacher/facilitator she/he has first an eye view about the concept:

Rational Choice
 What’s New

With our present condition, every peso counts. Let’s say you were asked by your
parents to budget 100 pesos to feed the family of five for a day. Which among the
following options would you choose? Explain your answer.

Option A Option B Option C

1 ½ kilos of rice (Php 1 ½ kilos of rice Create your own list of
25/kilo)– 37.50 pesos (Php27/kilo)– 40.50 pesos food items to buy.

Sitaw – 20 pesos 5 pcs. Eggs (6 pesos/pc) –

30 pesos
Soy sauce – 9.20 pesos
Cooking oil – 10 pesos
Cooking oil – 10 pesos
Noodles (6.30 pesos/55
Garlic & onion – 10 pesos
grams)- 18.90
Canned sardines in
tomato sauce – 12 pesos

Total: 98.70 pesos Total: 99.40 pesos

Source: https://www.dti.gov.ph/konsyumer/latest-srps-basic-necessities-prime-commodities/

What is It

Rational Choice

Peoples’ demand for resources is said to be infinite while the world’s

resources such as land, labor, and capital are finite. From this situation arise the
concept of scarcity. It is a fundamental economic problem arising from unlimited
wants of people with limited resources. Therefore, decision making always
considers a rational choice.

According to Jonathan Levin and Paul Milgrom, in the standard view,

rational choice is defined to mean the process of determining what options are
available and then choosing the most preferred one according to some consistent
criterion (Levin and Milgrom, 2004). In this sense, rational choice is presented as
maximizing a real-valued utility function. Rational choice also explains social
phenomena as outcomes of individual action. According to Rafael Wittek, choices
are “rational” if they meet some consistency criterion as defined by a decision
theory and are suitable to achieve specific goals, given the constraints of the
situation (Wittek, 2013). Overall, rational choice is used to predict social
consequences of decision-making based on scarcity.
 Basic Concepts and Principles of Rational Choice

Among the important concepts and principles of rational choice are provided by Ian
Shapiro and Donald Green. Some of them are utility maximization, structure of
preferences, and centrality of individuals in the explanation of collective outcomes.

1. Utility maximization means that a person will choose the object that provides
the greatest reward at the lowest costs. A good example of utility maximization is
selecting a product based on its features and low market price compared to other
brands that offer the same features at a higher price.
2. Structure of preferences means that a person will make choices related to
his/her goals and determine the ways to attain those goals. An example of this is
buying a house and lot by using a person’s savings or applying for a housing loan
in a private lending company.

3. Centrality of individuals in the explanation of collective outcomes means

the results of individual actions and interactions will lead to social change or group
outcomes. A good example is the individual decision of the people to go to the
streets and protest the end of dictatorship that lead to the restoration of
democracy.

Scarce Resources, Decisions Made and Predicted Social Consequences

Scarce resources influence the choices we have and the factors that we take
into consideration when making a decision. Hence, it becomes important to make a
rational choice. Some of the scarce resources encountered by humans, the
decisions made to address each limited resource, and the social consequences of
rational choice are presented below.
Social Consequence:
Consumers would
Decision A: Impose water
experience higher product
tax to heavy users like
prices but tax would help
industry and agriculture
decouple economic
growth.

Decision B: Incentivize Social Consequence:

organic farming and other Protect water sources
Scarce Resource: Water sustainable farming from agricultural
practices pollutants

Decision C: Educate Social Consequence: Help

farmers about water loss reduce wasteful water
from practices and use in agriculture
funding irrigation
improvement.
Figure 1.1 Water as scarce resource, decisions made and social
consequences
 Which among these available options is the rational choice? What is the
social consequence of that decision?
Another example of scarce resource is petroleum. Let’s take a look on
possible solutions to address the problem and their social consequences.

