In order to properly predict the influence of different policy moves, economists look at people's "revealed preferences": The preferences revealed in their actions rather than in their words.
When people state their list of priorities, their intentions and desires, we should of course believe them. But if their actions don’t match their statements, there is room to see their actual choices as an expression of their real preferences.
Allegedly, there is nothing new here. Why we always question different people's declarations of intent. Always? That's inaccurate. The natural tendency is to have faith in words, especially when they are said in a convincing, festive, direct language.
Is there anyone who isn't certain that his child really wants a red balloon even though he always chooses a green or blue one when facing a rainbow of balloons? What, is the child always lying? This is where the revealed preference theory comes in and says: Let's put psychology aside and focus on the behavior. Had the child wanted a red balloon, he would have already had one a long time ago. This means that he prefers other colors.
The revealed preference concept is very useful and explains a lot.
Think about our politicians. They say, for example, that the expensive housing is at the top of their list of priorities. But when the housing becomes more and more expensive every year, it's clear that they prefer expensive apartments. It's their revealed preference. Is it possible that they honestly made an effort to reduce the housing prices and failed? They may have made an effort, but it wasn't honest. The problem didn't seem important enough – it wasn't favored enough – to get the required resources in order to solve it.
Or think about the light rail project in the Tel Aviv metropolitan area. It's not ready because the decision makers preferred not to see it launched. They preferred the Tel Aviv metropolis without a light rail, regardless of what they said, stated and promised.
Or think about cheap shopping. Israel's consumers state that the product's price is their top priority. But their actual behavior shows that they prefer the convenience of shopping, their friends' opinion, the store's proximity to their home. These are the revealed consumer preferences, and these are the preferences the sellers should focus on.
Or think about the latest elections and the contradiction between the voters' list of priorities in public opinion polls and their revealed preferences, as reflected in the actual voting. It was reflected, by the way, too late for the politicians.
This isn't about conscious deception, a very common phenomenon. This is about the inability of bodies, institutions, leaders and people to give others, and usually also themselves, a reliable account of what they really prefer.
Turn your gaze over to South Korea. Throughout the generations, its leaders have declared that uniting with the communist North Korea is one of their top priorities. But for decades, South Korea has made no effort to pave the way for such unity, and has even accepted North Korea's nuclear armament. Economists would say that South Korea's revealed preference is to live well alongside its jailed, poor, nuclear northern sister, which is separated from the South's wealth by fences and walls. The United States should take this revealed preference into account.
Think about the Palestinian leaders. From 1988, they have been declaring that they are interested in establishing a state alongside Israel. But had the establishment of a Palestinian nation state been their top priority, it would have already been an established fact by now, in spite of Israel's opposition or with its quiet support.
The Palestinians' clear revealed preference is therefore against an independent state alongside Israel. And Israel's revealed preference, excluding the days of Yitzhak Rabin and Ariel Sharon who did what they did, is to remain in the territories forever.
In their actual behavior, the two sides to the conflict are revealing their preference for a binational state. That's why it is closer than ever. In actions, not in words.