Have economists moved from Homo Economicus to Homosapiens

I was just reading this paper from Richard Thaler where he makes 6 (bold) predictions. The basic theme of the paper is that work in economics should shift from assuming rational agents (Homo Economicus) to normal human beings (homo sapiens) who is biased, overconfident etc. It is a fantastic paper full of wit and humor. Must read

The paper was written in 2000 and his predictions are for next couple of decades. So, have we shifted?

Yes we have but still it is pretty limited. There are many economists working on behavioral economics (see a profile of leading BE economists here) and Boston Fed has even set up a centre on research in the field (see this).

Still, we have a long way to go. Most economics work/papers is still based on Rational agents assumption and mathematical models. This paper by Oswald and Ralsmark looks at Future of Economics and has three findings: One of them is:

…contrary to numerous gloomy assessments of the state of academic economics –including some in the 1991 The Future of Economics centenary issue of the Economic Journal, compiled as a set of essays in Hey (1992)) — the great majority of these young economists are doing empirical work. Many people who criticise economists as bsessively mathematical have a view of economics that is out-of-date: our data paint a clear and more modern picture. The future of economics in the elite American universities seems likely to be heavily applied, not abstractly theoretical. Of our 112 researcherrs, few appear to be doing deductive theory for its own sake.

This paper is based on studying the resumes of the all Assistant Professors in Economics of the top 10 universities. The paper shows the popular research areas amidst the Professors and out of 112, only 5 are interested in Behavioral Economics. Now, many might shift to behavaioral economics in future, but most stick to their core areas. The authors have a nice Friedman quote at the end which is worth restating:

‘Again and again, I have read articles written primarily in mathematics, in which the central conclusions and reasoning could readily have been restated in English, and the mathematics relegated to an appendix…’

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One Response to “Have economists moved from Homo Economicus to Homosapiens”

  1. Should Development Economics become more empirical or theoretical? « Mostly Economics Says:

    […] essence.  A balance is needed and as of now it has tilted bigtime towards empirics. I also covered Thaler’s paper who also hoped we move towards a more realistic economics. Unfortunately, we […]

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