Decision A: Decrease Social Consequence:

demand for petroleum Conservation of
consumption of
petroleum
Scarce Resource: Petroleum
Decision B: Use of wind Social Consequence:
energy and solar power Disposal of radioactive
byproducts

Figure 1.2 Petroleum as scarce resource, decisions made and social

consequences
Among the choices presented to solve petroleum scarcity, which one do you
prefer? What are its social consequences?

What’s More

Activity 1.1

List down five scarce resources in the world aside from the examples mentioned in
the discussion.

Assessment 1.1

Directions: Choose the letter of the correct answer in the box and write on a
separate sheet of paper.

A. Example of utility maximization

B. Example of structure of preferences
C. Example of centrality of individuals in the explanation of collective outcomes
D. Meaning of utility maximization
E. Meaning of structure of preferences
F. Meaning of centrality of individuals in the explanation of collective outcomes
1. A person will choose the object that provides the greatest reward at the
lowest costs.
2. A person will make choices related to his/her goals and determine the ways
 to attain those goals.
3. Buying a house and lot by using a person’s savings or applying for a housing
loan in a private lending company.
4. Individual decision of the people to go to the streets and protest the end of
dictatorship that lead to the restoration of democracy.
5. Selecting a product based on its features and low market price compared to
other brands that offer the same features at a higher price.

Activity 1.2

Directions: Read the text and answer the given question. Write your answer on a
separate sheet of paper.

On March 16, 2020, President Duterte declared a Luzon-wide enhanced

community quarantine (ECQ) to combat the effect of increasing spread of COVID-
19. Under the ECQ setup, mass gatherings and classes in school are prohibited.
Public transport is not allowed limiting the populace’s movement. Non-essential
businesses are not allowed to open. In contrast, essential businesses who provide
food and medicine are permitted to operate. In addition, gasoline stations, funeral
services, banks, money transfer services and utility providers are allowed to open.
People are restricted to their homes, only one family member can go outside to buy
basic needs such as food, medicines, and other things needed for their sustenance.
ECQ also directs people to observe and follow one-meter distance apart from each
other. As of May 12, 2020, according to Department of Health (DOH), there are 44
total COVID-19 cases, four (4) deaths, and four (4) recovered in Quezon Province.
President Duterte’s public address on April 24, 2020 declared that the ECQ is
prolonged up to May 15, 2020 only in Metro Manila, Region IV-A (CALABARZON),
Central Luzon (except Aurora) and other areas in Luzon that are at high-risk for
COVID 19. Is it rational to prolong the ECQ in Quezon Province? What do you think
are the social consequences of this decision of the national government?

Assessment 1.2

Directions: Identify the social consequence of the following decisions based on the
scarcity of resources. Write only letter of the correct answer on a separate sheet of
paper.
1. Imposing water tax to industries who are heavy users of water
A. Consumers would increase its demand to different supplies.
B. Producers would earn more profit and provide more jobs to the people.
C. Consumers would likely experience higher product prices due to the
increased costs of production, ideally such a tax would help decouple
economic growth from water use.
D. Producers would install new branches of their business in different parts
of the country and would offer consumers a variety of products based on
their wants.
2. Provide incentives to individuals who practice and propagate organic farming
and other sustainable farming practices
A. Water sources will be scarce.
B. Water sources will be polluted.
C. Water sources will be protected from agricultural pollutants.
D. Water sources will be contaminated by agricultural pollutants.
 3. Make the water prices higher
A. It reduces water waste and pollution and serves as fund for water
infrastructure.
B. It increases water consumption of households, businesses, and
industries.
C. It contributes to water waste and water pollution.
D. It decreases income of water service providers.
4. Decrease demand for petroleum
A. Conservation of consumption of petroleum is an attempt to deal with
this problem, but it is only a partial solution.
B. International relations over petroleum could be at their most corrosive,
as states scramble into complex political situations to try to secure
their access to petroleum reserves at one another’s expense.
C. Question of storage and disposal of radioactive byproducts from nuclear
reactors and the adequacy of power generated by windmills or solar
panels.
D. The prospects for violent resolution of conflicts will increase as well
5. Use of wind energy and solar power as substitute to petroleum
A. Conservation of consumption of petroleum is an attempt to deal with
this problem, but it is only a partial solution.
B. International relations over petroleum could be at their most
corrosive, as states scramble into complex political situations to try to
secure their access to petroleum reserves at one another’s expense.
C. Question of storage and disposal of radioactive byproducts from nuclear
reactors and the adequacy of power generated by windmills or solar
panels.
D. The prospects for violent resolution of conflicts will increase as well.

