Just a quick footnote to the economic man stuff. Talking about Wikipedia probably gives me a credibility problem, but the page I referred to yesterday to is actually pretty impressive, and has some good points worth mentioning.
“One problem with making the Homo economicus model more sophisticated is that sometimes the model becomes tautologically true, i.e., true by definition. If someone has a “taste” for variety, for example, it becomes difficult if not impossible to distinguish economic rationality from irrationality. In this case, the Homo economicus model may not add any new information at all to our economic understanding.”
Indeed: anything can be rationalized. The whole sorry debate about economic man could probably be avoided if we understand that “the Homo economicus model” isn’t supposed to add new information to our economic understanding. The economist’s ultimate goal is not to figure out how people behave – that’s just something we have to address along the way to describing things. Economic man is no more of an end than the super-supercomputer I invoked yesterday.
However, my favorite bit from the page is this nice little dig:
“These criticisms [of economic man] are especially valid to the extent that the professor asserts that the simplifying assumptions are true and/or uses them in a propagandistic way.”
No argument here. Economics teaching is usually depressing. Why is the first thing students of economics see a supply and demand diagram? How does that help them understand what we’re trying to do, what we assume? How, more importantly, is that value free? How can that separate economics from capitalism, money, markets? How can that be economics?
“It is primarily when targeting the limiting assumptions made in constructing undergraduate models that the criticisms listed above are valid.”
Imagine hundreds, thousands of students come to you every year. You can show them why your subject is exciting, what it can do philosophically and practically, ask big questions, educate an astonishing number of diverse students, make the next generation of economists good scientists while allowing all normative opinion to flourish around the argument. You can take students with all preconceptions, with all beliefs, and send those students away in their diversity of thought as economists. The next generation of economists would have a fighting chance of being value-free, and the debate wouldn’t be “us versus the economists”, but just “us”.
Hundreds of thousands of students do come to Econ 101 every year. We show them a supply and demand diagram and reinforce all prejudices. We present economics as an answer. How many minds do we lose? How can we tolerate the waste?