Among the larger albatrosses burdening the economics profession is the idea of Homo economicus. To this day, most economics undergraduates hear about it in the context of neoclassical economics. Homo economicus, we are told, is the ideal economic man who always seeks to maximize profits and minimize costs. He only acts “rationally,” and rationalism is defined as, well, always seeking to maximize profits and minimize costs. Even worse, “profit” is often assumed to mean “monetary profit” measurable only in dollars (or some other currency).
Yes, many economists will say, “It’s just a model,” and note there are many caveats that come with its use. These protestations are often less than convincing given the use of models based on “rational” behavior. But, for now, let’s just take the economists at their word. Even if what the defenders of Homo economicus say is true, the fact remains that the vast majority of sociologists, political scientists, politicians, and journalists never got that memo. In scholarship and media pieces on public policy, the concept of Homo economicus is routinely employed to illustrate the problems with economic theory. What’s worse, anticapitalists—many of whom view neoclassical economics as the primary foundation of laissez-faire thinking—present the shortcomings of Homo economicus as an illustration of the foolishness of market economies.
But it’s not just hard-line leftists who take issue with Homo economicus. Conservatives have also attacked the Homo economicus straw man for its inability to provide a “holistic view of humans.”
So, it’s not enough to just wave away critics of Homo economicus as a bunch of people who don’t understand the sophisticated ways of professional economists. The theory’s shortcomings remain a real-world problem.
Homo economicus Is Not Foundational to Sound Economics
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