Neoclassical economics

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Neoclassical_economics 

Part of a series on
Economics
History Outline Index

Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are driven by the supply and demand model. According to this line of thought, the value of a good or service is determined through a hypothetical maximization of utility by income-constrained individuals and of profits by firms facing production costs and employing available information and factors of production. This approach has often been justified by appealing to rational choice theory, a theory that has come under considerable question in recent years.

Neoclassical economics dominated microeconomics and, together with Keynesian economics, formed the neoclassical synthesis which dominated mainstream economics as neo-Keynesian economics from the 1950s to the 1970s.^[4] It competed with new Keynesian economics as new classical macroeconomics in explaining macroeconomic phenomena from the 1970s until the 1990s, when it was identified as having become a part of the new neoclassical synthesis along with new Keynesianism. There have been many critiques of neoclassical economics, a number of which have been incorporated into newer versions of neoclassical theory, whilst some remain distinct fields.

Classification

The term was originally introduced by Thorstein Veblen in his 1900 article "Preconceptions of Economic Science", in which he related marginalists in the tradition of Alfred Marshall et al. to those in the Austrian School.

No attempt will here be made even to pass a verdict on the relative claims of the recognized two or three main "schools" of theory, beyond the somewhat obvious finding that, for the purpose in hand, the so-called Austrian school is scarcely distinguishable from the neo-classical, unless it be in the different distribution of emphasis. The divergence between the modernized classical views, on the one hand, and the historical and Marxist schools, on the other hand, is wider, so much so, indeed, as to bar out a consideration of the postulates of the latter under the same head of inquiry with the former.

It was later used by John Hicks, George Stigler, and others to include the work of Carl Menger, William Stanley Jevons, Léon Walras, John Bates Clark, and many others. Today it is usually used to refer to mainstream economics, although it has also been used as an umbrella term encompassing a number of other schools of thought, notably excluding institutional economics, various historical schools of economics, and Marxian economics, in addition to various other heterodox approaches to economics.

Neoclassical economics is characterized by several assumptions common to many schools of economic thought. There is not a complete agreement on what is meant by neoclassical economics, and the result is a wide range of neoclassical approaches to various problem areas and domains—ranging from neoclassical theories of labor to neoclassical theories of demographic changes.

Theory

Assumptions and objectives

It was expressed by E. Roy Weintraub that neoclassical economics rests on three assumptions, although certain branches of neoclassical theory may have different approaches:

1. People have rational preferences between outcomes that can be identified and associated with values.
2. Individuals maximize utility and firms maximize profits.
3. People act independently on the basis of full and relevant information.

From these three assumptions, neoclassical economists have built a structure to understand the allocation of scarce resources among alternative ends—in fact, understanding such allocation is often considered the definition of economics to neoclassical theorists. Here's how William Stanley Jevons presented "the problem of Economics".

Given, a certain population, with various needs and powers of production, in possession of certain lands and other sources of material: required, the mode of employing their labor which will maximize the utility of their produce.

From the basic assumptions of neoclassical economics comes a wide range of theories about various areas of economic activity. For example, profit maximization lies behind the neoclassical theory of the firm, while the derivation of demand curves leads to an understanding of consumer goods, and the supply curve allows an analysis of the factors of production. Utility maximization is the source for the neoclassical theory of consumption, the derivation of demand curves for consumer goods, and the derivation of labor supply curves and reservation demand.

Supply and demand model

Market analysis is typically the neoclassical answer to price questions, such as why does an apple cost less than an automobile, why does the performance of work command a wage, or how to account for interest as a reward for saving. An important device of neoclassical market analysis is the graph presenting supply and demand curves. The curves are reflecting the behavior of individual buyers and individual sellers. Buyers and sellers interact with each other in and through these markets, and their interactions determine the market prices of anything they buy and sell. In the following graph, the specific price of the commodity being bought/sold is represented by P*.

In reaching agreed outcomes of their interactions, the market behaviors of buyers and sellers are driven by their preferences (= wants, utilities, tastes, choices) and productive abilities (= technologies, resources). This creates a complex relationship between buyers and sellers. Thus, the geometrical analytics of supply and demand is only a simplified way how to describe and explore their interaction. Market supply and demand are aggregated across firms and individuals. Their interactions determine equilibrium output and price. The market supply and demand for each factor of production is derived analogously to those for market final output to determine equilibrium income and the income distribution. Factor demand incorporates the marginal-productivity relationship of that factor in the output market.

Neoclassical economics emphasizes equilibria, which are the solutions of agent maximization problems. Regularities in economies are explained by methodological individualism, the position that economic phenomena can be explained by aggregating over the behavior of agents. The emphasis is on microeconomics. Institutions, which might be considered as prior to and conditioning individual behavior, are de-emphasized. Economic subjectivism accompanies these emphases. See also general equilibrium.

Utility theory of value

Neoclassical economics uses the utility theory of value, which states that the value of a good is determined by the marginal utility experienced by the user. This is one of the main distinguishing factors between neoclassical economics and other earlier economic theories, such as Classical and Marxian, which use the labor theory of value that value is determined by the labor required for production.

The partial definition of the neoclassical theory of value states that the value of an object of market exchange is determined by human interaction between the preferences and productive abilities of individuals. This is one of the most important neoclassical hypotheses. However, the neoclassical theory also asks what exactly is causing the supply and demand behaviors of buyers and sellers, and how exactly the preferences and productive abilities of people determine the market prices. Therefore, the neoclassical theory of value is a theory of these forces: the preferences and productive abilities of humans. They are the final causal determinants of the behavior of supply and demand and therefore of value. According to neoclassical economics, individual preferences and productive abilities are the essential forces that generate all other economic events (demands, supplies, and prices).

Cambridge quantity theory of money

The Cambridge version of the quantity theory of money was developed mainly by Alfred Marshall, Arthur Cecil Pigou, Ralph George Hawtrey and Dennis Holme Robertson, and is understood as the income version of the money theory. The basis of the Cambridge quantity theory of money is the Cambridge equation:

${\displaystyle M_{d}=kPY,}$

where ${\displaystyle M_{d}}$ is the demand for money, ${\displaystyle k}$ is the Cambridge (Marshall) coefficient expressing the part of real income in the form of cash, ${\displaystyle P}$ is the price level and ${\displaystyle Y}$ is the real income. The left side of the Cambridge equation is expressing the money supply, i.e. the amount of money that people have at their disposal, whereas the right side is expressing the sum of cash people actually want to have, i.e. it is expressing the money demand. Thus, the Cambridge equation is focusing on exploring the conditions of equilibrium in the money market.

Market failure and externalities

Despite favoring markets to organize economic activity, neoclassical theory acknowledges that markets do not always produce the socially desirable outcome due to the presence of externalities. Externalities are considered a form of market failure. Neoclassical economists vary in terms of the significance they ascribe to externalities in market outcomes.

Pareto criterion

In a market with a very large number of participants and under appropriate conditions, for each good, there will be a unique price that allows all welfare–improving transactions to take place. This price is determined by the actions of the individuals pursuing their preferences. If these prices are flexible, meaning that all parties are able to pursue transactions at any rates they find mutually beneficial, they will, under appropriate assumptions, tend to settle at price levels that allow for all welfare–improving transactions. Under these assumptions, free-market processes yield an optimum of social welfare. This type of group welfare is called the Pareto optimum (criterion) after its discoverer Vilfredo Pareto. Wolff and Resnick (2012) describe the Pareto optimality in another way. According to them, the term "Pareto optimal point" signifies the equality of consumption and production, which indicates that the demand (as a ratio of marginal utilities) and supply (as a ratio of marginal costs) sides of an economy are in balance with each other. The Pareto optimum point also signifies that society has fully realized its potential output.

Normative judgments in neoclassical economics are shaped by the Pareto criterion. As a result, many neoclassical economists favor a relatively laissez-faire approach to government intervention in markets, since it is very difficult to make a change where no one will be worse off. However, many less conservative neoclassical economists instead use the compensation principle, which says that an intervention is good if the total gains are larger than the total losses, even if losers are not compensated in practice.

International trade

Neoclassical economics favors free trade according to David Ricardo's theory of comparative advantage. This idea holds that free trade between two countries is always mutually beneficial because it allows the greatest total consumption in both countries.

Origins

Classical economics, developed in the 18th and 19th centuries, included a value theory and distribution theory. The value of a product was thought to depend on the costs involved in producing that product. The explanation of costs in classical economics was simultaneously an explanation of distribution. A landlord received rent, workers received wages, and a capitalist tenant farmer received profits on their investment. This classic approach included the work of Adam Smith and David Ricardo.

However, some economists gradually began emphasizing the perceived value of a good to the consumer. They proposed a theory that the value of a product was to be explained with differences in utility (usefulness) to the consumer. (In England, economists tended to conceptualize utility in keeping with the utilitarianism of Jeremy Bentham and later of John Stuart Mill.)

The third step from political economy to economics was the introduction of marginalism and the proposition that economic actors made decisions based on margins. For example, a person decides to buy a second sandwich based on how full he or she is after the first one, a firm hires a new employee based on the expected increase in profits the employee will bring. This differs from the aggregate decision-making of classical political economy in that it explains how vital goods such as water can be cheap, while luxuries can be expensive.