Activity 1.3

Read the text below and write the answer on a separate sheet of paper.

Alcohol, disinfectant, head covers, overall PPE, and fabric/cloth facemasks were
some of scarce resources during the COVID-19 Pandemic. National Economic and
Development Authority (NEDA) prepared a report entitled “Addressing the Social
and Economic Impact of the COVID-19 Pandemic” to suggest alternative
production/activity to solve scarcity of essential items. Some of them are listed
below. Analyze them and explain if these are rational decisions or not.

1. Domestic perfume companies can be tapped for production of alcohol and

disinfectants. Since perfumes are mostly alcohol based, they may be able to
shift production easily. Perfume containers can be used as alcohol
containers as well.
2. Plastic manufacturing companies may consider shifting to production of
head covers, goggles, and overall PPE. There is a need to check if their
machines can accommodate shifting of production. For those already
producing laboratory goggles, suggest increased production.

Assessment 1.3

Predict the social consequences of the decisions of NEDA to solve scarcity of

essential items stated above.
 What I Have Learned

Answer the following to complete your understanding of rational choice.

 Scarcity means
________________________________________________________________________

 Some of the scarce resources are

________________________________________________________________________

 Social consequences mean

________________________________________________________________________

 Rational choice is
________________________________________________________________________

 Some of the basic concepts and principles of rational choice are

__________________________________________________________________

__________________________________________________________________

 Social consequences of decisions can be predicted by

________________________________________________________________________

What I Can Do

Let us apply rational choice theory in examining socio-cultural, economic, and

political conditions. Read the text below and answer the questions.
Target Beneficiaries of Social Amelioration Program (SAP) as stated in the Joint
Memorandum Circular No.1 Series of 2020 are Senior Citizens; Persons with
Disability; Pregnant and Lactating Women; Solo Parents; Overseas Filipinos (OFs)
in Distress; Indigent Indigenous Peoples; Underprivileged Sector and Homeless
Citizens; Informal Economy Workers; Directly Hired or Occasional Workers;
Subcontracted Workers; Homeworkers; House helpers; Drivers of Pedicab, Tricycle,
PUJs, UVs, PUBs, Taxi, Transport Network Vehicle Service (TNVS) and Transport
Network Companies (TNC); Micro-entrepreneurs and Producers, Operators of Sari-
sari Stores, and the like; Family Enterprise Owners; Sub Minimum Wage Earners;
Farmers, Fisher folks, and Farm workers; Employees affected by “no work, no pay”
policy and not covered by DOLE Order No. 209, Series of 2020 or any DOLE
issuance/s on adjustment measures program; and Stranded workers. They will
receive a subsidy amounting to a minimum of Five Thousand Pesos (PhP 5,000.00)
to a maximum of Eight Thousand Pesos (PhP 8,000.00) a month for two (2) months
to provide for basic food, medicine, and toiletries.
Question: Justify and/or refute the list of target beneficiaries of SAP and predict
the social consequences of including/excluding the beneficiaries of SAP. Write your
answers on a separate sheet of paper.

Assessment

Write the letter of the correct answer on a separate sheet of paper.

