#Homo-economicus

[publicatiosui]

The deployment of rational management of people in the contemporary corporation contributes to the constitution of a complex personality structure that both masters and expresses emotions, that is both rational and sympathetic, that both masters one's self-image and is able to decipher others' motives. Thus, by an ironic twist of cultural history, the self-interested Homo economicus of Adam Smith has been recast by psychologists as a Homo communicans who reflexively monitors his words and emotions, controls his self-image, and pays tribute to the other's point of view.

--Eva Illouz, Saving the Modern Soul

[lukore]

I'm going to blow a gasket

[thesiltverses]

this fragment from sontag’s illness as metaphor reminded me of eskew for some reason. “Illness is the night-side of life, a more onerous citi-zenship. Everyone who is born holds dual citizenship, in the kingdom of the well and in the kingdom of the sick. Although we all prefer to use only the good pass-port, sooner or later each of us is obliged, at least for a spell, to identify ourselves as citizens of that other place.”

There's actually a few bits from that work that inspired Eskew and in particular the depiction of Eskew as a combined cancerous city-imitator and late-capitalist hellscape.

"In TB, you are eating yourself up, being refined, getting down to the core, the real you. In cancer, non-intelligent ("primitive," "embryonic," "atavistic") cells are multiplying, and you are being replaced by the nonyou."

"Cells without inhibitions, cancer cells will continue to grow and extend over each other in a "chaotic" fashion, destroying the body's normal cells, architecture, and functions.

Advanced capitalism requires expansion, speculation, the creation of new needs (the problem of satisfaction and dissatisfaction); buying on credit; mobility—an economy that depends on the irrational indulgence of desire. Cancer is described in images that sum up the negative behavior of twentieth-century homo economicus: abnormal growth."

[probablyasocialecologist]

Consider the twin master sciences of the twentieth century, neoclassical economics and population genetics. Each of these disciplines came to power in the early twentieth century with formulations bold enough to redefine modern knowledge. Population genetics stimulated the “modern synthesis” in biology, uniting evolutionary theory and genetics. Neoclassical economics reshaped economic policy, creating the modern economy of its imagination. While practitioners of each have had little to do with each other, the twins set up similar frames. At the heart of each is the self-contained individual actor, out to maximize personal interests, whether for reproduction or wealth. Richard Dawkins’s “selfish gene” gets across the idea, useful at many life scales: It is the ability of genes (or organisms, or populations) to look out for their own interests that fuels evolution. Similarly, the life of Homo economicus, economic man, is a series of choices to follow his best interests.

The assumption of self-containment made an explosion of new knowledge possible. Thinking through self-containment and thus the self-interest of individuals (at whatever scale) made it possible to ignore contamination, that is, transformation through encounter. Self-contained individuals are not transformed by encounter. Maximizing their interests, they use encounters—but remain unchanged in them. Noticing is unnecessary to track these unchanging individuals. A “standard” individual can stand in for all as a unit of analysis. It becomes possible to organize knowledge through logic alone. Without the possibility of transformative encounters, mathematics can replace natural history and ethnography. It was the productiveness of this simplification that made the twins so powerful, and the obvious falsity of the original premise was increasingly forgotten. Economy and ecology thus each became sites for algorithms of progress-as-expansion.

Anna Lowenhaupt Tsing, The Mushroom at the End of the World: On the Possibility of Life in Capitalist Ruins

[hazanla]

Klasik felsefeye göre insan “düşünen bir varlık” tır. Antropolojide ise insan “Homo sapiens” olarak tanımlanır. Ekonomi kavramının dilimize yerleşmesinden sonrada insanı “Homo economicus” olarak tanımlamaya başladık.

İnsanın ilk ve en önemli amacı iç huzurunu sağlamak ve ruhsal rahatlığa ulaşmaktır. Yapılan iyiliklerin, katlanılan fedakarlıkların ve gösterilen kahramanlıkların temelinde hep bu dürtü yatar. İnsanlığın sahip olduğu tüm yüce amaçların kökeni hep bundan ibarettir.

İnsan, her şeyden önce okuyan, araştıran, inceleyen, düşünen, yorumlayan, sorgulayan, itiraz eden, analitik düşünen yeni şeyler ortaya koyan, düşüncelerini anlatan, sezdiren ya da uygulayan bir varlıktır.

