Sometimes (quite often, actually) I find a particular subject or issue crops up from extremely diverse sources in the same day. Does that happen to you? I suppose Jung called it “synchronicity” but the first time I really thought about the phenomenon was a teenager when I read Arthur Koestler’s “Roots of Coincidence” which explored this phenomenon from a rather paranormal perspective.
I don’t know how these things happen, but they just do!
Today it was the term “Homo Economicus” – not a term I was particularly aware of, though I was aware of elements of the neoliberal economic paradigm of “rational actors” and the centrality of “self-interest”. This morning I stumbled across it in a podcast – the “Pitchfork Economics” podcast which I just subscribed to. Well, their latest episode is entitled “Homo Economicus must die”.
I listened to it in the car while I was out and about and really enjoyed it. They interviewed an economist called Samuel Bowes and I thought he was both clear and convincing.
Then when I came home I checked my Twitter feed and there was a tweet referencing the “Boston Review” It was headed “Inclusive economics is Complexity economics”.
It was the reference to “complexity” which got me clicking through, because that’s a subject I’ve been interested in for many, many years. Well, the linked article quickly got onto discussing, yes, you guessed it, “Homo Economicus”.
Nick Hanauer, in the podcast, says –
Yeah. So Homo Economicus, just to remind everybody is a simplifying assumption that neo-classical economists make, about what humans are and how they behave. Basically it assumes that people are perfectly selfish, and perfectly rational, and that we are utility maximization machines, that we have consistent preferences, that we have no biases, or the biases are randomly distributed. We use probabilistic reasoning. That we are frame and context-independent. That we can do things like exponential discounting, and that we have infinite cognitive abilities, we have time and infinite willpower, and information and attention are broadly distributed.
Now here’s the thing is that we now know that with scientific certainty, that none of those things are true….
and he goes on –
the last 40 years of behavioral, psychological and sociological research shows unambiguously that people are not Homo Economicus, that we are actually Homo Sapiens and that we are other-regarding, reciprocal, approximating, heuristic, emotional and moral.
There follows a funny bit about how Spock and Captain Kirk might shop in a supermarket, then they bring in Samuel Bowes. He says the “Homo economicus” model arose from the reasonable belief that when we see people acting we can assume their actions are purposeful, then goes on to describe how people think and what they are thinking about.
It assumes people think logically, and rationally, weighing up the probabilities of the utility value of various possible outcomes to each action. Except we don’t. Not all the time. In fact, maybe hardly ever. Instead we think, what he terms, “viscerally” – emotionally. This is behaviour which is instinctive and doesn’t involve looking forward into potential futures.
Secondly, it assumes that what people think about is themselves. That self-interest is the basis of all our choices and behaviours.
He explains why neither of these assumptions are true, and how the ability to act co-operatively and socially is now thought to give evolutionary advantages over acting selfishly.
these ideas of incentivizing everything by essentially harnessing self-interest, they don’t work very [00:18:00] well and they certainly cannot address the basic problem facing humanity today. We cannot design incentives which would be good enough so that the environment will be saved for entirely selfish people who don’t care about future generations. There’s no way to design a kind of what’s called an economics, a mechanism that will do that.
These guys are arguing that prosperity doesn’t come from selfishness. It comes from acting on the basis of mutual interest.
In the Boston Review piece, the authors state –
Homo sapiens looks almost nothing like Homo economicus. Instead of asocial, transactional, self-regarding utility maximizers, real humans are intensely social, highly cooperative, and other-regarding creatures who make decisions inductively, heuristically, mimetically, and through group reasoning. Evolution has wired us to be both selfish and groupish. It has given us a repertoire of biochemical, neurological, emotional, and behavioral tools to help us successfully navigate life in groups and to help groups compete against other groups. These tools range from hormonal responses that trigger caring instincts, to neural capacities that vicariously experience the welfare of others, to behavioral strategies for reciprocity, cooperation, and punishment of those who violate group norms. These emotions and behaviors have in turn co-evolved with cultural norms, including our moral norms.
Instead of the neoliberal model based on self-interested rationalists, they argue that economics, and, hence, social and political policy, would be better based on an understanding of complex systems. This would allow us to acknowledge the importance of values such as fairness and reciprocity, to work with the natural diversity and heterogeneity of human populations, instead of flattening them all out into averages, and to deal with the world’s problems at a systems level which will take a multidisciplinary approach instead of a narrow, specialised one.
Now maybe you’re not that interested in economics, or even politics, but I think both are aspects of human life that none of us can avoid. The “Homo Economicus” model seems bonkers to me from the start. It just doesn’t reflect reality. Maybe it’s time to get behind the challenges to the beliefs that we should encourage self-interest, selfishness and greed if we really want to deal with the problems we are all facing together. Maybe it’s going to turn out that empathy, compassion, co-operation and collaboration will be better tools to use.
Oh, before I go…..I liked how this discussion acknowledges that we are all BOTH selfish and altruistic, that we are BOTH rational and visceral. It reminded me of how we have two such different cerebral hemisphereswith such different ways of engaging with the world, and how we have to use BOTH of them to be fully human. The Homo Economicus model seems straight out of the left hemisphere.
Isn’t it time to activate the other half of the brain? The half that looks for connections, and prioritises relationships?