Are We Humans or Homo Economicus? Why Economics Needs to Evolve Beyond Growth [View all]

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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