Ülkemizde ise yukarıda yazdığım insani değerleri terk eden yeni insan tipi karşı cinsi aşk ve sevgi ile kandırıp, serbest seks yapmak için evlilik kurumunun içine hapsedip türünün çoğalmasını sağlayan canlı türüne dönüşmüştür...

Muzaffer Kılıç

[mostlysignssomeportents]

The problem with economic models

When students of statistics are introduced to creating and interpreting models, they are introduced to George Box’s maxim:

All models are wrong, some are useful.

It’s a call for humility and perspective, a reminder to superimpose the messy world on your clean lines.

If you’d like an essay-formatted version of this article to read or share, here’s a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2023/04/03/all-models-are-wrong/#some-are-useful

Even with this benediction, modeling is forever prone to the cardinal sin of insisting that complex reality can be reduced to “a perfectly spherical cow of uniform density on a frictionless plane.” Partially that’s down to human frailty, our shared inability to tell when we’re simplifying and when we’re oversimplifying.

But complex mathematics are also a very powerful smokescreen: because so few of us are able to interpret mathematical models, much less interrogate their assumptions, models can be used as “empirical facewash,” in which bias and ideology are embedded in equations and declared to be neutral, because “math can’t be racist.”

The problems with models have come into increasing focus, as machine learning models have increasingly been used to replace human judgment in areas from bail assessment to welfare eligibility to child protective services interventions:

https://memex.craphound.com/2018/01/31/automating-inequality-using-algorithms-to-create-a-modern-digital-poor-house/

But even amidst this increasing critical interrogation of models in new domains, there is one domain where modeling is all but unquestioned: economics, specifically, macroeconomics, that is, the economics of national government budgets.

This is part of a long-run, political project to “get politics out of budgeting” -a project as absurd as “getting wet out of water.” Government budgeting is intrinsically, irreducibly political, and there is nothing more political than insisting that your own preferences and assumptions are “empirical” while anyone who questions them is “doing politics.”

This model-first pretense of neutrality is a key component of neoliberalism, which saw a vast ballooning of economists in government service — FDR employed 5,000 economists, while Reagan relied on 16,000 of them. As the jargon and methods of economics crowded out the language of politics, this ideology-that-insisted-it-wasn’t got a name: economism.

Economism’s core method is reducing human interaction to “incentives,” to the exclusion of morals or ethics — think of Margaret Thatcher’s insistence that “there is no such thing as society.” Economism reduces its subjects to homo economicus, a “rational,” “utility-maximizing” automaton responding robotically to its “perfect information” about the market.

Economism also insists that power has no place in predictions about how policies will play out. This is how the Chicago School economists were able to praise monopolies as “efficient” systems for maximizing “consumer welfare” by lowering prices without “wasteful competition.”

This pretense of mathematical perfection through monopoly ignores the problem that anti-monopoly laws seek to address, namely, the corrupting influence of monopolists, who wield power to control markets and legislatures alike. As Sen John Sherman famously said in arguing for the Sherman Act: “If we will not endure a King as a political power we should not endure a King over the production, transportation, and sale of the necessaries of life.”

https://marker.medium.com/we-should-not-endure-a-king-dfef34628153

Economism says that we can allow monopolies to form and harness them to do only good, enforcing against them when they abuse their market dominance to hike prices. But once a monopoly forms, it’s too late to enforce against them, because monopolies are both too big to fail and too big to jail:

https://doctorow.medium.com/small-government-fd5870a9462e

Today, economism is helpless to do anything about inflation, because it is ideologically incapable of recognizing the inflation is really excuseflation, in which monopolists blame pandemic supply shocks, Russian military belligerence and supposedly overgenerous covid relief programs for their own greedy profiteering:

https://pluralistic.net/2023/03/11/price-over-volume/#pepsi-pricing-power

Mathematics operates on discrete quantities like prices, while power is a quality that does not readily slot into an equation. That doesn’t mean that we can safely discard power for the convenience of a neat model. Incinerating the qualitative and doing arithmetic with the dubious quantitative residue that remains is no way to understand the world, much less run it:

https://locusmag.com/2021/05/cory-doctorow-qualia/

Economism is famously detached from the real world. As Ely Devons quipped, “If economists wished to study the horse, they wouldn’t go and look at horses. They’d sit in their studies and say to themselves, ‘What would I do if I were a horse?’”