1. It is defined to mean the process of determining what options are available
and then choosing the most preferred one according to some consistent
criterion.
A. Rational choice
B. Rationality
C. Scarcity
D. Social consequences
2. Rational choice is:
A. A product of scarcity and demand the people to make the right and
rational choice to maximize the use of its resources.
B. A theory of personality, an approach to psychotherapy, and method of
investigation founded by Sigmund Freud.
C. An approach that sees society as the product of the everyday
interactions of individuals.
D. An approach that sees society as a complex system whose parts work
together to promote solidarity and stability.
3. All are some of the basic concepts and principles of rational choice EXCEPT:
A. Centrality of individuals in the explanation of collective outcomes
B. Morality of an individual
C. Structure of preferences
D. Utility maximization
4. Utility maximization means:
A. A person will choose the object that provides the greatest reward at
the lowest costs.
B. A person will make choices related to his/her goals and determine the
ways to attain those goals.
C. The results of individual actions and interactions will lead to social
change or group outcomes.
D. All of the above.
5. Structure of preferences means:
A. A person will choose the object that provides the greatest reward at
the lowest costs.
B. A person will make choices related to his/her goals and determine the
ways to attain those goals.
C. The results of individual actions and interactions will lead to social
change or group outcomes.
D. All of the above.
6. Centrality of individuals in the explanation of collective outcomes means:
A person will choose the object that provides the greatest reward at the
lowest costs.
B. A person will make choices related to his/her goals and determine the
ways to attain those goals.
C. The results of individual actions and interactions will lead to social
change or group outcomes.
D. All of the above.
7. Selecting a product based on its features and low market price compared to
other brands that offer the same features at a higher price is an example of:
A. centrality of individuals in the explanation of collective outcomes
B. structure of preference
C. utility maximization
D. none of the above.
8. Buying a house and lot by using a person’s savings or applying for a housing
loan in a private lending company is an example of:
A. centrality of individuals in the explanation of collective outcomes
B. structure of preference
C. utility maximization
D. none of the above.
9. The individual decision of the people to go to the streets and protest the end
of dictatorship that lead to the restoration of democracy is an example of:
A. centrality of individuals in the explanation of collective outcomes
B. structure of preference
C. utility maximization
D. none of the above.
10. What will be the social consequence if there is a decrease of demand for
petroleum?
A. Conservation of consumption of petroleum is an attempt to deal
with this problem, but it is only a partial solution.
B. International relations over petroleum could be at their most
corrosive, as states scramble into complex political situations to
try to secure their access to petroleum reserves at one another’s
expense.
C. There is question of storage and disposal of radioactive
byproducts from nuclear reactors and the adequacy of power
generated by windmills or solar panels.
D. The prospects for violent resolution of conflicts will increase as
well.
11. The decision of the use of nuclear power generation and alternative
technologies such as wind energy and solar power as substitute to
petroleum will have:
A. Conservation of consumption of petroleum is an attempt to deal
with this problem, but it is only a partial solution.
B. International relations over petroleum could be at their most
corrosive, as states scramble into complex political situations to
try to secure their access to petroleum reserves at one another’s
expense.
C. Question of storage and disposal of radioactive byproducts from
nuclear reactors and the adequacy of power generated by
windmills or solar panels.
D. The prospects for violent resolution of conflicts will increase as
well.
12. The decision to make the water prices higher will result to:
A. Consumers would likely experience higher product prices due to the
increased costs of production, ideally such a tax would help decouple
economic growth from water use.
B. Protect water sources from agricultural pollutants.
C. Promote renewable energy sources.
D. Reduce water waste and pollution and can serve to fund water
infrastructure improvements.
13. The decision to impose water tax on heavy users while leaving household
water prices unaffected will result to:
A. Consumers would likely experience higher product prices due to the
increased costs of production, ideally such a tax would help decouple
economic growth from water use.
B. Protect water sources from agricultural pollutants.
C. Promote renewable energy sources.
D. Reduce water waste and pollution and can serve to fund water
infrastructure improvements.
14. The decision to educate farmers about potential water loss practices, setting
clear water-use reduction targets, and funding irrigation improvements and
water-conservation technologies will:
A. help reduce wasteful water use in agriculture
B. promote water loss practices
C. fund irrigation improvements
D. None of the above
15. The decision to incentivize organic farming and other sustainable farming
practices will result to:
A. Consumers would likely experience higher product prices due to the
increased costs of production, ideally such a tax would help decouple
economic growth from water use
B. Protect water sources from agricultural pollutants
C. Promote renewable energy sources
D. Reduce water waste and pollution and can serve to fund water
infrastructure improvements
 Additional Activities

More activity for you to be done.

