September 16, 2005 by AK

Just Price, Economics and the Middle Ages: three posts (here’s #3) at Eunomia. No time to comment on the discussion, but still: it’s not economists who created homo oeconomicus, it’s philosophizers in search of the meaning of “economics.” Modern economics doesn’t really “celebrate” the self-interest of man; it simply assumes that, in order to correctly predict certain aspects of economic behavior, it makes sense to assume that economic agents are self-interested. Sometime it makes no sense at all: complete egotists would rather die in debt (thereby maximizing lifelong consumption) than leave unspent wealth to the living. It’s obviously necessary to assume altruistic motivations to agents in an intergenerational model to account for inheritance (I think Robert Barro was the first, or one of the first, to put together a model of this sort in the 1970s.)

Also, “self-interested” in economics may mean simply that people act according to their preferences (“maximize their utility”), which might well be altruistic.


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