https://pluralistic.net/2022/10/27/economism/#what-would-i-do-if-i-were-a-horse

But this disconnection isn’t merely the result of head-in-the-clouds academics who refuse to dirty their hands by venturing into the real world. Asking yourself “What would I do if I were a horse?” (or any other thing that economists are usually not, like “a poor person” or “a young mother” or “a refugee”) allows you to empiricism-wash your biases. Your prejudices can be undetectably laundered if you first render them as an equation whose details can only be understood by your co-religionists.

Two of these if-I-were-a-horse models reign invisibly and totally over our daily lives: the Congressional Budget Office model and the Penn Wharton Budget model. Every piece of proposed government policy is processed through these models, and woe betide the policy that the model condemns. Thus our entire government is conducted as a giant, semi-secret game of Computer Says No.

This week, The American Prospect is conducting a deep, critical dive into these two models, and into the enterprise of modeling itself. The series kicks off today with a pair superb pieces, one from Nobel economics laureate Joseph Stiglitz, the other from Prospect editor-in-chief David Dayen and Rakeen Mabud, chief economist for the Groundwork Collaborative.

Let’s start with the Stiglitz piece, “How Models Get the Economy Wrong,” which highlights specific ways in which the hidden assumptions of models have led us to sideline good policy (like increasing spending during recessions) and make bad policy (like cutting taxes on the rich):

https://prospect.org/economy/2023-04-03-how-models-get-economy-wrong/

First, Stiglitz sets out a general critique of the assumptions in neoclassical models, starting with the “efficient market” hypothesis, that holds that the market is already making efficient use of all our national resources, so any government spending will “crowd out” efficient private sector activity and make us all poorer.

There are trivially obvious ways in which this is untrue: every unemployed person who wants a job is not being used by the market. The government can step in — say, with a federal jobs guarantee — and employ everyone who wants a job but isn’t offered one by the public sector, and by definition, this will not crowd out private sector activity.

Less obvious — but still true — is that the private sector is riddled with inefficiencies. The idea that Google and Facebook make “efficient” use of capital when they burn billions of dollars to increase their surveillance dragnets is absurd on its face. Then there’s the billions Facebook set on fire to build a creepy dead mall it calls “the metaverse”:

https://www.youtube.com/watch?v=EiZhdpLXZ8Q

Then we come to some of the bias in the models themselves, which consistently undervalue the long-run benefits of infrastructure spending. Public investments of this kind “yield very high returns,” which means that even if a public sector project reduces private sector investment, the private investments that remain produce a higher yield, thanks to public investment in a skilled workforce and efficient ports, roads and trains.

A commonplace among model users is that we must make “The Big Tradeoff” — we can either reduce inequality, or we can increase prosperity, but not both, because reducing inequality means taking resources away from the business leaders who would otherwise build the corporations whose products would make us all better off.

Despite the fact that organizations from the OECD to the IMF have recognized that inequality is itself a brake on economic growth, fostering destructive “rent seeking” (seen today online in the form of enshittification), the most common macroeconomic models continue to presume that an unequal society will be as efficient as a pluralistic one. Indeed, model-makers treat attention to inequality as an error bordering on a mortal sin — the sin of caring about “distributional outcomes” (that is, who gets which slice of the pie) rather than “growth” (whether the pie is getting bigger).

Stiglitz says that model makers have gotten a little better in recent years, formally disavowing Herbert Hoover’s idea of expansionary austerity, which is the idea that we should cut public spending when the economy is shrinking. Common sense tells us that this will make it shrink faster, but expansionary austerity (incorrectly) predicts that governments that cut spending will produce “investor confidence” and trigger more private investment.

This reliance on what Paul Krugman calls the “Confidence Fairy” is tragically misplaced. Hoover’s cutbacks made the Great Depression worse. So did IMF cutbacks in “East Asia, Greece, Spain, Portugal, and Ireland.”