Choose one of the following items. Write your answers on one whole sheet of
paper and let your teacher check your work.

1. Interpret personal and social experiences using rational choice approach

2. Research and evaluate the strengths and weaknesses of rational choice
approach.

Your answer will be graded using the rubric below.

2 /
5 / 4 / 3 / 1 /
NEEDS
EXCELLE VERY AVERAG UNACCEPT
IMPROVE-
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This paper is This The writer Topic is not As yet, the

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holds the focused, the topic, are too many purpose or
reader's and has even topics. central theme.
attention. some though To extract
Relevant good developmen meaning from
Ideas details and details t is still the text, the
quotes enrich and basic or reader must
the central quotes. general. make
theme. inferences
based on
sketchy or
missing
details.

The Paper The Sentences The writing

organization (and organizatio within lacks a clear
enhances and paragraph nal paragraphs sense of
showcases s) are structure is make sense, direction.
the central mostly strong but the order Ideas, details,
idea or organized, enough to of paragraphs or events
theme. The in order, move the does not. seem strung
Organiza-
order, and reader together in a
tion
structure of makes through the loose or
information is sense to text without random
compelling the too much fashion; there
and moves reader. confusion. is no
the reader identifiable
through the internal
text. structure.

Sentence The writing The The text The text The reader
Fluency has an easy writing hums along seems choppy has to
 flow, rhythm, mostly with a and is not practice quite
and cadence. flows, and steady beat, easy to read a bit in order
Sentences are usually but tends to orally. to give this
well built, invites be more paper a fair
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structure musical,
that invites more
expressive mechanical
oral reading. than fluid.

The writer The write The writer The writer Errors in

demonstrates understan shows seems to have spelling,
a good grasp ds good reasonable made little punctuation,
of standard writing control over effort to use capitalization,
writing conventio a limited conventions: usage, and
conventions ns and range of spelling, grammar
(e.g., spelling, usually standard punctuation, and/or
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The form and The The writer's The writer's The reader
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Source: https://www.uen.org/rubric/previewRubric.html?id=20123
References

Addressing the Social and Economic Impact of the COVID-19 Pandemic.

NEDA Report is as of March 19, 2020.
www.neda.gov.ph/wp-content/uploads/2020/03/NEDA_Addressing-
the-Social-and-Economic-Impact-of-the-COVID-19-Pandemic.pdf
Latest suggested retail prices (SRPs) of Basic Necessities and Prime Commodities
https://www.dti.gov.ph/konsyumer/latest-srps-basic-necessities-prime-commodities/
Levin, Jonathan and Milgrom, Paul. “Introduction to Choice Theory.”
September 2004.
https://web.stanford.edu/~jdlevin/Econ%20202/Choice%20Theory.pdf
Mrs. Hancock. Basic Essay Writing Rubric. August 8, 2009.
https://www.uen.org/rubric/previewRubric.html?id=20123
Petruzzello, Melissa. “Water Scarcity.” Last Updated: April 14, 2020.
http://www.britannica.com/topic/water-scarcity
“Updates on Novel Coronavirus Disease” (COVID-19)
https://www.doh.gov.ph/2019-nCoV
Wittek, Rafael. “RATIONAL CHOICE THEORY.” 2013.
http://www.rafaelwittek.eu/images.pdf/lemmas/Witteek_2013_-
_Rational_Choice_Thoery.pdf
Wittek, Rafael. “Rational Choice.” Last Reviewed: 10 May 2017. Last
Modified: 29 October 2013.
https://www.oxfordbibliographies.com/view/document/obo-9780199756384/obo-
9780199756384-0070.xml
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