Homo economicus

Homo economicus, or Economic man, is a term used for an approximation of Homo sapiens that is selfish and very rational and has a perfect knowledge of markets, and that has been formalized in certain social science models, particularly in certain economic models.

Since these assumptions are not realistic, the term is often used derogatorily in academic literature, perhaps most commonly by sociologists, who tend to prefer structural explanations to ones based on rational action by individuals.

Homo economicus is selfish, in that he bases his choices only on the consideration of his own personal "utility function", which, in the models that the Homo economicus idea is trying to criticize, does not include much of any consideration of the well-being of other people.

How is Homo economicus rational? This is harder to define, but he is rational in the senses of Rational Choice Theory and Rational expectations. See Rationality for other senses.

Although not typically used this way, Homo economicus could probably also be used, with some degree of felicity, to critique the characters of Ayn Rand.

Comparisons between economics and sociology have resulted in a corresponding term Homo sociologicus, to parody the image of human nature given in sociological models. Hirsch, Michaels, and Friedman (1990, p. 44) say that homo sociologicus is largely a tabula rasa upon which societies and cultures write values and goals; unlike economicus, sociologicus acts not to pursue selfish interests but to fulfill social roles. Sociologicus may appear all society and no individual.

References

• Hirsch, Michaels, and Friedman (1990)."Clean Models Versus Dirty Hands: Why Economics is Different From Sociology". pp. 39-56 in Zukin and DiMaggio (Eds.), Structures of Capital: The Social Organization of the Economy. Cambridge: Cambridge University Press.

External link

• http://www.korpios.org/resurgent/L-homoeconomicus.htm, which simultaneously explains and debunks economic models based on Homo Economicus, claiming that such models serve the political interests of more conservative economists.