Summary: Homo economicus, or Economic human, is the concept in some economic theories of humans as rational and narrowly self-interested actors who have the ability to make judgments towards their subjectively defined ends. This theory stands in contrast to the concept of Homo reciprocans, which states that human beings are primarily motivated by the desire to be cooperative, and improve their environment.

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REQUIEM FOR HOMO ECONOMICUS

Homo economicus rests on the silent premises that human communication today is no different than it was in Adam Smith’s day and therefore human beings relate to each other and to themselves no differently than 225 years ago. In essence, the development of the telegraph followed by the telephone, radio, television, fax, email, and internet have had no bearing on the way we think about economic agency. Homo economicus never changes.

Proclaiming a requiem for homo economicus is more than just clever rhetoric. It is based on more than just expressions borrowed from other disciplines. The call is grounded in an understanding of human nature that surfaced with the development of electronic communication which altered our awareness of others and of ourselves and gave birth to the philosophy of personalism. Burying homo economicus and substituting homo socioeconomicus bring the basic unit of economic analysis out of the individualism of the 17th and 18th centuries into the personalism of the 20th century.

There is a huge and steadily growing literature on the meaning of the Latin expression homo economicus which has been used widely and approvingly by mainstream economists for many years. At the same time, and in the same literature, there is some confusion regarding the origins of that expression. For instance, Sheasby [p. 2] attributes it to Adolph Lowe’s Economics and Sociology published in 1935. With Zabieglik [pp. 3-4] concurring, Persky [p. 222] identifies the term as originating with Vilfredo Pareto’s Manual in 1906 though he openly admits that he had not completed a thorough search of sources in Europe. Pareto [p. 12]1 himself ascribes the expression to Vito Volterra in 1901.

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Depending on the definition we prefer, we may say that economists are interested in the allocation of resources, in the nature and causes of the wealth of nations, or perhaps something else. Regardless, all of those things depend on the actions and decisions of human beings. So, in order to get started, economists are going to have to make some assumptions about human beings, about how human beings act and how human beings decide how to act. We might turn to psychology for our assumptions — after all, psychologists are the professionals in the study of the human mind — but in practice, most economists have not done that. It may be that the theories of psychologists do not answer the questions economists need to ask, or that there are many competing psychological hypotheses, or that economists are stubborn fellows — but, for whatever reason, economists have not as a rule based their assumptions on psychological views of the human mind. Rather, most economists have begun from an assumption few modern psychologists would endorse. The assumption is that human beings are highly rational and self-interested.

This assumption is especially characteristic of neoclassical economists. Some non-neoclassical economists do also accept it, but some do not.

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