Marginal revolution

The change in economic theory from classical to neoclassical economics has been called the "marginal revolution", although it has been argued that the process was slower than the term suggests. It is frequently dated from William Stanley Jevons's Theory of Political Economy (1871), Carl Menger's Principles of Economics (1871), and Léon Walras's Elements of Pure Economics (1874–1877). Historians of economics and economists have debated:

• Whether utility or marginalism was more essential to this revolution (whether the noun or the adjective in the phrase "marginal utility" is more important)
• Whether there was a revolutionary change of thought or merely a gradual development and change of emphasis from their predecessors
• Whether grouping these economists together disguises differences more important than their similarities.

In particular, Jevons saw his economics as an application and development of Jeremy Bentham's utilitarianism and never had a fully developed general equilibrium theory. Menger did not embrace this hedonic conception, explained diminishing marginal utility in terms of subjective prioritization of possible uses, and emphasized disequilibrium and the discrete; further, Menger had an objection to the use of mathematics in economics, while the other two modeled their theories after 19th-century mechanics. Jevons built on the hedonic conception of Bentham or of Mill, while Walras was more interested in the interaction of markets than in explaining the individual psyche.

Alfred Marshall's textbook, Principles of Economics (1890), was the dominant textbook in England a generation later. Marshall's influence extended elsewhere; Italians would compliment Maffeo Pantaleoni by calling him the "Marshall of Italy". Marshall thought classical economics attempted to explain prices by the cost of production. He asserted that earlier marginalists went too far in correcting this imbalance by overemphasizing utility and demand. Marshall thought that "We might as reasonably dispute whether it is the upper or the under blade of a pair of scissors that cuts a piece of paper, as to whether the value is governed by utility or cost of production".

Marshall explained price by the intersection of supply and demand curves. The introduction of different market "periods" was an important innovation of Marshall's:

• Market period. The goods produced for sale on the market are taken as given data, e.g. in a fish market. Prices quickly adjust to clear markets.
• Short period. Industrial capacity is taken as given. The level of output, the level of employment, the inputs of raw materials, and prices fluctuate to equate marginal cost and marginal revenue, where profits are maximized. Economic rents exist in short period equilibrium for fixed factors, and the rate of profit is not equated across sectors.
• Long period. The stock of capital goods, such as factories and machines, is not taken as given. Profit-maximizing equilibria determine both industrial capacity and the level at which it is operated.
• Very long period. Technology, population trends, habits, and customs are not taken as given but allowed to vary in very long period models.

Marshall took supply and demand as stable functions and extended supply and demand explanations of prices to all runs. He argued supply was easier to vary in longer runs, and thus became a more important determinant of price in the very long run.

Cambridge and Lausanne school

Cambridge and Lausanne School of economics form the basis of neoclassical economics. Until the 1930s, the evolution of neoclassical economics was determined by the Cambridge school and was based on the marginal equilibrium theory. At the beginning of the 1930s, the Lausanne general equilibrium theory became the general basis of neoclassical economics and the marginal equilibrium theory was understood as its simplification.

The thinking of the Cambridge school continued in the steps of classical political economics and its traditions but was based on the new approach that originated from the marginalist revolution. Its founder was Alfred Marshall, and among the main representatives were Arthur Cecil Pigou, Ralph George Hawtrey and Dennis Holme Robertson. Pigou worked on the theory of welfare economics and the quantity theory of money. Hawtrey and Robertson developed the Cambridge cash balance approach to theory of money and influenced the trade cycle theory. Until the 1930s, John Maynard Keynes was also influencing the theoretical concepts of the Cambridge school. The key characteristic of the Cambridge school was its instrumental approach to the economy – the role of the theoretical economist is first to define theoretical instruments of economic analysis and only just then apply them to real economic problems.

The main representatives of the Lausanne school of economic thought were Léon Walras, Vilfredo Pareto and Enrico Barone. The school became famous for developing the general equilibrium theory. In the contemporary economy, the general equilibrium theory is the methodologic basis of mainstream economics in the form of New classical macroeconomics and New Keynesian macroeconomics.

Evolution

The evolution of neoclassical economics can be divided into three phases. The first phase (= a pre-Keynesian phase) is dated between the initial forming of neoclassical economics (the second half of the nineteenth century) and the arrival of Keynesian economics in the 1930s. The second phase is dated between the year 1940 and the half of the 1970s. During this era, Keynesian economics was dominating the world's economy but neoclassical economics did not cease to exist. It continued in the development of its microeconomics theory and began creating its own macroeconomics theory. The development of the neoclassical macroeconomic theory was based on the development of the quantity theory of money and the theory of distribution. One of the products of the second phase was the Neoclassical synthesis, representing a special combination of neoclassical microeconomics and Keynesian macroeconomics. The third phase began in the 1970s and is labeled as the neoclassical renaissance, the revival of neoclassical economics. During this era, Neo-Keynesian economics was in crisis, which encouraged the creation of new neoclassical lines of thoughts such as Monetarism, New classical macroeconomics, Supply-side economics, or the Public choice theory. Despite the diverse focus and approach of these theories, they are all based on the theoretic and methodologic principles of traditional neoclassical economics.

An important change in neoclassical economics occurred around 1933. Joan Robinson and Edward H. Chamberlin, with the nearly simultaneous publication of their respective books, The Economics of Imperfect Competition (1933) and The Theory of Monopolistic Competition (1933), introduced models of imperfect competition. Theories of market forms and industrial organization grew out of this work. They also emphasized certain tools, such as the marginal revenue curve. In her book, Robinson formalized a type of limited competition. The conclusions of her work for welfare economics were worrying: they were implying that the market mechanism operates in a way that the workers are not paid according to the full value of their marginal productivity of labor and that also the principle of consumer sovereignty is impaired. This theory heavily influenced the anti–trust policies of many Western countries in the 1940s and 1950s.

Joan Robinson's work on imperfect competition, at least, was a response to certain problems of Marshallian partial equilibrium theory highlighted by Piero Sraffa. Anglo-American economists also responded to these problems by turning towards general equilibrium theory, developed on the European continent by Walras and Vilfredo Pareto. J. R. Hicks's Value and Capital (1939) was influential in introducing his English-speaking colleagues to these traditions. He, in turn, was influenced by the Austrian School economist Friedrich Hayek's move to the London School of Economics, where Hicks then studied.

These developments were accompanied by the introduction of new tools, such as indifference curves and the theory of ordinal utility. The level of mathematical sophistication of neoclassical economics increased. Paul Samuelson's Foundations of Economic Analysis (1947) contributed to this increase in mathematical modeling.

The interwar period in American economics has been argued to have been pluralistic, with neoclassical economics and institutionalism competing for allegiance. Frank Knight, an early Chicago school economist attempted to combine both schools. But this increase in mathematics was accompanied by greater dominance of neoclassical economics in Anglo-American universities after World War II. Some argue that outside political interventions, such as McCarthyism, and internal ideological bullying played an important role in this rise to dominance.

Hicks' book, Value and Capital had two main parts. The second, which was arguably not immediately influential, presented a model of temporary equilibrium. Hicks was influenced directly by Hayek's notion of intertemporal coordination and paralleled by earlier work by Lindhal. This was part of an abandonment of disaggregated long-run models. This trend probably reached its culmination with the Arrow–Debreu model of intertemporal equilibrium. The Arrow–Debreu model has canonical presentations in Gérard Debreu's Theory of Value (1959) and in Arrow and Hahn's "General Competitive Analysis" (1971).

Neoclassical synthesis

Many of these developments were against the backdrop of improvements in both econometrics, that is the ability to measure prices and changes in goods and services, as well as their aggregate quantities, and in the creation of macroeconomics, or the study of whole economies. The attempt to combine neo-classical microeconomics and Keynesian macroeconomics would lead to the neoclassical synthesis which was the dominant paradigm of economic reasoning in English-speaking countries from the 1950s till the 1970s. Hicks and Samuelson were for example instrumental in mainstreaming Keynesian economics.

The dominance of Neo-Keynesian economics was upset by its inability to explain the economic crises of the 1970s- neoclassical economics emerged distinctly in macroeconomics as the new classical school, which sought to explain macroeconomic phenomenon using neoclassical microeconomics. It and its contemporary New Keynesian economics contributed to the new neoclassical synthesis of the 1990s, which informs much of mainstream macroeconomics today.

Cambridge capital controversy

Problems exist with making the neoclassical general equilibrium theory compatible with an economy that develops over time and includes capital goods. This was explored in a major debate in the 1960s—the "Cambridge capital controversy"—about the validity of neoclassical economics, with an emphasis on economic growth, capital, aggregate theory, and the marginal productivity theory of distribution. There were also internal attempts by neoclassical economists to extend the Arrow–Debreu model to disequilibrium investigations of stability and uniqueness. However, a result known as the Sonnenschein–Mantel–Debreu theorem suggests that the assumptions that must be made to ensure that equilibrium is stable and unique are quite restrictive.

Criticisms

Although the neoclassical approach is dominant in economics, the field of economics includes others, such as Marxist, Behavioral, Schumpeterian, Developmentalist, Austrian, Post Keynesian, and Institutionalist schools. All of these schools differ with the neoclassical school and each other, and incorporate various criticisms of the neoclassical economics. Not all criticism comes from other schools: some prominent economists such as Nobel Prize recipient and former chief economist of the World Bank Joseph Stiglitz are vocally critical of mainstream neoclassical economics.

Methodology and mathematical models

Further information: Unreasonable ineffectiveness of mathematics § Economics and finance, and Financial economics § Challenges and criticism

Some see mathematical models used in contemporary research in mainstream economics as having transcended neoclassical economics, while others disagree. Mathematical models also include those in game theory, linear programming, and econometrics. Critics of neoclassical economics are divided into those who think that highly mathematical method is inherently wrong and those who think that mathematical method is useful even if neoclassical economics has other problems.

