The Rise and Fall of Homo Economicus


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In his debut, Greek journalist Papadogiannis argues that the triumph of economics as a science is a tragedy of human arrogance.
In this stinging critique, the author writes that mainstream economics has lost touch with reality. Economists have cast economics as a “hard science” and have put their trust in mathematical models and the efficiency of free markets. Yet economic dilemmas erupt violently and unexpectedly, such as the global financial crisis of 2007 and 2008, despite economists’ assurances about stability and risk. Papadogiannis contends that this happens because the study of economics operates in a “parallel universe” that’s merely a shadow of how real life works. A number of dubious assumptions, he says, have left economics poorly equipped to explain a complex, chaotic world. Among them is the myth of “Homo economicus”—that people are economic agents who coldly calculate profit and loss for every decision. Citing voluminous research from psychology and the social sciences, Papadogiannis shows that people are seldom purely rational; emotions, biases, and social and political ideas profoundly influence people’s behavior. Add the disruptive nature of technology, and no mathematical formula can possibly capture the messiness of life. The only thing that’s certain, the author says, is another economic calamity. He hammers home this point with a thumbnail history of financial crises, from the 17th century tulip mania to the Great Recession of 2009. It reveals a pattern of boom-and-bust money-grubbing and misfortune that illustrates how academic theories crumble before human folly. The book’s true value is in how it challenges the so-called experts; like a dogged skeptic, Papadogiannis raises razor-sharp questions to expose flawed thinking (“Why did [economics] stubbornly ignore reality and get trapped on a lonely path?”), and in doing so, he accomplishes a rare feat: an economics text that will hold the attention of noneconomists. Richly sourced and strongly argued, his book is an attack on humanity’s self-deceiving faith in its own abilities. The author doesn’t deny the value of economics but rather urges its practitioners to widen their vision. The economy, in his view, is a many-sided beast driven by passions, expectations, fear and greed—just like the people who comprise it.
A forceful economics text that tells a damning tale of hubris.

Pub Date: Aug. 7, 2014

ISBN: 978-1499646672

Page Count: 296

Publisher: CreateSpace

Review Posted Online: July 23, 2014

Kirkus Reviews Issue: Sept. 1, 2014


Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our...

A psychologist and Nobel Prize winner summarizes and synthesizes the recent decades of research on intuition and systematic thinking.

The author of several scholarly texts, Kahneman (Emeritus Psychology and Public Affairs/Princeton Univ.) now offers general readers not just the findings of psychological research but also a better understanding of how research questions arise and how scholars systematically frame and answer them. He begins with the distinction between System 1 and System 2 mental operations, the former referring to quick, automatic thought, the latter to more effortful, overt thinking. We rely heavily, writes, on System 1, resorting to the higher-energy System 2 only when we need or want to. Kahneman continually refers to System 2 as “lazy”: We don’t want to think rigorously about something. The author then explores the nuances of our two-system minds, showing how they perform in various situations. Psychological experiments have repeatedly revealed that our intuitions are generally wrong, that our assessments are based on biases and that our System 1 hates doubt and despises ambiguity. Kahneman largely avoids jargon; when he does use some (“heuristics,” for example), he argues that such terms really ought to join our everyday vocabulary. He reviews many fundamental concepts in psychology and statistics (regression to the mean, the narrative fallacy, the optimistic bias), showing how they relate to his overall concerns about how we think and why we make the decisions that we do. Some of the later chapters (dealing with risk-taking and statistics and probabilities) are denser than others (some readers may resent such demands on System 2!), but the passages that deal with the economic and political implications of the research are gripping.

Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our minds.

Pub Date: Nov. 1, 2011

ISBN: 978-0-374-27563-1

Page Count: 512

Publisher: Farrar, Straus and Giroux

Review Posted Online: Sept. 3, 2011

Kirkus Reviews Issue: Sept. 15, 2011


Occasionally wonky but overall a good case for how the dismal science can make the world less—well, dismal.

“Quality of life means more than just consumption”: Two MIT economists urge that a smarter, more politically aware economics be brought to bear on social issues.

It’s no secret, write Banerjee and Duflo (co-authors: Poor Economics: A Radical Rethinking of the Way To Fight Global Poverty, 2011), that “we seem to have fallen on hard times.” Immigration, trade, inequality, and taxation problems present themselves daily, and they seem to be intractable. Economics can be put to use in figuring out these big-issue questions. Data can be adduced, for example, to answer the question of whether immigration tends to suppress wages. The answer: “There is no evidence low-skilled migration to rich countries drives wage and employment down for the natives.” In fact, it opens up opportunities for those natives by freeing them to look for better work. The problem becomes thornier when it comes to the matter of free trade; as the authors observe, “left-behind people live in left-behind places,” which explains why regional poverty descended on Appalachia when so many manufacturing jobs left for China in the age of globalism, leaving behind not just left-behind people but also people ripe for exploitation by nationalist politicians. The authors add, interestingly, that the same thing occurred in parts of Germany, Spain, and Norway that fell victim to the “China shock.” In what they call a “slightly technical aside,” they build a case for addressing trade issues not with trade wars but with consumption taxes: “It makes no sense to ask agricultural workers to lose their jobs just so steelworkers can keep theirs, which is what tariffs accomplish.” Policymakers might want to consider such counsel, especially when it is coupled with the observation that free trade benefits workers in poor countries but punishes workers in rich ones.

Occasionally wonky but overall a good case for how the dismal science can make the world less—well, dismal.

Pub Date: Nov. 12, 2019

ISBN: 978-1-61039-950-0

Page Count: 432

Publisher: PublicAffairs

Review Posted Online: Aug. 28, 2019

Kirkus Reviews Issue: Sept. 15, 2019

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