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Why economists are so often wrong Friendship, kinship, loyalty, family, community, commitment, spirituality, passion for art, passion for life, etc, can't be put into the economist's equations. To them, we are just maximising utilty machines - which is how most economists relate to the world, so they think we are all like it. What is called “economics” is really psychology on steroids. It starts with a model of human nature and extrapolates an entire scenario for how the world works from that. The model is homo economicus,the myopic protoganist of the economics texts. This hypothetical person has no social affinities, no lapses of judgment or hang-ups, no capacity even for thinking about anyone besides him or herself. He goes through life with an unfailing and relentless calculus of
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Why economists are so often wrong Friendship, kinship, loyalty, family, community, commitment, spirituality, passion for art, passion for life, etc, can't be put into the economist's equations. To them, we are just maximising utilty machines - which is how most economists relate to the world, so they think we are all like it. What is called “economics” is really psychology on steroids. It starts with a model of human nature and extrapolates an entire scenario for how the world works from that. The model is homo economicus,the myopic protoganist of the economics texts. This hypothetical person has no social affinities, no lapses of judgment or hang-ups, no capacity even for thinking about anyone besides him or herself. He goes through life with an unfailing and relentless calculus of
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Why economists are so often wrong
Friendship, kinship, loyalty, family, community, commitment, spirituality, passion for art, passion for life, etc, can't be put into the economist's equations. To them, we are just maximising utilty machines - which is how most economists relate to the world, so they think we are all like it.
What is called “economics” is really psychology on steroids. It starts with a model of human nature and extrapolates an entire scenario for how the world works from that. The model is homo economicus,the myopic protoganist of the economics texts. This hypothetical person has no social affinities, no lapses of judgment or hang-ups, no capacity even for thinking about anyone besides him or herself. He goes through life with an unfailing and relentless calculus of personal loss and gain.
As I explained in The Tragedy of Economics this portrayal of our basic nature did not arise from actual inquiry. Homo economicus was from the beginning a polemical construct, devised to serve political ends. At first this was to help undermine the secular authority of the Roman Church, and then the divine right of kings. More recently it has served to justify a fundamentalism of what is called “the market.” Along the way, it has provided economists with the semblance of a predictable atom of economic activity. This has enabled them to declaim under the banner of “science,” and has given them a hook on which to hang their arcane math.
Today, psychologists can only roll their eyes at this naïve portrayal. People who have to deal with actual humans in market settings – such as advertisers and corporate managers – find it borderline irrelevant. A new field called “behavioral economics” (which ought to be redundant but revealingly is not) is picking apart homo economicus within the temple of the profession itself.
Economics