Editing Homo economicus (section)

== Model ==

''Homo economicus'' is a term used for an approximation or [[Economic model|model]] of ''[[Homo sapiens]]'' that acts to obtain the highest possible well-being for themself given available information about opportunities and other constraints, both natural and [[institution]]al, on their ability to achieve their predetermined goals. This approach has been formalized in certain [[social sciences]] models, particularly in [[economics]].

''Homo economicus'' is usually seen as "rational" in the sense that well-being as defined by the [[utility function]] is optimized given perceived opportunities.<ref>{{Cite book |last=Medema |first=Steven G. |title=The Economics Book: From Xenophon to Cryptocurrency, 250 Milestones in the History of Economics |date=2019 |publisher=[[Sterling Publishing]] |isbn=978-1-4549-3008-2 |location=New York |page=146}}</ref> That is, the individual seeks to attain very specific and predetermined goals to the greatest extent with the least possible cost. Note that this kind of "rationality" does not say that the individual's actual goals are "rational" in some larger ethical, social, or human sense, only that they try to attain them at minimal cost. Only naïve applications of the ''Homo economicus'' model assume that this hypothetical individual knows what is best for their long-term physical and mental health and can be relied upon to always make the right decision for themself. See [[rational choice theory]] and [[rational expectations]] for further discussion; the article on [[rationality]] widens the discussion.

As in social science, these assumptions are at best approximations. The term is often used derogatorily in academic literature, perhaps most commonly by [[sociology|sociologists]], many of whom tend to prefer structural explanations to ones based on rational action by individuals.

The use of the Latin form ''Homo economicus'' is certainly long established; Persky<ref name=persky/> traces it back to [[Vilfredo Pareto|Pareto]] (1906)<ref>Pareto, Vilfredo (1906). "Manual of political economy".</ref> but notes that it may be older. The English term ''economic man'' can be found even earlier, in [[John Kells Ingram]]'s ''A History of Political Economy'' (1888).<ref>Zabieglik, Stefan (2002). "The Origins of the Term ''Homo Oeconomicus''", Gdansk, 123–130.</ref>  The ''[[Oxford English Dictionary]] (O.E.D.)'' cites the use of ''Homo oeconomicus'' by [[Charles Stanton Devas|C. S. Devas]] in his 1883 work ''The Groundwork of Economics'' in reference to Mill's writings, as one of a number of phrases that imitate the scientific name for the human species:

{{quote|Mill has only examined the ''Homo oeconomicus'', or dollar-hunting animal.<ref>{{cite web|url=http://www.oed.com/view/Entry/87988#eid215918154|title=Homo oeconomicus|url-access=subscription |work=Oxford English Dictionary}}</ref>}}

According to the ''[[Oxford English Dictionary|OED]]'', the human genus name ''Homo'' is

{{quote|Used with [[Latin|L.]] or mock-L. adjs. in names imitating ''Homo sapiens,'' ''etc.,'' and intended to personify some aspect of human life or behaviour (indicated by the adj.). ''Homo faber'' ("feIb@(r)) [H. Bergson L'Evolution Créatrice (1907) ii. 151], a term used to designate man as a maker of tools.) Variants are often comic: ''Homo insipiens;'' ''Homo turisticus.''<ref>This is from the CD edition of 2002.</ref>}}

Note that such forms should logically keep the capital for the "genus" name—''i.e.,'' ''<u>H</u>omo economicus'' rather than ''<u>h</u>omo economicus.'' Actual usage is inconsistent.

[[Amartya Sen]] has argued there are grave pitfalls in assuming that rationality is limited to selfish rationality. Economics should build into its assumptions the notion that people can give credible commitments to a course of conduct. He demonstrates the absurdity with the narrowness of the assumptions by some economists with the following example of two strangers meeting on a street.<ref>AK Sen, ‘Rational Fools: A Critique of the Behavioural Foundations of Economic Theory’ (1977) 6 Philosophy and Public Affairs 317, 332</ref>

{{Cquote|"Where is the railway station?" he asks me. "There," I say, pointing at the post office, "and would you please post this letter for me on the way?" "Yes," he says, determined to open the envelope and check whether it contains something valuable.}}