Who was never born, never lived, yet overran the world? The answer is homo economicus, economic man: a selfish contender and something like a supercomputer; fully informed and perfectly rational. His main aim is to ‘maximise his utility’ ‒ to be as happy as can be. Such traits allow him to act effectively for his own good while also producing an optimum on a social scale. He is the protagonist of mainstream economic models and the main figure in the university teaching of economics; in fact, he is a gender-neutral human who is called a ‘man’ only due to historic convention. Beyond the university walls, economic man has now become a belief system that promises to offer a pathway to prosperity, both individually and socially.

It seems a mystery why economic man has become so popular, because we know very well that this is not what human beings are like.

Not rational and not egoistic

Many have challenged the suppositions behind economic man. These days, criticizing the assumption of rational decision making is by no means an exotic notion or indeed one beyond the range of the economics profession. Both Daniel Kahneman in 2002 and Amor Tversky in 2017 received the Nobel Prize in Economics for doing just that.

People do not necessarily do what is good for them. According to János Harsányi, a Nobel Prize-winning Hungarian-American economist, a person's behaviour does not necessarily reflect their deeper interests and true preferences, which may be due to ignorance or to incorrect information. He gives the example of someone with a sore throat who has a choice between two drugs; of the two, according to the current scientific knowledge, A is the best medicine. If he nevertheless chooses medicine B, out of ignorance, then his action is not in his true interest. His true preference was actually for medicine A.

The human is not perfectly rational, but rather ‘predictably irrational’, as explained by behavioural economists. We are indeed irrational: the human mind is far from being a perfectly rational supercomputer. Yet we remain predictable: our irrationality has its abiding patterns, so our minds are not simply full of chaos. In Kahneman's view, for example, we are inclined to overrate the chances of unlikely events, or we tend overly to cling to things we already possess.