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The human element in the new economics: a 60-year refresh for economic thinking and teaching
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Abstract
For more than half a century the discipline of economics has been based on an
inadequate and misleading description of human nature. Translated into what
students remember, and what has increasingly risen to the top in Anglo-American
culture, this description promotes the idea that only selfishness is rational.
Many economists and others have noted that the working out of the “rational
economic man” image denies both the social and the moral nature of humankind. At
the same time it produces theoretic results, and influences some real-world behaviors,
in ways that mimic the initial assumption.
The first four sections of this paper will describe aspects of the old economic theory
that are based on the rationality axiom. Sections 5 and 6 will outline some of the
findings of the relatively new school of behavioral economics, which is leading a major
challenge to the neoclassical economic edifice – the first such challenge that (so far)
mainstream economics has been unable effectively to marginalize