Critics such as Tony Lawson contend that neoclassical economics' reliance on functional relations is inadequate for social phenomena in which knowledge of one variable does not reliably predict another. The different factors affecting economic outcomes cannot be experimentally isolated from one another in a laboratory; therefore the explanatory and predictive power of mathematical economic analysis is limited. Lawson proposes an alternative approach called the contrast explanation which he says is better suited for determining causes of events in social sciences. More broadly, critics of economics as a science vary, with some believing that all mathematical economics is problematic or even pseudoscience and others believing it is still useful but has less certainty and higher risk of methodology problems than in hard sciences.

Milton Friedman, one of the most prominent and influential neoclassical economists of the 20th century, responded to criticisms that assumptions in economic models were often unrealistic by saying that theories should be judged by their ability to predict events rather than by the supposed realism of their assumptions. He claimed that, on the contrary, a theory with more absurd assumptions has stronger predictive power. He argued that a theory's ability to theoretically explain reality is irrelevant compared to its ability to empirically predict reality, no matter the method of getting to that prediction.

Objectivity and pluralism

Neoclassical economics is often criticized for having a normative bias despite sometimes claiming to be "value-free". Such critics argue an ideological side of neoclassical economics, generally to argue that students should be taught more than one economic theory and that economics departments should be more pluralistic.

Rational behavior assumptions

One of the most widely criticized aspects of neoclassical economics is its set of assumptions about human behavior and rationality. According to Edward Fullbrook, these assumptions were chosen not because they were observed to be true by studying human behavior, but because they were the required conditions to reach a market equilibrium. The "economic man", or a hypothetical human who acts according to neoclassical assumptions, does not necessarily behave the same way as humans do in reality. The economist and critic of capitalism Thorstein Veblen claimed that neoclassical economics assumes a person to be:

[A] lightning calculator of pleasures and pains, who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift about the area, but leave him intact.

His characterization references a number of commonly criticized rationality assumptions: that people make decisions using a rigid utilitarian framework, have perfect information available about their options, have perfect information processing ability allowing them to immediately calculate utility for all possible options, and are independent decision-makers whose choices are unaffected by their surroundings or by other people.

While Veblen is from the Institutional school, the Behavioral school of economics is focused on studying the mechanisms of human decision-making and how they differ from neoclassical assumptions of rationality. Altruistic or empathy-based behavior is another form of "non-rational" decision making studied by behavioral economists, which differs from the neoclassical assumption that people only act in self-interest. Behavioral economists account for how psychological, neurological, and even emotional factors significantly affect economic perceptions and behaviors.

Rational choice theory need not be problematic according to a paper written by the economist Gary Becker which was published in 1962 in the Journal of Political Economy called "Irrational Behavior and Economic Theory." According to Becker, this paper demonstrates "how the important theorems of modern economics result from a general principle which not only includes rational behavior and survivor arguments as special cases, but also much irrational behavior." The specific important theorems and results which are shown to result from a broad range of different type of irrational behavior as well as rational behavior by market participants in the paper are that market demand curves are downward sloping or "negatively inclined", and that if an industry transformed from a competitive industry to a completely monopolistic cartel and profits are always maximized, then output per firm under the cartel would decrease compared to its equilibrium level when the industry was competitive.

This paper was largely based on the 1950 paper "Uncertainty, Evolution, and Economic Theory" by Armen Alchian. The paper sets out a justification for supply analysis separate from relying on the assumption of rational consumption, the representative firm and the way neoclassical economists analyze firm behavior in markets which does not apply on rational behavior by the decision makers in those firms, nor any other type of foresighted or goal directed behavior by them. Becker's subsequent 1962 paper provides an independent justification for neoclassical market demand analysis. The two papers offer separate justifications for the use of neoclassical methodology for supply and demand analysis without relying on implausible assumptions.

Methodological individualism

Neoclassical economics offers an approach to study the economic behavior of homo-economicus. This theory is based on methodological individualism and adopts an atomistic approach to social phenomena, according to which social atoms are the individuals and their actions. According to this doctrine, individuals are independent of social phenomena, but the opposite is not true. Individuals' actions can explain macro-scale behavior, and social collections are nothing more than aggregates, and they do not add anything to its components (Ibid). Although methodological individualism does not negate complex social phenomena such as institutions or behavioral rules, it argues any explanation should be based on constituent components' characteristics of those institutions. This is a reductionist approach based on which it is believed that the characteristics of the social system are derived from the individuals' preferences and their actions.

A critique of this approach is that the individuals' preferences and interests are not fixed. The structures contextualize individual's. According to social constructivists, systems are co-constituted alongside the actors, and ideas within the system define actors' identities, their interests, and thus their behavior. In this regard, actors in various circumstances (exposed to different impressions and experiences) will construct their interests and preferences differently, both within each other and over time. Given the individualistic foundation of the economic theory, critics argue that this theory should consider individual action's structural contexts.

Inequality

Neoclassical economics is often criticized as promoting policies that increase inequality and as failing to recognise the impact of inequality on economic outcomes. In the case of the former claim, neoclassical economics is often used for analysis in support of policies reducing economic inequality—in particular through determining the diminishing marginal utility of income, whereby poorer individuals gain greater net benefits from a given increase in income than comparable richer individuals, but more generally by being the primary means by which the impact on inequality of any given policy is assessed. In the case of the latter claim, neoclassical economics is the prevailing lens through which the relationship between inequality and economic outcomes is studied.

Ethics of markets

Neoclassical economics tends to promote commodification and privatization of goods due to its principle that market exchange generally results in the most effective allocation of goods. For example, some economists support markets for human organs, on the basis that it increases supply of life-saving organs and benefits willing donors financially. However, there are arguments in moral philosophy that use of markets for certain goods is inherently unethical. Political philosopher Michael Sandel summarizes that market exchanges have two ethical problems: coercion and corruption. Coercion happens because market participation may not be as free as proponents often claim: people often participate in markets because it is the only way to survive, which is not truly voluntary. Corruption describes how commodification of a good can inherently degrade its value.

Bounded rationality

From Wikipedia, the free encyclopedia

Bounded rationality is the idea that rationality is limited when individuals make decisions. In other words, humans' "preferences are determined by changes in outcomes relative to a certain reference level". Limitations include the difficulty of the problem requiring a decision, the cognitive capability of the mind, and the time available to make the decision. Decision-makers, in this view, act as satisficers, seeking a satisfactory solution, rather than an optimal solution. Therefore, humans do not undertake a full cost-benefit analysis to determine the optimal decision, but rather, choose an option that fulfils their adequacy criteria.

Some models of human behavior in the social sciences assume that humans can be reasonably approximated or described as "rational" entities, as in rational choice theory or Downs' political agency model. The concept of bounded rationality complements "rationality as optimization", which views decision-making as a fully rational process of finding an optimal choice given the information available. Therefore, bounded rationality can be said to address the discrepancy between the assumed perfect rationality of human behaviour (which is utilised by other economics theories such as the Neoclassical approach), and the reality of human cognition. In short, bounded rationality revises notions of "perfect" rationality to account for the fact that perfectly rational decisions are often not feasible in practice because of the intractability of natural decision problems and the finite computational resources available for making them. The concept of bounded rationality continues to influence (and be debated in) different disciplines, including economics, psychology, law, political science, and cognitive science.

Background and Motivation

Bounded rationality was coined by Herbert A. Simon, where it was proposed as an alternative basis for the mathematical and neoclassical economic modelling of decision-making, as used in economics, political science, and related disciplines. Many economics models assume that agents are on average rational, and can in large quantities be approximated to act according to their preferences in order to maximise utility. With bounded rationality, Simon's goal was "to replace the global rationality of economic man with a kind of rational behavior that is compatible with the access to information and the computational capacities that are actually possessed by organisms, including man, in the kinds of environments in which such organisms exist."

In Models of Man, Simon argues that most people are only partly rational, and are irrational in the remaining part of their actions. In another work, he states "boundedly rational agents experience limits in formulating and solving complex problems and in processing (receiving, storing, retrieving, transmitting) information". Simon used the analogy of a pair of scissors, where one blade represents "cognitive limitations" of actual humans and the other the "structures of the environment", illustrating how minds compensate for limited resources by exploiting known structural regularity in the environment.

Simon describes a number of dimensions along which "classical" models of rationality can be made somewhat more realistic, while remaining within the vein of fairly rigorous formalization. These include:

• limiting the types of utility functions
• recognizing the costs of gathering and processing information
• the possibility of having a "vector" or "multi-valued" utility function

Simon suggests that economic agents use heuristics to make decisions rather than a strict rigid rule of optimization. They do this because of the complexity of the situation. An example of behaviour inhibited by heuristics can be seen when comparing the cognitive strategies utilised in simple situations (e.g Tic-tac-toe), in comparison to strategies utilised in difficult situations (e.g Chess). Both games, as defined by game theory economics, are finite games with perfect information, and therefore equivalent. However, within Chess, mental capacities and abilities are a binding constraint, therefore optimal choices are not a possibility. Thus, in order to test the mental limits of agents, complex problems, such as those within Chess, should be studied to test how individuals work around their cognitive limits, and what behaviours or heuristics are used to form solutions

Model extensions

As decision-makers have to make decisions about how and when to decide, Ariel Rubinstein proposed to model bounded rationality by explicitly specifying decision-making procedures. This puts the study of decision procedures on the research agenda.

