Are We Humans or Homo Economicus? Why Economics Needs to Evolve Beyond Growth

[Celerity]

Economics assumes we behave like chimps, but humans are far more cooperative—and our economic models must catch up.

https://www.socialeurope.eu/are-we-humans-or-homo-economicus-why-economics-needs-to-evolve-beyond-growth



Do you behave more like an ape or a human? If you have to share some money (or some raisins!), do you give away as little as possible and keep as much as you can for yourself, or do you share equally? Mainstream economic theory has traditionally worked on the basis that human behaviour can largely be explained in terms of inherent self-interest – a tendency to maximise gain for ourselves. Economists coined the term homo economicus, or “economic man”, for this conceptualisation of humans as rational and self-interested back in the nineteenth century, drawing on the assertions of John Stuart Mill and Adam Smith that we will want to do the least amount of work for the most amount of gain and that we cannot rely on the benevolence of others but must look out for ourselves.

Obviously, this is a simplistic presentation of our utilitarian tendencies, but it underpins assertions like those promulgated in Steven D. Levitt and Stephen J. Dubner’s 2005 book, Freakonomics – that our behaviour is shaped by our conscious and subconscious self-interest, what their book describes as “the hidden side of everything”.

Humans, however, are nowhere near that simple. But chimpanzees are – in behavioural experiments they perform exactly as economic theory suggests that humans will behave, acting as self-interested so-called “rational maximisers” in what is known as the Ultimatum Game. In this experiment, participants are paired and a known sum of money is given to one, the “proposer”, who must then divide it as they please with the “responder”. The responder accepts or rejects the offer. If rejected, neither gets anything; if accepted, they both keep the share of money offered.

Economic theory suggests that responders should accept any offer, however small, because there isn’t going to be a next time and something is better than nothing. And proposers should offer the smallest possible amount, just enough to get the responder to accept it, however derisory. When chimpanzees play the game (with raisins rather than cash), they behave exactly as the theory predicts: they will take what they are offered and are not sensitive to fairness.

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[Phoenix61]

1. Captive chimpanzees do that. I wonder what they do

in the wild. The whole Alpha dog bs was based on caged wolves from separate packs interacting. We now know wild wolves don’t interact like that at all.

[-misanthroptimist]

2. Seriously, why do we need economics at all?

Across a vast range of products/services, we aren't even close to a subsistence economy. If we want more of these things we can simply produce them. Fretting about the cost in dollars is pointless.

[Redleg]

5. Fretting about the costs is pointless?

I don't understand your point.

[-misanthroptimist]

7. Cost is an abstract and limited construct

That is why economics has a concept called "externalities." The obvious conclusion is that economic costs are non-comprehensive, at best.

Even so, positive externalities are monetized quickly by whomever notices and can get up and running.

Negative externalities are ignored (see: Climate Change) or farmed out to the public sector. Either way, those costs are paid either through government programs, human suffering, or disasters of varying degrees.

So, in a sense we are already ignoring costs -those we don't like and make people rich. We simply ignore the economic impacts we don't like. That being the case, there is no reason we can't ignore the costs that we do like. And we should. The entire idea is antiquated and unnecessary.

[Redleg]

9. It seems a big gulf between "ignoring costs" and the notion that "the entire idea is antiquated and unnessary"

Plus, you stated that those costs are paid or ignored. Is "cost" abstract to those people who can't afford to buy sufficient food or who get downsized due to adoption of AI or automation in the workplace? Is cost irrelevant to small business owners whose profit margins have shrunk due to tariffs imposed by the president?

Economics is about making choices and it should be about making choices that take into account moral principles such as utility, human rights, and distributive justice. Each of these principles addresses the notions of "costs" and "benefits" in their calculus.

[-misanthroptimist]

10. "Cost" is indeed an abstract.

What is the value of a dollar? It used to be based on gold (which itself is an arbitrary standard). The situation is even more abstract today with floating currency. A dollar is worth what large numbers of people think it's worth.

Therefore, a dollar has no intrinsic monetary value. Neither does gold. Economics is a game that most people on this planet are losing -badly in many cases. There is no particular need for it if we set aside the idiotic idea that one thing is "worth more" than another thing in any real way.

[Redleg]

11. Many concepts are abstract but need not be ignored

We live in an economy where we exchange our labor for pay and we use that pay to purchase things we value. Are values subjective? Certainly. Do we want to negotiate the price of everthing we buy? Not likely.

While I agree with your point that our current system has failed a good number of people, I don't really understand where your argument leads.

[-misanthroptimist]

13. Where the argument leads

The argument leads to a non-monetary based society. Worth can be ignored -and it should be. We produce enough food to feed the world with plenty to spare. We're not going to Mars because of economic factors. People are miserable because they don't have enough money, even though the very concept of money is antiquated by our technology and knowledge. Abandoning money and worth will unleash our possibilities to the fullest.

You say, "...we exchange our labor for pay...". That's only part what we exchange. We also exchange our time which is much more valuable than any training or education we possess. We can learn a new job, a new language, etc. Yet our time counts for nothing, only our training is taken into account. Our entire lives -family, friends, etc.- are subordinate to the economy. In short, our lives are an economic externality. In fact, economically speaking people are an externality. This clearly is evident by the number of jobs that are now done through automation. The number of jobs done by automation is ever-increasing at an ever increasing rate. What happens when the inevitable occurs, when humans are not needed to do all but a very few jobs?

That brings up another point which I'll only mention briefly here: Who benefits from all this automation? Is it the people or the economy that derives real benefit from automation?

[Redleg]

14. Capital has benefitted the most from automation, at least over the last 30 years or so

This is evidenced by the steeper upward curve for productivity compared to average wages (adjusted for inflation). I believe that this "AI revolution" will only accelerate the transfer of wealth to the very wealthy at the expense of the rest of us. I think you and I could probably find agreement on a number of things.

[-misanthroptimist]

15. You're probably right that we would agree over a wide range

But the problem goes far further than wages and wealth distribution. Because of money -and money alone- we are setting ourselves up for disaster via Climate Change. Virtually no one arguing against doing anything about CC actually believes CC isn't real or that we aren't the cause. They argue about it because of money, either fossil fuel profits or the raw cost of addressing the issue. Without money, one would have to be an utter lunatic or completely immoral to not address CC. That holds true across a wide variety of issues.

We are destroying ourselves for a game that we made up, bears only a tangential relation to reality, and which benefits relatively few of us overall.

[Redleg]

16. Indeed. We should be leading the world in development and use of renewable energy

Instead we're driving big-ass trucks and shitting on green energy projects.

[leftstreet]

3. Well worth the read

Especially the section discussing how the Nobel Prize categories didn't originally include "Economics."
Decades later it was added to Physics, Chemistry, Physiology or Medicine, Literature and Peace, but it's stupidly taken seriously.

LOL if Hayek and Friedman can win it, what good is it?!

DURec

[Redleg]

4. A good number of the more recent winners addressed the limitations of rationality

in decision-making. This is important work they have done and it helps us better understand why people make such stupid-ass decisions.

[leftstreet]

6. Not sure it's valuable in the framework of Capitalism

There are limited actions "decisions" available for people who don't control a resource

[Redleg]

8. I don't understand your point

The models of decision-making are applicable to any types of decisions at any level.

[malaise]

12. Good Read

Rec