Expansionary austerity is politics dressed up as economics. Indeed, the political ideology subsumed into our bedrock models has caused governments to fail to anticipate crisis after crisis, including the 2008 Great Financial Crisis.

The politics in modeling are especially obvious in the process running up to the Trump tax cuts (as is often the case with Trump, he draws with a fisted crayon where others delicately shade with a fine pencil, making it easier to see the work for what it is) (see also: E. Musk).

Axiomatic to model-building is the idea that if you tax something, you’ll get less of it (“incentives matter”). The theory of corporate tax cuts goes like this: “if we tax corporations for the money they might otherwise use to build new plant and hire new workers, they will do less of those things.”

That’s a reasonable assumption — which is why we don’t tax companies on capital investments and their payrolls. These expenses are deducted from a company’s profits before it calculates its taxes. Corporate taxes are levied on profits, net of spending on labor and plant.

But when the CBO modeled the Trump cuts, it operated on the assumption that the existing tax system was punishing companies for hiring people and expanding operations, and thus concluded the reducing taxes would lead to more of these activities. On that basis, the tax cuts were declared to be expansionary, a means of driving new private sector activity. In reality, all they did was create more profits, which rich people used to bid up the prices of assets, creating a dangerous asset bubble — not investment in productive capacity.

In “Hidden in Plain Sight,” the other Prospect piece that dropped today, Dayen and Mabud tell us just how wrong the models were about the Trump cuts:

https://prospect.org/economy/2023-04-03-hidden-in-plain-sight/

The CBO predicted that the cuts would drive a 0.7% increase in GDP over a decade, while Penn Wharton predicted 0.6–1.1% growth. Both were very, very wrong:

https://www.npr.org/2019/12/20/789540931/2-years-later-trump-tax-cuts-have-failed-to-deliver-on-gops-promises

Despite the manifest defects of these models, we still let them imprison our politics. When Elizabeth Warren proposed a 2% wealth tax on assets over $50m, she asserted that this would reduce billionaires’ fortunes by $3.75T over 10 years, but the Penn Wharton model knocked $1T off it, and declared that the real impact of the policy would be a reduction in investment, depressing long-run growth. The politics of a wealth tax are sound — the kind of politics that wins elections and restores faith in democracy — but the economism of models sweeps the proposal off the table and into the dustbin of history.

The Penn Wharton model simply refuses to factor in absolutely key aspects of a wealth tax plan, from the impact of increased enforcement to the economic benefits of universal child care, increased education funding, student debt cancellation and other programs that could be enacted with the fiscal space opened up by reducing billionaires’ spending power.

The Warren policy is rare because we got to hear about it — through a national election campaign — before it was strangled by the model-makers. More often, proposals like this are quietly snuffed out even before they’re introduced to the legislature, when they are run through the model and told Computer Says No.

Modeling isn’t intrinsically bad, but “all models are wrong” and what determines whether a model is useful are the politics of its assumptions. Economism insists that there are no politics in model-making, which creates unfixable flaws in its models.

One core political assumption in economism’s models is that government shouldn’t exercise power to produce outcomes — rather, it should “nudge” markets with incentives (which, we are constantly reminded, “matter”). This means that we can’t ban pollution — we can only offer “cap and trade” systems to incentivize companies to pollute less. It means we can’t do Medicare For All, we can only “bend the cost-curve” with minor interventions like forcing hospitals to publish their rate-cards.

Economism — and its institutions, like the CBO — are “short-run Keynesian and long-run classical” — that is, they only consider the benefits of public spending over the shortest of timespans, and assume that these evaporate over long time-scales. That’s exactly backwards, as anyone who’s ever traveled on a federal highway or visited a national park can attest:

https://prospect.org/politics/congress-biggest-obstacle-congressional-budget-office/

All of this is worsened by politicians, who exploit the primacy of economism to attack their adversaries. When the CBO or Penn Wharton release a report on a policy, they often wrap their conclusions with caveats about uncertainties and ranges — but these cautions are jettisoned by opportunistic politicians who seize a single headline figure and use it as a club against their opponents.

In the coming week, the Prospect will run deep dives into the defects of CBO and Penn Wharton, along with other commentary. It’s very important work, throwing open the doors to the inner sanctum of economism’s sacred temple. I’ll be following it eagerly.

