Editing Homo economicus (section)

== History of the term ==

The term "economic man" was used for the first time in the late nineteenth century by critics of [[John Stuart Mill]]'s work on political economy.<ref name=persky>Persky, Joseph. "Retrospectives: The Ethology of Homo economicus." ''The Journal of Economic Perspectives'', Vol. 9, No. 2 (Spring, 1995), pp. 221–231</ref> Below is a passage from Mill's work that critics referred to:

<blockquote>[Political economy] does not treat the whole of man's nature as modified by the social state, nor of the whole conduct of man in society. It is concerned with him solely as a being who desires to possess wealth, and who is capable of judging the comparative efficacy of means for obtaining that end.<ref>Mill, John Stuart. "On the Definition of Political Economy, and on the Method of Investigation Proper to It," London and Westminster Review, October 1836. ''Essays on Some Unsettled Questions of Political Economy'', 2nd ed. London: Longmans, Green, Reader & Dyer, 1874, essay 5, paragraphs 38 and 48.</ref></blockquote>

Later in the same work, Mill stated that he was proposing "an arbitrary definition of man, as a being who inevitably does that by which he may obtain the greatest amount of necessaries, conveniences, and luxuries, with the smallest quantity of labour and physical self-denial with which they can be obtained."

[[Adam Smith]], in ''[[The Theory of Moral Sentiments]]'', had claimed that individuals have sympathy for the well-being of others. On the other hand, in ''[[The Wealth of Nations]]'', Smith wrote:

<blockquote>It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.<ref>Smith, Adam. “On the Division of Labour,” The Wealth of Nations, Books I–III. New York: Penguin Classics, 1986, p. 119.</ref></blockquote>

This comment is perfectly in line with the notion of ''Homo economicus'' and the idea, propounded by Smith in ''The Wealth of Nations'' and, in the 20th century, by the likes of Ayn Rand (in ''The Virtue of Selfishness'', for example), that pursuing one's individual self-interest promotes social well-being. In Book V, Chapter I, Smith argues, "The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become." This could be seen as prefiguring one part of [[Marx's theory of alienation]] of labor; and also as a pro-worker argument against the division of labor and the restrictions it places upon freedom of occupation. But even so, taken in the context of the work as a whole, Smith clearly intends it in a pro-capitalism, pro-bourgeoisie, way: "removing difficulties", such as reducing the time needed for travel and trade, through "expedients", such as steam-engine ships, here means the typical argument that capitalism brings freedom of entrepreneurship and innovation, which then bring prosperity. Thus, Smith is not unreasonably called "The Father of Capitalism"; early on, he theorized many of today's most widespread and deep-seated pro-capitalism arguments.

The early role of Homo Economicus within neoclassical theory was summarised to include a general objective of discovering laws and principles to accelerate further growth within the national economy and the welfare of ordinary citizens. These laws and principles were determined by two governing factors, natural and social.<ref name=Elahi>{{cite journal |last1=Elahi |first1=Khandakar |title=Behavioural controversy concerning homo economicus: a Humean perspective |journal=The Journal of Philosophical Economics |date=January 2014 |volume=7 |pages=2–29 |url=https://www.researchgate.net/publication/265643563}}</ref> It had been found to be the foundation of neoclassical theory of the firm which assumed that individual agents would act rationally amongst other rational individuals.<ref>{{cite journal |last1=Kluver |first1=Jesse |last2=Frazier |first2=Rebecca |last3=Haidt |first3=Jonathan |title=Behavioral ethics for Homo economicus, Homo heuristicus, and Homo duplex |journal=Organizational Behavior and Human Decision Processes |year=2014 |volume=123 |issue=2 |pages=150–158 |doi=10.1016/j.obhdp.2013.12.004}}</ref> In which Adam Smith explains that the actions of those that are rational and self-interested under homo economicus promotes the general good overall which was understood as the efficient allocation of material wealth. However, social scientists had doubted the actual importance of income and wealth to overall happiness in societies.<ref>{{cite journal |last1=Konow |first1=James |last2=Earley |first2=Joseph |title=The Hedonistic Paradox: Is homo economicus happier? |journal=Journal of Public Economics |year=2008 |volume=92 |issue=1–2 |pages=1–33 |doi=10.1016/j.jpubeco.2007.04.006|url=https://mpra.ub.uni-muenchen.de/2728/1/MPRA_paper_2728.pdf }}</ref>  

The term 'Homo economicus' was initially critiqued for its portrayal of the economic agent as a narrowly defined, money-making animal, a characterization heavily influenced by the works of Adam Smith and John Stuart Mill. Authors from the [[English historical school of economics|English Historical School of Economics]] sought to demote this model from its broad classification under the 'genus homo', arguing that it insufficiently captured the complex ethical and behavioral dimensions of human decision-making. Their critique emphasized the need for a more nuanced understanding of human agency beyond the mere pursuit of economic rationality.<ref>Rodriguez-Sickert, C. (2009). Homo economicus. In Handbook of Economics and Ethics (Edward Elgar).</ref>

Economists in the late 19th century—such as [[Francis Edgeworth]], [[William Stanley Jevons]], [[Léon Walras]], and [[Vilfredo Pareto]]—built mathematical models on these economic assumptions. In the 20th century, the [[rational choice theory]] of [[Lionel Robbins]] came to dominate mainstream economics. The term "economic man" then took on a more specific meaning: a person who acted rationally on complete knowledge out of self-interest and the desire for wealth.