Homo economicus is from rational choice theory (i) that says humans maximize their self-interest in a consistent and rational way, much like how software solves an optimization problem. To be sure, this model does not map well to how a real mind works. In fact, look at how a cognitive scientist discusses how reasoning does not resemble anything like that of an algorithm.
We’ve learned a centuries old theory of rationality that says that thought is conscious (when it is mostly unconscious), that it works by logic (it actually works by embodied primitives, frames, conceptual metaphor, and integration), that all people have the same logic (which is supposed to be what makes us rational animals). [7]
Here I would like to ridicule the idea of homo economicus being an accurate characterization of how we make decisions because it is not only wrong from a neuroscience point of view (ii), but it also elevates rationality. And a worldview that embodies rationality, with roots going back to Descartes, leads to championing the idea of self-interest by way of logical necessity (iii).
It is often seen as natural for people to act so as to maximize their self-interest (or profit) and unnatural for them not to. Those who profit most are therefore seen as doing what comes naturally, and those who profit much less are seen as irrational, unnatural, lesser beings who don’t deserve much no matter how hard they work. [9]
Presumption of Reason
The Enlightenment advocated reason and empiricism as a way to obtain objective truth about our world and gave us arguments to challenge any authority that used dogma to their advantage. It also applied empiricism to achieve economic progress to improve upon our welfare as well as gave rise to humanism which is the idea that humans have value and agency not to be trodden upon.
The Enlightenment also thought that reason is what makes us human and rational, but they framed everything in terms of logic. As a result, “reason” is thought of as a faculty that gives “truth” in accordance with the rules of logic. There is, however, no universal reason or logic. To be sure, the reason I mean here is the kind made from our minds that is unrelated to logic in a program.
The view on reason is that it is conscious, universal, logical, unemotional, and value-neutral. But it is not any of those things, and believing so is irrational. For example, when others argue against us, we think they must be either mistaken (in need of the facts), irrational (needing a lesson in logic), or immoral (need to feel how we do) [7]. Worldviews must have their own logic then (v).
If the people are made aware of the facts and figures, they should naturally reason to the right conclusion. Voters should vote their interests; they should calculate which policies and programs are in their best interests, and vote for the candidates who advocate those policies and programs. But people aren’t rational, so this doesn’t happen. [9]
Rationality of Self-Interest
Yet versions of the rational actor model (i) have contributed to the arms race (via game theory (iv) and Mutually Assured Destruction) and global warming (via the externalization of pollution costs). It is that form of “rationality” that has most threatened our ability to survive and thrive.
The rational actor model (i) is in line with the eighteenth-century-view of mind which saw reason as primarily serving to achieve personal goals. Therefore it was seen as irrational to be against your self-interest. If our culture expects us to behave in ways that serve our interests, then how do we know how much of our selfish behavior is influenced by biology or from social norms?
From the selfish gene perspective, the rational actor of course makes sense. But this mode of thought is so engrained – the narrative of the rational actor – that altruism was called reciprocal-altruism. Whether or not evolutionists are correct (they probably are), is not the point but speculation as to how metaphors and language construct our realities and guide theory is.
Although there is considerable literature documenting biological altruism, the most popular evolutionary account of altruism as a form of self-interest is reciprocal altruism—the trading of favors: it is in my interest to serve your interests in a society where that is the norm.
The “invisible hand” made seeking a profit into a moral act since it maximizes the profit for all (vi). We find this attractive – that is, making the proverbial pie bigger – because it reduces the guilt we feel from being selfish. But this is a good thing because it says that we have empathy and that there is more to human nature than self-interest.
Notes:
i) Rational choice theory is synonymous with the rational actor model.
ii) Rational choice theory does find application to many optimizing problems. But it has been used incorrectly by ideologues to explain how we make decisions and reason.
iii) If we adopt a worldview that uses the rational actor model, then we get trapped in narratives that place emphasis on self-interest.
iv) When there is more than one actor, limited resources, competition for benefits, and strategies for acting given the actions and strategies of others, then we are in the realm of game theory.
v) Disagreement happens because different worldviews have their own logic and rationality. This means that objective truth has a frame of reference.
vi) It doesn’t matter what Adam Smith said only how it is remembered in simple and absolute terms and by way of metaphor.
Related Posts
“Conception of Homo Economicus“: rational man was conceived by way of deductive reasoning and a few “self-evident” truths.
“Destruction of Homo Economicus“: rationality from the Enlightenment leads to self-interest and there is no universal reason.
“Reasoning with Homo Economicus“: teaching the self-righteous human self-awareness and that passions drive reason.
“Resurrection of Homo Economicus“: the “invisible hand” promises wealth creation but costs go beyond typical externalities.
References:
[1] Ariely, Dan. Predictably Irrational, Revised and Expanded Edition. HarperCollins e-books.
[2] Barrett, Lisa Feldman. How Emotions Are Made: The Secret Life of the Brain. HMH Books.
[3] Damasio, Antonio R.. Descartes’ Error. Penguin Publishing Group.
[4] Foster, Peter. Why We Bite the Invisible Hand: The Psychology of Anti-Capitalism . Pleasaunce Press.
[5] Haidt, Jonathan. The Righteous Mind . Knopf Doubleday Publishing Group.
[6] Kennedy, Gavin. Adam Smith and the Invisible Hand: From Metaphor to Myth. Econ Journal Watch 6(2): 239–263.
[7] Lakoff, George. Moral Politics . University of Chicago Press.
[8] Lakoff, George. Philosophy In The Flesh.
[9] Lakoff, George. The Political Mind. Penguin Publishing Group.
[10] Madrick, Jeff. Seven Bad Ideas. Knopf Doubleday Publishing Group.
[11] Mercier, Hugo. The Enigma of Reason. Harvard University Press.
[12] Pinker, Steven. Enlightenment Now. Penguin Publishing Group.
[13] Smith, Justin E. H.. Irrationality. Princeton University Press.
I once took a class with the anthropologist, Marshal Sahlins. Homo Economicus was one of his favorite whipping boys. He was good at it too.