Gerd Gigerenzer opines that decision theorists, to some extent, have not adhered to Simon's original ideas. Rather, they have considered how decisions may be crippled by limitations to rationality, or have modeled how people might cope with their inability to optimize. Gigerenzer proposes and shows that simple heuristics often lead to better decisions than theoretically optimal procedures. Moreover, Gigerenzer states, agents react relative to their environment and use their cognitive processes to adapt accordingly.

Huw Dixon later argues that it may not be necessary to analyze in detail the process of reasoning underlying bounded rationality. If we believe that agents will choose an action that gets them "close" to the optimum, then we can use the notion of epsilon-optimization, which means we choose our actions so that the payoff is within epsilon of the optimum. If we define the optimum (best possible) payoff as ${\displaystyle U^{*}}$, then the set of epsilon-optimizing options S(ε) can be defined as all those options s such that:

${\displaystyle U(s)\geq U^{*}-\epsilon }$.

The notion of strict rationality is then a special case (ε=0). The advantage of this approach is that it avoids having to specify in detail the process of reasoning, but rather simply assumes that whatever the process is, it is good enough to get near to the optimum.

From a computational point of view, decision procedures can be encoded in algorithms and heuristics. Edward Tsang argues that the effective rationality of an agent is determined by its computational intelligence. Everything else being equal, an agent that has better algorithms and heuristics could make "more rational" (closer to optimal) decisions than one that has poorer heuristics and algorithms. Tshilidzi Marwala and Evan Hurwitz in their study on bounded rationality observed that advances in technology (e.g. computer processing power because of Moore's law, artificial intelligence, and big data analytics) expand the bounds that define the feasible rationality space. Because of this expansion of the bounds of rationality, machine automated decision making makes markets more efficient.

It is also important to consider that the model of bounded rationality also extends to bounded self-interest, in which humans are sometimes willing to forsake their own self-interests for the benefits of others, something that has not been considered in earlier economic models.

Behavioral Economics

Further information: Behavioral economics

Bounded rationality implies the idea that humans take reasoning shortcuts that may lead to sub-optimal decision-making. Behavioural economists engage in mapping the decision shortcuts that agents use in order to help increase the effectiveness of human decision-making. One treatment of this idea comes from Cass Sunstein and Richard Thaler's Nudge. Sunstein and Thaler recommend that choice architectures are modified in light of human agents' bounded rationality. A widely cited proposal from Sunstein and Thaler urges that healthier food be placed at sight level in order to increase the likelihood that a person will opt for that choice instead of a less healthy option. Some critics of Nudge have argued that modifying choice architectures will lead to people becoming worse decision-makers.

Furthermore, bounded rationality attempts to address assumption points discussed within Neoclassical Economics theory during the 1950s. This theory assumes that the complex problem, the way in which the problem is presented, all alternative choices, and a utility function, are all provided to decision-makers in advance, where this may not be realistic. This was widely used and accepted for a number of decades, however economists realised some disadvantages exist in utilising this theory. This theory did not consider how problems are initially discovered by decision-makers, which could have an impact on the overall decision. Additionally, personal values, the way in which alternatives are discovered and created, and the environment surrounding the decision-making process are also not considered when using this theory. Alternatively, bounded rationality focuses on the cognitive ability of the decision-maker and the factors which may inhibit optimal decision-makingAdditionally, placing a focus on organisations rather than focusing on markets as Neoclassical Economics theory does, bounded rationality is also the basis for many other economics theories (e.g. Organisational theory) as it emphasises that the "...performance and success of an organisation is governed primarily by the psychological limitations of its members..." as stated by John D.W. Morecroft (1981).

In Psychology

The collaborative works of Daniel Kahneman and Amos Tversky expand upon Herbert A. Simon's ideas in the attempt to create a map of bounded rationality. The research attempted to explore the choices made by what was assumed as rational agents compared to the choices made by individuals optimal beliefs and their satisficing behaviour. Kahneman cites that the research contributes mainly to the school of psychology due to imprecision of psychological research to fit the formal economic models, however, the theories are useful to economic theory as a way to expand simple and precise models and cover diverse psychological phenomena. Three major topics covered by the works of Daniel Kahneman and Amos Tversky include Heuristics of judgement, risky choice, and framing effect, which were a culmination of research that fit under what was defined by Herbert A. Simon as the Psychology of Bounded Rationality. In contrast to the work of Simon; Kahneman and Tversky aimed to focus on the effects bounded rationality had on simple tasks which therefore placed more emphasis on errors in cognitive mechanisms irrespective of the situation.^[8]

Influence on social network structure

Recent research has shown that bounded rationality of individuals may influence the topology of the social networks that evolve among them. In particular, Kasthurirathna and Piraveenan have shown that in socio-ecological systems, the drive towards improved rationality on average might be an evolutionary reason for the emergence of scale-free properties. They did this by simulating a number of strategic games on an initially random network with distributed bounded rationality, then re-wiring the network so that the network on average converged towards Nash equilibria, despite the bounded rationality of nodes. They observed that this re-wiring process results in scale-free networks. Since scale-free networks are ubiquitous in social systems, the link between bounded rationality distributions and social structure is an important one in explaining social phenomena.

Conclusion

Bounded rationality challenges the rationality assumptions widely accepted between the 1950s and 1970s which were initially used when considering expected utility maximisation, Bayesian probability judgements, and other market-focused economic calculations. Not only does the concept focus on the ways in which humans subconsciously use satisficing in order to make decisions, but also emphasises that humans infer to a great extent, given the limited information they access prior to decision-making for complex problems. Although this concept realistically delves into decision-making and human cognition, challenging earlier theories which assumed perfect rational cognition and behaviour, bounded rationality can mean something different to everyone, and the way each person satisfices can vary dependant on their environment and the information they have access to.

Free will in theology

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Free_will_in_theology 

Free will in theology is an important part of the debate on free will in general. Religions vary greatly in their response to the standard argument against free will and thus might appeal to any number of responses to the paradox of free will, the claim that omniscience and free will are incompatible.

Overview

Main article: Argument from free will

The theological doctrine of divine foreknowledge is often alleged to be in conflict with free will, particularly in Calvinistic circles: if God knows exactly what will happen (right down to every choice a person makes), it would seem that the "freedom" of these choices is called into question.

This problem relates to Aristotle's analysis of the problem of the sea battle: tomorrow either there will or will not be a sea battle. According to the Law of excluded middle, there seem to be two options. If there will be a sea battle, then it seems that it was true even yesterday that there would be one. Thus it is necessary that the sea battle will occur. If there will not be one, then, by similar reasoning, it is necessary that it will not occur. That means that the future, whatever it is, is completely fixed by past truths: true propositions about the future (a deterministic conclusion is reached: things could not have been any other way).

However, some philosophers follow William of Ockham (c. 1287 – 1347) in holding that necessity and possibility are defined with respect to a given point in time and a given matrix of empirical circumstances, and so something that is merely possible from the perspective of one observer may be necessary from the perspective of an omniscient. Some philosophers follow Philo in holding that free will is a feature of a human's soul, and thus that non-human animals lack free will.

Common defenses

Jewish philosophy stresses that free will is a product of the intrinsic human soul, using the word neshama (from the Hebrew root n.sh.m. or .נ.ש.מ meaning "breath"), but the ability to make a free choice is through Yechida (from Hebrew word "yachid", יחיד, singular), the part of the soul that is united with God, the only being that is not hindered by or dependent on cause and effect (thus, freedom of will does not belong to the realm of the physical reality, and inability of natural philosophy to account for it is expected).

In Islam, the theological issue is not usually how to reconcile free will with God's foreknowledge but with God's jabr or divine commanding power. al-Ash'ari developed an "acquisition" or "dual-agency" form of compatibilism, in which human free will and divine jabr were both asserted, and which became a cornerstone of the dominant Ash'ari position. In Shia Islam, Ash'aris understanding of a higher balance toward predestination is challenged by most theologists. Free will, according to Islamic doctrine is the main factor for man's accountability in his/her actions throughout life. All actions committed by man's free will are said to be counted on the Day of Judgement because they are his/her own and not God's.

The philosopher Søren Kierkegaard claimed that divine omnipotence cannot be separated from divine goodness. As a truly omnipotent and good being, God could create beings with true freedom over God. Furthermore, God would voluntarily do so because "the greatest good... which can be done for a being, greater than anything else that one can do for it, is to be truly free." Alvin Plantinga's free-will defense is a contemporary expansion of this theme, adding how God, free will, and evil are consistent.

Christianity

See also: Free will in antiquity § Christianity

In the Bible

The biblical ground for free will lies in the fall into sin by Adam and Eve that occurred in their "willfully chosen" disobedience to God.

"Freedom" and "free will" can be treated as one because the two terms are commonly used as synonyms. However, there are widespread disagreements in definitions of the two terms. Because of these disagreements, Mortimer Adler found that a delineation of three kinds of freedom is necessary for clarity on the subject, as follows:

(1) Circumstantial freedom is "freedom from coercion or restraint" that prevents acting as one wills.

• In the Bible, circumstantial freedom was given to the Israelites in The Exodus from slavery in Egypt.

(2) Natural freedom (a.k.a. volitional freedom) is freedom to determine one's own "decisions or plans." Natural freedom is inherent in all people, in all circumstances, and "without regard to any state of mind or character which they may or may not acquire in the course of their lives."

• The Bible, paralleling Adler, views all humanity as naturally possessing the "free choice of the will." If "free will" is taken to mean unconstrained and voluntary choice, the Bible assumes that all people, unregenerate and regenerate, possess it. For examples, "free will" is taught in Matthew 23:37 and Revelation 22:17.