Have you ever wanted to say thank you for these posts? Here’s how you can: I’m kickstarting the audiobook for my next novel, a post-cyberpunk anti-finance finance thriller about Silicon Valley scams called Red Team Blues. Amazon’s Audible refuses to carry my audiobooks because they’re DRM free, but crowdfunding makes them possible.

Image: bert knottenbeld (modified) https://www.flickr.com/photos/bertknot/8375267645/

CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0/

[[Image ID: A Tron-like plane of glowing grid-squares. Two spherical cows roll about on the plane, chased by motion lines. The gridlines are decorated with complex equations from the Penn-Wharton Budget Model.]]

[aspirateur-killeuse]

So I wrote an AU where Kendall is an economic professor spécialised in behaviour economics. And Stewy... Well he is still Stewy.

[fierceawakening]

You know, it’s really funny to me the way the people defining neoliberalism are describing “homo economicus,” as I remember when I was studying sociopathy people mentioning over and over that sociopaths are overrepresented in the business world.

It seems at least to make sense. Homo economicus as described by those posters at least is assumed to be driven by desire for material gain rather than concern for others, and to act in accordance with others’ interests only when it’s required to achieve their own aims. HE is assumed to be insatiable, always wanting new stuff rather than buying their dream house after years of saving for that specific goal.

That’s basically sociopathy. Low empathy, not much drive to altruism unless it’s proven to help them too, thrill and novelty seeking for fear of crippling boredom, competition, dominance as primary motivation…

And yet when we call it HE everyone goes “lol that’s not real people, someone like that would be insufferable and also pretty awful,” but when we call it sociopathy we’re ableist for saying those traits usually would add up to a pretty selfish person, much less an insufferable one, EVEN LESS a potentially dangerous one.

Fascinating. What if we really did just base our models of “how most humans act re goods and services” on neurodivergence Georg and wind up politicking badly because we’re not accounting for that being a less common sort of human?

It would be funny. Disastrous, but funny.

[markrosewater]

In economics, there's a concept called *Homo economicus* which is essentially a perfectly rational being who always acts in a way to maximize utility. This person does not actually exist, but is the subject of most economic studies. Obviously I haven't seen the data that WotC has on its customers, but some of your answers lead me to believe that you may be focusing too much on the "perfectly rational" customer, and not enough on the customers that actually exist.

Who do you think is buying product? Who is playing all the games of Magic we can monitor (sanctioned tabletop play and digital play)? Who is rating individual sets highly in market research?

We’re not basing anything on hypothetical players. We base our business decision on actual data from actual players.

[cishetamine]

1 issue with tumblr compared to twitter is that it feels like the average level of discourse is often a bit more “i just graduated high school and think i am very smart” ?

like i just saw someone trying to rebut the theory of homo economicus on here and i’m just like….. look i know this might sound elitist but i would prefer to read things written by people who have gone to college and who know that that theory is outmoded and that even ppl in finance these days use behavioral economics to figure out how to invest….

like, this critique you’re making has been fully incorporated into the discipline by now…. it’s like seeing ppl try to critique anthropology without recognizing that anthropologists have been critiquing themselves for aaaages to the point of navel-gazing self-parody! like, you’re still going “anthropologists need to recognize that they have a standpoint TOO!!”

which like yeah!! no fucking shit!!! they know that!!!!! doesn’t mean they aren’t still racist tho!! but crucially, they’re now racist in *slightly different, occasionally more subtle ways*.

[edwad]

my point is that something like "how did homo economicus come to be" is not a question that neoclassical thinkers have to answer. for many of them, it's a problem for anthropologists and historians. they couldn't care less

[athousandgateaux]

My main complaint against the popularized use of the terms "emotional labour" or "affective labour" is that it tends to divorce an understanding of labour from any notion of economy, in a way that works to further extend capitalist relations into interpersonal relationships. It requires you to think of all your relationships, all your interactions with people, in terms of labour, work, exchange, and economy. Truly homo economicus behaviour.

[memoriae-lectoris]

[­­­...] Third, because it profoundly reshaped not only economic relationships, but also our relationships with each other. For neoliberal capitalism was never just an economic policy, as Margaret Thatcher made clear in 1981 when she told The Sunday Times, “Economics is the method; the object is to change the heart and soul.”

