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“There’s Life in the Old Dog Yet”: The Homo economicus model and its value for behavioral ethics

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Abstract

The Homo economicus model (HEM) is widely used in the social sciences in general and in business ethics in particular. Despite its success, the model is frequently criticized for being empirically flawed and normatively dangerous, and its critics argue that it should be abandoned and replaced by more realistic models of human behavior. In response to the HEM’s critics, this paper develops a precise methodological approach that makes it possible to integrate within the HEM seemingly contradictory empirical evidence. Using the methodology we develop, we will integrate recent findings in behavioral economics and show how a rational-choice approach to behavioral ethics can illuminate the emergence, salience and persistence of morality.

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Notes

  1. Kant famously illustrates his position with an example from business: if a merchant who could easily cheat charges a fair price to everybody because he is worried that, if he did not, his reputation would suffer, there is no moral worth in his honesty, as his behavior is just a matter of prudence (Kant 1785/2013: 487). Another prominent critic of economic acts is Karl Marx who denies the possibility of morality, solidarity and humanity in capitalist market systems (Marx 1959/2007). On egoist motives in Marxism, see Churchich (1994: 145–169).

  2. Some researchers describe a similar “indoctrination effect” to explain why in laboratory experiments economics students tend to behave less cooperatively than students of other social sciences (Bauman and Rose 2011; Frank et al. 1993; Ostrom 1998).

  3. Popper himself did not think of his methodology as ‘contingent,’ but understood it as the only way of guaranteeing progress in science. In this respect, we do not follow Popper. His position is prescriptive and hence not falsifiable in itself (see e.g., Küpper 2011). Methodological choices are normative stipulations and therefore cannot be true in an objective sense.

  4. For the sake of expositional clarity, we summarize our results in the form of a proposition. In a recent Academy of Management Review editorial, Cornelissen (2017) referred to this style of theorizing as the “proposition-based style.” In contrast to that, our propositions do not introduce “cause–effect relationships” but outline the cornerstones of our proposed methodology.

  5. We should note that Becker’s concept of ‘preferences’ does not refer to mere tastes, but to fundamental preferences, as reflected in the following quote: “The preferences that are assumed to be stable do not refer to market goods and services, like oranges, automobiles, or medical care, but to underlying objects of choice that are produced by each household using market goods and services, their own time, and other inputs. These underlying preferences are defined over fundamental aspects of life, such as health, prestige, sensual pleasure, benevolence, or envy, that do not always bear a stable relation to market goods and services” (Becker 1976: 5).

  6. Note that this methodological choice does not deny that evolutionary cooperation may have developed first (Tomasello 2009).

  7. In Elements of Law Hobbes (1650/1994: 50) states: “GLORY […] is that passion which proceedeth from the imagination or conception of our own power, above the power of him that contendeth with us.”

  8. We are grateful to Alicia Melis for drawing our attention to this distinction.

  9. Similarly, economics draws a difference between an explanatory model of behavior and the agent’s perception of that same behavior (his Lebenswelt): “The critics of rational choice invariably—and I mean invariably—misrepresent the theory. In particular, it does not imply that rational actors are egoists, or that they maximize pleasure, or in fact, that they maximize anything. It is useful to keep in mind at all times that the rational choice model is a key tool of animal behavior theory (…). It is difficult to consider a creature lacking nociceptors (e.g., most insects) as a happiness maximizer, and yet the rational actor model is very illuminating even for such creatures. They maximize fitness” (Gintis 2016: vii).

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Authors and Affiliations

  1. School of Law and Economics, Martin-Luther-University Halle-Wittenberg, Große Steinstr. 73, 06108, Halle (Saale), Germany

    Philipp Schreck

  2. Department of Business, Economics and Social Theory, University of Salzburg, Kapitelgasse 5-7, 5020, Salzburg, Austria

    Dominik van Aaken

  3. School of Philosophy, Philosophy of Science, and Religious Studies, Ludwig-Maximilians-University Munich, Ludwigstr. 28, 80539, Munich, Germany

    Karl Homann

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Schreck, P., van Aaken, D. & Homann, K. “There’s Life in the Old Dog Yet”: The Homo economicus model and its value for behavioral ethics. J Bus Econ 90, 401–425 (2020). https://doi.org/10.1007/s11573-019-00964-z

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