(3) Acquired freedom is freedom "to live as [one] ought to live," a freedom that requires a transformation whereby a person acquires a righteous, holy, healthy, etc. "state of mind or character."

• The Bible testifies to the need for acquired freedom because no one "is free for obedience and faith till he is freed from sin's dominion." People possess natural freedom but their "voluntary choices" serve sin until they acquire freedom from "sin's dominion." The New Bible Dictionary denotes this acquired freedom for "obedience and faith" as "free will" in a theological sense. Therefore, in biblical thinking, an acquired freedom from being "enslaved to sin" is needed "to live up to Jesus' commandments to love God and love neighbor."
• Jesus told his hearers that they needed to be made "free indeed" (John 8:36). "Free indeed [ontós]" means "truly free" or "really free," as it is in some translations. Being made "free indeed" means freedom from "bondage to sin." This acquired freedom is "freedom to serve the Lord." Being "free indeed" (i.e., true freedom) comes by "God's changing our nature" to free us from being "slaves to sin." and endowing us with "the freedom to choose to be righteous."

Mark R. Talbot, a "classical Christian theist," views this acquired "compatibilist freedom" as the freedom that "Scripture portrays as worth having."

Open theism denies that classical theism's compatibilist "freedom to choose to be righteous without the possibility of choosing otherwise." qualifies as true freedom. For open theism, true libertarian freedom is incompatibilist freedom. Regardless of factors, a person has the freedom to choose the opposite alternatives. In open theist William Hasker's words, regarding any action it is always "within the agent's power to perform the action and also in the agent's power to refrain from the action." Although open theism generally contradicts classical theism's "freedom to choose to be righteous without the possibility of choosing otherwise," Hasker allows that Jesus possessed and humans in heaven will possess such freedom. Regarding Jesus, Hasker views Jesus as "a free agent," but he also thinks that "it was not really possible" that Jesus would "abort the mission." Regarding heaven, Hasker foresees that as the result of our choice we will be "unable to sin" because all sinful impulses will be gone.

Roman Catholic

Theologians of the Roman Catholic Church universally embrace the idea of free will, but generally do not view free will as existing apart from or in contradiction to grace. According to the Roman Catholic Church "To God, all moments of time are present in their immediacy. When therefore he establishes his eternal plan of "predestination", he includes in it each person's free response to his grace." The Council of Trent declared that "the free will of man, moved and excited by God, can by its consent co-operate with God, Who excites and invites its action; and that it can thereby dispose and prepare itself to obtain the grace of justification. The will can resist grace if it chooses. It is not like a lifeless thing, which remains purely passive. Weakened and diminished by Adam's fall, free will is yet not destroyed in the race (Sess. VI, cap. i and v)."

St. Augustine and St. Thomas Aquinas wrote extensively on free will, with Augustine focusing on the importance of free will in his responses to the Manichaeans, and also on the limitations of a concept of unlimited free will as denial of grace, in his refutations of Pelagius.

The Catechism of the Roman Catholic Church asserts that "Freedom is the power, rooted in reason and will". It goes on to say that "God created man a rational being, conferring on him the dignity of a person who can initiate and control his own actions. God willed that man should be 'left in the hand of his own counsel,' so that he might of his own accord seek his Creator and freely attain his full and blessed perfection by cleaving to him."" The section concludes with the role that grace plays, "By the working of grace the Holy Spirit educates us in spiritual freedom in order to make us free collaborators in his work in the Church and in the world."

Reformed Latin Christianity's views on free will and grace are often contrasted with predestination in Reformed Protestant Christianity, especially after the Counter-Reformation, but in understanding differing conceptions of free will it is just as important to understand the differing conceptions of the nature of God, focusing on the idea that God can be all-powerful and all-knowing even while people continue to exercise free will, because God transcends time.

The papal encyclical on human freedom, Libertas Praestantissimum by Pope Leo XIII (1888), seems to leave the question unresolved as to the relation between free will and determinism: whether the correct notion is the compatibilist one or the libertarian one. The quotations supporting compatibilism include the one from St. Thomas (footnote 4) near the end of paragraph 6, regarding the cause of evil ("Whereas, when he sins, he acts in opposition to reason, is moved by another, and is the victim of foreign misapprehensions"), and a similar passus suggesting a natural, cause-and-effect function of human will ("harmony with his natural inclinations", "Creator of will", "by whom all things are moved in conformity with their nature") near the end of paragraph 8 (when considering the problem of how grace can have effects on free will). On the other hand, metaphysical libertarianism – at least as a sort of possibility of reversing the direction of one's acting – is suggested by the reference to the well-known philosophical term metaphysical freedom at the beginning of paragraph 3 and, to an extent, a contrasting comparison of animals, which always act "of necessity", with human liberty, by means of which one can "either act or not act, do this or do that".

Critique that seems more or less to support popular incompatibilistic views can be found in some papal documents especially in the 20th century, no explicit condemnation, however, of causal determinism in its most generic form can be found there. More often these documents focus on condemnation of physicalism/materialism and the stressing of significance of belief in soul, as a non-physical indivisible substance equipped with intellect and will, which decides human proceeding in a (perhaps imprecise) way.

Orthodox Christianity

Oriental Orthodox

The concept of free will is also of vital importance in the Oriental (or non-Chalcedonian) Churches, those in communion with the Coptic Orthodox Church of Alexandria. As in Judaism, free will is regarded as axiomatic. Everyone is regarded as having a free choice as to in what measure he or she will follow his or her conscience or arrogance, these two having been appointed for each individual. The more one follows one's conscience, the more it brings one good results, and the more one follows one's arrogance, the more it brings one bad results. Following only one's arrogance is sometimes likened to the dangers of falling into a pit while walking in pitch darkness, without the light of conscience to illuminate the path. Very similar doctrines have also found written expression in the Dead Sea Scrolls "Manual of Discipline", and in some religious texts possessed by the Beta Israel Jews of Ethiopia.

Eastern Orthodox

The Eastern (or Chalcedonian) Orthodox Church espouses a belief different from the Lutheran, Calvinist, and Arminian Protestant views. The difference is in the interpretation of original sin, alternatively known as "ancestral sin," where the Orthodox do not believe in total depravity. The Orthodox reject the Pelagian view that the original sin did not damage human nature; they accept that the human nature is depraved, but despite man's fallenness the divine image he bears has not been destroyed.

The Orthodox Church holds to the teaching of synergy (συνεργός, meaning working together), which says that man has the freedom to, and must if he wants to be saved, choose to accept and work with the grace of God. St. John Cassian, a 4th-century Church Father and pupil of St. John Chrysostom, articulated this view and all the Eastern Fathers embraced it. He taught that "Divine grace is necessary to enable a sinner to return unto God and live, yet man must first, of himself, desire and attempt to choose and obey God", and that "Divine grace is indispensable for salvation, but it does not necessarily need to precede a free human choice, because, despite the weakness of human volition, the will can take the initiative toward God."

Some Orthodox Christians use the parable of a drowning man to plainly illustrate the teaching of synergy: God from the ship throws a rope to a drowning man, pulls him up, saving him, and the man, if he wants to be saved, must hold on tightly to the rope; explaining both that salvation is a gift from God and man cannot save himself, and that man must co-work (syn-ergo) with God in the process of salvation.

Fyodor Dostoevsky, the Russian Orthodox Christian novelist, suggested many arguments for and against free will. Famous arguments are found in "The Grand Inquisitor" chapter in The Brothers Karamazov, and in his work Notes from Underground. He also developed an argument that suicide, if irrational, is actually a validation of free will (see Kirilov in the Demons) novel. As for the argument presented in The Brothers Karamazov's section "The Rebellion" that the suffering of innocents was not worth the price of free will, Dostoevsky appears to propose the idea of apocatastasis (or universal reconciliation) as one possible rational solution.

Roman Catholic teaching

Illustrating as it does that the human part in salvation (represented by holding on to the rope) must be preceded and accompanied by grace (represented by the casting and drawing of the rope), the image of the drowning man holding on to the rope cast and drawn by his rescuer corresponds closely to Roman Catholic teaching, which holds that God, who "destined us in love to be his sons" and "to be conformed to the image of his Son", includes in his eternal plan of "predestination" each person's free response to his grace.

The Roman Catholic Church holds to the teaching that "by free will, (the human person) is capable of directing himself toward his true good … man is endowed with freedom, an outstanding manifestation of the divine image'." Man has free will either to accept or reject the grace of God, so that for salvation "there is a kind of interplay, or synergy, between human freedom and divine grace". "Justification establishes cooperation between God's grace and man's freedom. On man's part it is expressed by the assent of faith to the Word of God, which invites him to conversion, and in the cooperation of charity with the prompting of the Holy Spirit who precedes and preserves his assent: 'When God touches man's heart through the illumination of the Holy Spirit, man himself is not inactive while receiving that inspiration, since he could reject it; and yet, without God's grace, he cannot by his own free will move himself toward justice in God's sight' (Council of Trent)."

God has freely chosen to associate man with the work of his grace. the fatherly action of God is first on his own initiative, and then follows man's free acting through his collaboration. For Roman Catholics, therefore, human cooperation with grace is essential. When God establishes his eternal plan of 'predestination', he includes in it each person's free response to his grace, whether it is positive or negative: "In this city, in fact, both Herod and Pontius Pilate, with the Gentiles and the peoples of Israel, gathered together against your holy servant Jesus, whom you anointed, to do whatever your hand and your plan had predestined to take place" (Acts 4:27–28).