And in many ways, neoliberalism succeeded in this aim. For it fundamentally changed how we saw each other and the obligations to each other that we felt, with its valorizing of qualities such as hypercompetitiveness and the pursuit of self-interest, regardless of the wider consequences. It is not that humans are essentially selfish—research in evolutionary biology makes clear that we are not. But with politicians actively championing a self-seeking, dog-eat-dog mindset, and “Greed is good” (the maxim Gordon Gekko famously uttered in the 1987 movie Wall Street) serving as neoliberalism’s bumper sticker, qualities such as solidarity, kindness, and caring for each other were not only undervalued but deemed to be irrelevant human traits.

Under neoliberalism we were reduced to homo economicus, rational humans consumed only by our own self-interest.

[xionisgr]

ISBN:978-960-16-6763-8 Συγγραφέας: Wendy Brown Εκδότης: Εκδόσεις Πατάκη Σελίδες: 424 Ημερομηνία Έκδοσης: 2017-03-01 Διαστάσεις: 21x14 Εξώφυλλο: Μαλακό εξώφυλλο

[manpetasgr]

ISBN:978-960-16-6763-8 Συγγραφέας: Wendy Brown Εκδότης: Εκδόσεις Πατάκη Σελίδες: 424 Ημερομηνία Έκδοσης: 2017-03-01 Διαστάσεις: 21x14 Εξώφυλλο: Μαλακό εξώφυλλο

[mostlysignssomeportents]

This day in history

Monday (October 2), I'll be in Boise to host an event with VE Schwab. On October 7–8, I'm in Milan to keynote Wired Nextfest.

#10yrsago Asteroid named after Randall “XKCD” Munroe https://blog.xkcd.com/2013/09/30/asteroid-4942-munroe/

#10yrsago HOWTO make $200,000 off of the above-inflation USPS postage hike https://qz.com/128329/a-step-by-step-guide-to-profiting-off-the-3-cent-hike-on-us-postage-stamps

#10yrsago Talking about Ron Howard’s Haunted Mansion album with the Comedy on Vinyl podcast https://stolendress.com/comedyonvinyl/podcast_episodes/COV_278.mp3

#10yrsago The Big Lie: how polygraph companies convinced the US government to use pseudoscience on job applicants https://www.wired.com/story/inside-polygraph-job-screening-black-mirror/

#5yrsago California bans all-male corporate boards https://www.cnn.com/2018/09/30/business/california-requires-women-board-of-directors/index.html

#5yrsago The history of a Zorklike programming interpreter is a tale of language, art, code and literature http://www.emshort.com/ifmu/inform.html

#5yrsago Brazilian electoral upset possible as fascist loses ground to surging leftist https://www.theguardian.com/world/2018/sep/30/huge-protests-in-brazil-as-far-right-presidential-hopeful-jair-bolsonaro-returns-home

#5yrsago Chinese students, made to study Communism, are rising up for workers’ rights https://www.nytimes.com/2018/09/28/world/asia/china-maoists-xi-protests.html

#5yrsago “Like Lord of the Flies”: working at the TSA really sucks https://federalnewsnetwork.com/congress/2018/09/report-blasts-tsa-leadership-for-toxic-culture-blames-it-for-high-attrition-poor-morale/

#5yrsago Large scale psych study identifies “homo economicus” as the source of all evil in the world https://psycnet.apa.org/doiLanding?doi=10.1037%2Frev0000111

#5yrsago Justin Trudeau’s NAFTA concessions include 20 year copyright extension https://www.michaelgeist.ca/2018/10/from-copyright-term-to-super-bowl-commercials-breaking-down-the-digital-nafta-deal/

#5yrsago All levels of UK government have been paralysed by Brexit https://www.bloomberg.com/news/articles/2018-09-19/brexit-has-brought-britain-to-a-standstill#xj4y7vzkg

#5yrsago California’s Net Neutrality bill is now law https://arstechnica.com/tech-policy/2018/09/california-governor-signs-net-neutrality-rules-into-law/

#1yrago How Palantir will steal the NHS https://pluralistic.net/2022/10/01/the-palantir-will-see-you-now/#public-private-partnership