Homo economicus

But let's start with the conscious banking, because I think it's a concept that is very important.

OK, so you see, I always wrote about this dichotomy existing between the Homo sapiens and the economic sapiens, right, and the Homo economicus and the Homo sapiens.

So the previous theory of financial markets thought that the Homo economicus was a necessary rational being, so try to just work with rationality.

in order to make financial decisions.

The problem is that rationality is through only exposed.

Otherwise, I sort of spoil the reading, right? However, I provide a deep insight and articulated review about the different opinions of the origins and the replication of consciousness.

I don't cover them all, just the tiny few that I believed were the most relevant, because there's much more happening out there, but I think these crystallize the key determinants of that.

But then, in the end, as much as in my previous work, I tried to reconcile the gap between Homo economicus and Homo sapiens, where Homo sapiens is the only actor living and breathing on this pale blue dot.

And I'm very happy to have you on the show as a former colleague at the Centre Valos Pareto in Lausanne.

The first paper we'll discuss about is the one that you wrote with Michele Bay and that was published in the Journal of Economics out in 2023, The Birth of Homo Economicus, The Methodological Debate on the Economic Agent from John Stuart Mill to Vilfredo Pareto.

And so my first question to you would be, on that paper, what is the common understanding of Homo economicus today? Is it closer to John Stuart Mill's wealth-seeking individual or to Maffeo Pantaleoni's evolutionary agent, as you tell in your paper, or even to Vilfredo Pareto's choice machine? And perhaps the question behind that is what common misconceptions about Homo economicus were you hoping to challenge with your article?

Okay, this is a great question, Francois.

I guess the first one is easier and quicker for me to respond.

I would say that modern microeconomics owes its understanding mostly to Edgeworth and to Pareto.

And in micro, we see Homo economicus as a choice machine.

This is Pareto's expression.

Annette draws a very sharp contrast between secular economic theory and the church's vision.

He takes direct aim at the prevailing secular model of the human person, which economists call homo economicus.

Let's unpack this because it dictates so much of our modern world.

It really is the water we swim in.

It is.

Homo economicus is the idea that a human being is essentially a perfectly rational, purely self-interested calculating machine.

Every decision you make is supposedly driven by maximizing your own personal utility and wealth.

It is a devastatingly bleak atomized view of humanity.

Um, well, maybe you can explain.

Like you, you mentioned Homo economicus and self, uh, interested rational utility maximizers.

Someone with a PhD in economics probably believes that, but the farmer down the street from me has never heard of that term.

So how does the whole culture fit into the story of separation?

And I could go on and on about the way in which that paradigm has, has shaped us.

But for, for example, the idea of Homo economicus, the pe-- the idea that people are reliably selfish.

If that was true, then it would be true by definition that selfishness is the cause of our prosperity.

And that is not true because we are Homo sapiens.

Then the neoclassical school, which is the big one today.

That's where Homo economicus comes from, the rational, self-interested calculator.

But then there's Marx, who sees capitalism as class conflict, and the Austrians, who love free markets but hate the math.

And Schumpeter, who talks about creative destruction through innovation.