The initiative comes from God, but it demands a free response from man: "God has freely chosen to associate man with the work of his grace. the fatherly action of God is first on his own initiative, and then follows man's free acting through his collaboration". "Since the initiative belongs to God in the order of grace, no one can merit the initial grace of forgiveness and justification, at the beginning of conversion. Moved by the Holy Spirit and by charity, we can then merit for ourselves and for others the graces needed for our sanctification, for the increase of grace and charity, and for the attainment of eternal life."

Orthodox criticism of Roman Catholic theology

Orthodox theologian Vladimir Lossky has stated that the teaching of John Cassian, who in the East is considered a witness to Tradition, but who "was unable to make himself correctly understood", "was interpreted, on the rational plane, as a semi-pelagianism, and was condemned in the West". Where the Roman Catholic Church defends the concept of faith and free will these are questioned in the East by the conclusions of the Second Council of Orange. This council is not accepted by the Eastern churches and the Roman Catholic Church's use of describing their position and St Cassian as Semi-Pelagian is also rejected.

Although the Roman Catholic Church explicitly teaches that "original sin does not have the character of a personal fault in any of Adam's descendants", some Eastern Orthodox nevertheless claim that Roman Catholicism professes the teaching, which they attribute to Saint Augustine, that everyone bears not only the consequence, but also the guilt of Adam's sin.

Differences of view between Roman Catholic and Orthodox Churches

Various Roman Catholic theologians identify Cassian as a teacher of the semipelagian heresy which was condemned by the Council of Orange. While the Orthodox do not apply the term semipelagian to their theology, they criticize the Roman Catholics for rejecting Cassian whom they accept as fully orthodox, and for holding that human consent to God's justifying action is itself an effect of grace, a position shared by Eastern Orthodox theologian Georges Florovsky, who says that the Eastern Orthodox Church "always understood that God initiates, accompanies, and completes everything in the process of salvation", rejecting instead the Calvinist idea of irresistible grace.

Recently, some Roman Catholic theologians have argued that Cassian's writings should not be considered semipelagian. And scholars of other denominations too have concluded that Cassian's thought "is not Semi-Pelagian", and that he instead taught that "salvation is, from beginning to end, the effect of God's grace" and held that "God's grace, not human free will, is responsible for 'everything which pertains to salvation' - even faith."

The Orthodox Church holds to the teaching of synergy (συνεργός, meaning working together), which says that man has the freedom to, and must if he wants to be saved, choose to accept and work with the grace of God. Once baptised the experience of his salvation and relationship with God is called theosis. Mankind has free will to accept or reject the grace of God. Rejection of the gifts of God is called blasphemy of the Holy Spirit (gifts of grace, faith, life). The first who defined this teaching was John Cassian, 4th-century Church Father, and a pupil of John Chrysostom, and all Eastern Fathers accept it. He taught that "Divine grace is necessary to enable a sinner to return unto God and live, yet man must first, of himself, desire and attempt to choose and obey God", and that "Divine grace is indispensable for salvation, but it does not necessarily need to precede a free human choice, because, despite the weakness of human volition, the will can take the initiative toward God.".

Some Orthodox use an example of a drowning man to illustrate the teaching of synergy: God from the ship throws a rope to a drowning man, the man may take the rope if he wants to be saved, but he may decide not to take the rope and perish by his own will. Explaining both that salvation is a gift from God and man cannot save himself. That man must co-work (syn-ergo) with God in the process of salvation.

Protestant

Classical Arminianism and Wesleyan Arminianism

Main articles: History of Calvinist–Arminian debate and Wesleyan-Arminian theology

 

Part of a series on
Methodism
John Wesley

Christians who were influenced by the teachings of Jacobus Arminius (such as Methodists) believe that while God is all-knowing and always knows what choices each person will make, he still gives them the ability to choose or not choose everything, regardless of whether there are any internal or external factors contributing to that choice.

Like John Calvin, Arminius affirmed total depravity, but Arminius believed that only prevenient grace allowed people to choose salvation:

Concerning grace and free will, this is what I teach according to the Scriptures and orthodox consent: Free will is unable to begin or to perfect any true and spiritual good, without grace.... This grace [prœvenit] goes before, accompanies, and follows; it excites, assists, operates that we will, and co operates lest we will in vain.

Prevenient grace is divine grace which precedes human decision. It exists prior to and without reference to anything humans may have done. As humans are corrupted by the effects of sin, prevenient grace allows persons to engage their God-given free will to choose the salvation offered by God in Jesus Christ or to reject that salvific offer. Methodist theology thus teaches:

Our Lord Jesus Christ did so die for all men as to make salvation attainable by every man that cometh into the world. If men are not saved that fault is entirely their own, lying solely in their own unwillingness to obtain the salvation offered to them. (John 1:9; I Thess. 5:9; Titus 2:11-12).

Thomas Jay Oord offers perhaps the most cogent free will theology presupposing prevenient grace. What he calls "essential kenosis" says God acts preveniently to give freedom/agency to all creatures. This gift comes from God's eternal essence, and is therefore necessary. God remains free in choosing how to love, but the fact that God loves and therefore gives freedom/agency to others is a necessary part of what it means to be divine.

This view is backed in the Bible with verses such as Luke 13:34, NKJV

O Jerusalem, Jerusalem, the one who kills the prophets and stones those who are sent to her! How often I wanted to gather your children together, as a hen gathers her brood under her wings, but you were not willing!"

Here we see Jesus lamenting that He is unable to save Jerusalem as they are not willing. We see that whilst Jesus wants to save Jerusalem He respects their choice to continue on in sin despite His will that they be saved.

Lutheranism

Main article: Lutheranism

 

A.C. Article 18: Of Free Will

Lutherans adhere to divine monergism, the teaching that salvation is by God's act alone, and therefore reject the idea that humans in their fallen state have a free will concerning spiritual matters. Lutherans believe that although humans have free will concerning civil righteousness, they cannot work spiritual righteousness without the Holy Spirit, since righteousness in the heart cannot be wrought in the absence of the Holy Spirit. In other words, humanity is free to choose and act in every regard except for the choice of salvation.

Lutherans also teach that sinners, while capable of doing works that are outwardly "good," are not capable of doing works that satisfy God's justice. Every human thought and deed is infected with sin and sinful motives. For Luther himself, in his Bondage of the Will, people are by nature endowed with free-will/free choice in regard to "goods and possessions" with which a person "has the right of using, acting, and omitting according to his Free-will." However, in "God-ward" things pertaining to "salvation or damnation" people are in bondage "either to the will of God, or to the will of Satan."

As found in Paul Althaus' study of Luther's theology, sin's infection of every human thought and deed began with Adam's fall into sin, the Original Sin. Adam's fall was a "terrible example" of what "free will" will do unless God constantly motivates it to virtuous behavior. Humanity inherits Adam's sin. Thus, in our "natural condition," we have an inborn desire to sin because that is the person we are by birth. As Luther noted, "Adam sinned willingly and freely and from him a will to sin has been born into us so that we cannot sin innocently but only voluntarily."

The controversial term liberum arbitrium was translated "free-will" by Henry Cole and "free will" remains in general use. However, the Rupp/Watson study of Luther and Erasmus chose "free choice" as the translation and provided a rationale. Luther used "free choice" (or "free-will") to denote the fact that humans act "spontaneously" and with "a desirous willingness." He also allowed "Free-will" as that "power" by which humans "can be caught by the Spirit" of God. However, he deplored the use of the term "Free-will" because it is too "grand, copious, and full." Therefore, Luther held that the inborn faculty of "willingness" should be "called by some other term."

Although our wills are a function of and are in bondage to our inherited sinful desires, Luther insisted that we sin "voluntarily." Voluntarily means that we sin of our own free will. We will to do what we desire. As long as we desire sin, our wills are only free for sin. This is Luther's "bondage of the will" to sin. The sinner's "will is bound, but it is and remains his will. He repeatedly and voluntarily acts according to it." So it is, to be set free from sin and for righteousness requires a "rebirth through faith." A rebirth of faith gives "true freedom from sin," which is, wrote Luther, "a liberty [freedom] to do good."

To use a biblical word important to Luther, to be set free from sin and for righteousness requires a metanoia. Luther used Jesus' image of the good and bad trees to depict the necessity of changing the person to change what a person wills and does. In Jesus' image, "a good tree cannot bear bad fruit, and a bad tree cannot bear good fruit" (Matthew 7:18). Like the bad tree that can only produce bad fruit, before a rebirth through faith, people are in bondage to the sinful desires of their hearts. They can only will to do sin, albeit "spontaneously and with a desirous willingness." Given his view of the human condition, Luther concluded that, without a rebirth, the "free choice" that all humans possess is "not free at all" because it cannot of itself free itself from its inherent bondage to sin.

Thus, Luther distinguished between different kinds of freedom: (a) by nature, a freedom to act as we will and (b) by rebirth through faith, a freedom to act righteously.

God and creation

Orthodox Lutheran theology holds that God made the world, including humanity, perfect, holy and sinless. However, Adam and Eve chose to disobey God, trusting in their own strength, knowledge, and wisdom. Consequently, people are saddled with original sin, born sinful and unable to avoid committing sinful acts. For Lutherans, original sin is the "chief sin, a root and fountainhead of all actual sins."

According to Lutherans, God preserves his creation, in doing so cooperates with everything that happens, and guides the universe. While God cooperates with both good and evil deeds, with evil deeds he does so only inasmuch as they are deeds, but not with the evil in them. God concurs with an act's effect, but he does not cooperate in the corruption of an act or the evil of its effect. Lutherans believe everything exists for the sake of the Christian Church, and that God guides everything for its welfare and growth.

Predestination

Lutherans believe that the elect are predestined to salvation. Lutherans believe Christians should be assured that they are among the predestined. Lutherans believe that all who trust in Jesus alone can be certain of their salvation, for it is in Christ's work and his promises in which their certainty lies. According to Lutheranism, the central final hope of the Christian is "the resurrection of the body and the life everlasting" as confessed in the Apostles' Creed rather than predestination. Conversion or regeneration in the strict sense of the term is the work of divine grace and power by which man, born of the flesh, and void of all power to think, to will, or to do any good thing, and dead in sin is, through the gospel and holy baptism, taken from a state of sin and spiritual death under God's wrath into a state of spiritual life of faith and grace, rendered able to will and to do what is spiritually good and, especially, led to accept the benefits of the redemption which is in Christ Jesus.

Lutherans disagree with those that make predestination the source of salvation rather than Christ's suffering, death, and resurrection. Lutherans reject the Calvinist doctrine of the perseverance of the saints. Like both Calvinist camps, Lutherans view the work of salvation as monergistic in that "the natural [that is, corrupted and divinely unrenewed] powers of man cannot do anything or help towards salvation" (Formula of Concord: Solid Declaration, art. ii, par. 71), and Lutherans go further along the same lines as the Free Grace advocates to say that the recipient of saving grace need not cooperate with it. Hence, Lutherans believe that a true Christian (that is, a genuine recipient of saving grace) can lose his or her salvation, "[b]ut the cause is not as though God were unwilling to grant grace for perseverance to those in whom He has begun the good work... [but that these persons] wilfully turn away..." (Formula of Concord: Solid Declaration, art. xi, par. 42). Unlike Calvinists, Lutherans do not believe in a predestination to damnation. Instead, Lutherans teach eternal damnation is a result of the unbeliever's sins, rejection of the forgiveness of sins, and unbelief.

Anabaptism

The Anabaptist movement was characterized by the fundamental belief in the free will of man. Many earlier movements such as Waldensians and others likewise held this viewpoint. Denominations today representing this view include Old Order Mennonites, Amish, Conservative Mennonites and Ukrainian Baptists.

Calvinism

Main article: Calvinism

John Calvin ascribed "free will" to all people in the sense that they act "voluntarily, and not by compulsion." He elaborated his position by allowing "that man has choice and that it is self-determined" and that his actions stem from "his own voluntary choosing."

The free will that Calvin ascribed to all people is what Mortimer Adler calls the "natural freedom" of the will. This freedom to will what one desires is inherent in all people.

Calvin held this kind of inherent/natural free will in disesteem because unless people acquire the freedom to live as they ought by being transformed, they will desire and voluntarily choose to sin. "Man is said to have free will," wrote Calvin, "because he acts voluntarily, and not by compulsion. This is perfectly true: but why should so small a matter have been dignified with so proud a title?" The glitch in this inherent/natural freedom of the will is that although all people have the "faculty of willing," by nature they are unavoidably (and yet voluntarily without compulsion) under "the bondage of sin."

The kind of free will that Calvin esteems is what Adler calls "acquired freedom" of the will, the freedom/ability "to live as [one] ought." To possess acquired free will requires a change by which a person acquires a desire to live a life marked by virtuous qualities. As Calvin describes the change required for acquired freedom, the will "must be wholly transformed and renovated."

Calvin depicts this transformation as "a new heart and a new spirit (Ezek. 18:31)." It sets one free from "bondage to sin" and enables "piety towards God, and love towards men, general holiness and purity of life."

Calvinist Protestants embrace the idea of predestination, namely, that God chose who would be saved and who would be not saved prior to the creation. They quote Ephesians 1:4 "For he chose us in him before the creation of the world to be holy and blameless in his sight" and also 2:8 "For it is by grace you are saved, through faith, and this not of yourselves, it is the gift of God." One of the strongest defenders of this theological point of view was the American Puritan preacher and theologian Jonathan Edwards.

Edwards believed that indeterminism was incompatible with individual dependence on God and hence with his sovereignty. He reasoned that if individuals' responses to God's grace are contra-causally free, then their salvation depends partly on them and therefore God's sovereignty is not "absolute and universal." Edwards' book Freedom of the Will defends theological determinism. In this book, Edwards attempts to show that libertarianism is incoherent. For example, he argues that by 'self-determination' the libertarian must mean either that one's actions including one's acts of willing are preceded by an act of free will or that one's acts of will lack sufficient causes. The first leads to an infinite regress while the second implies that acts of will happen accidentally and hence can't make someone "better or worse, any more than a tree is better than other trees because it oftener happens to be lit upon by a swan or nightingale; or a rock more vicious than other rocks, because rattlesnakes have happened oftener to crawl over it."

It should not be thought that this view completely denies freedom of choice, however. It claims that man is free to act on his strongest moral impulse and volition, which is externally determined, but is not free to act contrary to them, or to alter them. Proponents, such as John L. Girardeau, have indicated their belief that moral neutrality is impossible; that even if it were possible, and one were equally inclined to contrary options, one could make no choice at all; that if one is inclined, however slightly, toward one option, then that person will necessarily choose that one over any others.

Some non-Calvinist Christians attempt a reconciliation of the dual concepts of predestination and free will by pointing to the situation of God as Christ. In taking the form of a man, a necessary element of this process was that Jesus Christ lived the existence of a mortal. When Jesus was born he was not born with the omniscient power of God the Creator, but with the mind of a human child - yet he was still God in essence. The precedent this creates is that God is able to will the abandonment of His knowledge, or ignore knowledge, while remaining fully God. Thus it is not inconceivable that although omniscience demands that God knows what the future holds for individuals, it is within his power to deny this knowledge in order to preserve individual free will. Other theologians argue that the Calvinist-Edwardsean view suggests that if all human volitions are predetermined by God, then all actions dictated by fallen will of man necessarily satisfy His sovereign decree. Hence, it is impossible to act outside of God's perfect will, a conclusion some non-Calvinists claim poses a serious problem for ethics and moral theology.

An early proposal toward such a reconciliation states that God is, in fact, not aware of future events, but rather, being eternal, He is outside time, and sees the past, present, and future as one whole creation. Consequently, it is not as though God would know "in advance" that Jeffrey Dahmer would become guilty of homicide years prior to the event as an example, but that He was aware of it from all eternity, viewing all time as a single present. This was the view offered by Boethius in Book V of The Consolation of Philosophy.

Calvinist theologian Loraine Boettner argued that the doctrine of divine foreknowledge does not escape the alleged problems of divine foreordination. He wrote that "what God foreknows must, in the very nature of the case, be as fixed and certain as what is foreordained; and if one is inconsistent with the free agency of man, the other is also. Foreordination renders the events certain, while foreknowledge presupposes that they are certain." Some Christian theologians, feeling the bite of this argument, have opted to limit the doctrine of foreknowledge if not do away with it altogether, thus forming a new school of thought, similar to Socinianism and process theology, called open theism.

Comparison of Protestants

This table summarizes three classical Protestant beliefs about free will.

John Calvin	Martin Luther	Jacob Arminius
For Calvin, humanity possesses "free will," but it is in bondage to sin, unless it is "transformed."	For Luther, humanity possesses free-will/free choice in regard to "goods and possessions," but regarding "salvation or damnation" people are in bondage either to God or Satan."	For Arminius, humanity possesses freedom from necessity, but not "freedom from sin" unless enabled by "prevenient grace."

Latter Day Saints

Main article: Agency in Mormonism

Latter Day Saints believe that God has given all humans the gift of moral agency. Moral agency includes free will and agency. Proper exercise of unfettered choice leads to the ultimate goal of returning to God's presence. Having the choice to do right or wrong was important, because God wants a society of a certain type—those that comply with eternal laws. Before this Earth was created, this dispute over agency rose to the level that there was a "war in heaven." Lucifer (who favored no agency) and his followers were cast out of heaven for rebelling against God's will. Many Mormon leaders have also taught that the battle in Heaven over agency is now being carried out on earth, where dictators, influenced by Satan, fight against freedom (or free agency) in governments contrary to the will of God.

Mormons also believe in a limited form of foreordination — not in deterministic, unalterable decrees, but rather in callings from God for individuals to perform specific missions in mortality. Those who are foreordained can reject the foreordination, either outright or by transgressing the laws of God and becoming unworthy to fulfill the call.

New Church

The New Church, or Swedenborgianism, teaches that every person has complete freedom to choose heaven or hell. Emanuel Swedenborg, upon whose writings the New Church is founded, argued that if God is love itself, people must have free will. If God is love itself, then He desires no harm to come to anyone: and so it is impossible that he would predestine anyone to hell. On the other hand, if God is love itself, then He must love things outside of Himself; and if people do not have the freedom to choose evil, they are simply extensions of God, and He cannot love them as something outside of Himself. In addition, Swedenborg argues that if a person does not have free will to choose goodness and faith, then all of the commandments in the Bible to love God and the neighbor are worthless, since no one can choose to do them - and it is impossible that a God who is love itself and wisdom itself would give impossible commandments.

Hinduism

See also: Free will § Hindu philosophy

As Hinduism is primarily a conglomerate of different religious traditions, there is no one accepted view on the concept of free will. Within the predominant schools of Hindu philosophy there are two main opinions. The Advaita (monistic) schools generally believe in a fate-based approach, and the Dvaita (dualistic) schools are proponents for the theory of free will. The different schools' understandings are based upon their conceptions of the nature of the supreme Being (see Brahman, Paramatma and Ishvara) and how the individual Self (atma or jiva) dictates, or is dictated by karma within the illusory existence of maya.

In both Dvaita and Advaita schools, and also in the many other traditions within Hinduism, there is a strong belief in destiny and that both the past and future are known, or viewable, by certain saints or mystics as well as by the supreme being (Ishvara) in traditions where Ishvara is worshipped as an all-knowing being. In the Bhagavad Gita, the Avatar, Krishna says to Arjuna:

• I know everything that has happened in the past, all that is happening in the present, and all things that are yet to come.

However, this belief in destiny is not necessarily believed to rule out the existence of free will, as in some cases both free will and destiny are believed to exist simultaneously.

The Bhagavad Gita also states:

Nor does the Supreme Lord assume anyone's sinful or pious activities (Bhagavad Gita 5.15)

From wherever the mind wanders due to its flickering and unsteady nature, one must certainly withdraw it and bring it back under the control of the self (Bhagavad Gita 6.26), indicating that God does not control anyone's will, and that it is possible to control the mind.

Different approaches

The six orthodox (astika) schools of thought in Hindu philosophy give differing opinions: In the Samkhya, for instance, matter is without any freedom, and Self lacks any ability to control the unfolding of matter. The only real freedom (kaivalya) consists in realizing the ultimate separateness of matter and self. For the Yoga school, only Ishvara is truly free, and its freedom is also distinct from all feelings, thoughts, actions, or wills, and is thus not at all a freedom of will. The metaphysics of the Nyaya and Vaisheshika schools strongly suggest a belief in determinism, but do not seem to make explicit claims about determinism or free will.

A quotation from Swami Vivekananda, a Vedantist, offers a good example of the worry about free will in the Hindu tradition.

Therefore, we see at once that there cannot be any such thing as free-will; the very words are a contradiction, because will is what we know, and everything that we know is within our universe, and everything within our universe is moulded by conditions of time, space and causality. ... To acquire freedom we have to get beyond the limitations of this universe; it cannot be found here.

However, Vivekananda's above quote can't be taken as a literal refutation of all free will, as Vivekanda's teacher, Ramakrishna Paramahansa used to teach that man is like a goat tied to a stake - the karmic debts and human nature bind him and the amount of free will he has is analogous to the amount of freedom the rope allows; as one progresses spiritually, the rope becomes longer.

On the other hand, Mimamsa, Vedanta, and the more theistic versions of Hinduism such as Shaivism and Vaishnavism have often emphasized the importance of free will. For example, in the Bhagavad Gita the living beings (jivas) are described as being of a higher nature who have the freedom to exploit the inferior material nature (prakrti):

Besides these, O mighty-armed Arjuna, there is another, superior energy of Mine, which comprises the living entities who are exploiting the resources of this material, inferior nature

The doctrine of Karma in Hinduism requires both that we pay for our actions in the past, and that our actions in the present be free enough to allow us to deserve the future reward or punishment that we will receive for our present actions. The Advaitin philosopher Chandrashekhara Bharati Swaminah puts it this way:

Fate is past karma, free-will is present karma. Both are really one, that is, karma, though they may differ in the matter of time. There can be no conflict when they are really one. Fate, as I told you, is the resultant of the past exercise of your free-will. By exercising your free-will in the past, you brought on the resultant fate. By exercising your free-will in the present, I want you to wipe out your past record if it hurts you, or to add to it if you find it enjoyable. In any case, whether for acquiring more happiness or for reducing misery, you have to exercise your free-will in the present.

Islam

See also: Predestination in Islam

Disputes about free will in Islam began with the Mu'tazili vs Hanbali disputes, with the Mu'tazili arguing that humans had qadar, the capacity to do right or wrong, and thus deserved the reward or punishment they received, whereas Hanbali insisted on God's jabr, or total power and initiative in managing all events. Schools that developed around earlier thinkers such as Abu Hanifa and al-Ash'ari searched for ways to explain how both human qadar and divine jabr could be asserted at the same time. Ash'ari develops a "dual agency" or "acquisition" account of free will in which every human action has two distinct agents. God creates the possibility of a human action with his divine jabr, but then the human follows through and "acquires" the act, making it theirs and taking responsibility for it using their human qadar.

Judaism

See also: Free will in antiquity § Ancient Judaism

The belief in free will (Hebrew: bechirah chofshit בחירה חפשית, bechirah בחירה) is axiomatic in Jewish thought, and is closely linked with the concept of reward and punishment, based on the Torah itself: "I [God] have set before you life and death, blessing and curse: therefore choose life" (Deuteronomy 30:19).

Free will is therefore discussed at length in Jewish philosophy, firstly as regards God's purpose in creation, and secondly as regards the closely related, resultant, paradox. The topic is also often discussed in connection with Negative theology, Divine simplicity and Divine Providence, as well as Jewish principles of faith in general.

Free will and creation

According to the Mishnah, "This world is like a vestibule before the World to Come". According to an 18th century rabbinic work, "Man was created for the sole purpose of rejoicing in God, and deriving pleasure from the splendor of His Presence… The place where this joy may truly be derived is the World to Come, which was expressly created to provide for it; but the path to the object of our desires is this world..." Free will is thus required by God's justice, "otherwise, Man would not be given or denied good for actions over which he had no control".

It is further understood that in order for Man to have true free choice, he must not only have inner free will, but also an environment in which a choice between obedience and disobedience exists. God thus created the world such that both good and evil can operate freely, this is the meaning of the rabbinic maxim, "All is in the hands of Heaven except the fear of Heaven".

According to Maimonides,

Free will is granted to every man. If he desires to incline towards the good way and be righteous, he has the power to do so; and if he desires to incline towards the unrighteous way and be a wicked man, he also has the power to do so. Give no place in your minds to that which is asserted by many of the ignorant: namely that the Holy One, blessed be He, decrees that a man from his birth should be either righteous or wicked. Since the power of doing good or evil is in our own hands, and since all the wicked deeds which we have committed have been committed with our full consciousness, it befits us to turn in penitence and to forsake our evil deed.

The paradox of free will

In rabbinic literature, there is much discussion as to the apparent contradiction between God's omniscience and free will. The representative view is that "Everything is foreseen; yet free will is given" (Pirkei Avot 3:15). Based on this understanding, the problem is formally described as a paradox, beyond our understanding.

The Holy One, Blessed Be He, knows everything that will happen before it has happened. So does He know whether a particular person will be righteous or wicked, or not? If He does know, then it will be impossible for that person not to be righteous. If He knows that he will be righteous but that it is possible for him to be wicked, then He does not know everything that He has created. ...[T]he Holy One, Blessed Be He, does not have any temperaments and is outside such realms, unlike people, whose selves and temperaments are two separate things. God and His temperaments are one, and God's existence is beyond the comprehension of Man… [Thus] we do not have the capabilities to comprehend how the Holy One, Blessed Be He, knows all creations and events. [Nevertheless] know without doubt that people do what they want without the Holy One, Blessed Be He, forcing or decreeing upon them to do so... It has been said because of this that a man is judged according to all his actions.

The paradox is explained, but not resolved, by observing that God exists outside of time, and therefore, his knowledge of the future is exactly the same as his knowledge of the past and present. Just as his knowledge of the past does not interfere with man's free will, neither does his knowledge of the future. This distinction, between foreknowledge and predestination, is in fact discussed by Abraham ibn Daud.

One analogy here is that of time travel. The time traveller, having returned from the future, knows in advance what x will do, but while he knows what x will do, that knowledge does not cause x to do so: x had free will, even while the time traveller had foreknowledge. One objection raised against this analogy – and ibn Daud's distinction – is that if x truly has free will, he may choose to act otherwise when the event in question comes to pass, and therefore the time traveller (or God) merely has knowledge of a possible event: even having seen the event, there is no way to know with certainty what x will do; see the view of Gersonides below. Further, the presence of the time traveller, may have had some chaotic effect on x's circumstances and choice, absent when the event comes to pass in the present.)

Alternate approaches

Although the above discussion of the paradox represents the majority rabbinic view, there are several major thinkers who resolve the issue by explicitly excluding human action from divine foreknowledge.

Both Saadia Gaon and Judah ha-Levi hold that "the decisions of man precede God's knowledge". Gersonides holds that God knows, beforehand, the choices open to each individual, but does not know which choice the individual, in his freedom, will make. Isaiah Horowitz takes the view that God cannot know which moral choices people will make, but that, nevertheless, this does not impair his perfection; it is as if one's actions cause one of the many possibilities that existed then to have become known, but only once chosen.

In line with this approach, the teaching from Pirkei Avot quoted above, can be read as: "Everything is observed (while - and no matter where - it happens), and (since the actor is unaware of being observed) free will is given".

Kabbalistic thought

The existence of free will, and the paradox above (as addressed by either approach), is closely linked to the concept of Tzimtzum. Tzimtzum entails the idea that God "constricted" his infinite essence, to allow for the existence of a "conceptual space" in which a finite, independent world could exist. This "constriction" made free will possible, and hence the potential to earn the World to Come.

Further, according to the first approach, it is understood that the Free-will Omniscience paradox provides a temporal parallel to the paradox inherent within Tzimtzum. In granting free will, God has somehow "constricted" his foreknowledge, to allow for Man's independent action; He thus has foreknowledge and yet free will exists. In the case of Tzimtzum, God has "constricted" his essence to allow for Man's independent existence; He is thus immanent and yet transcendent.