What is an Economic Man?
An economic man is an idealized being who possesses the capability of understanding the marketplace completely and perfectly, and is able to make business decisions that are highly likely to provide the greatest return from any investment or purchase. Sometimes known as the economic human or homo economicus, an individual with this level of expertise would be able to manage this process without a great deal of regard for the welfare of others, focusing instead on the satisfaction that is derived from executing transactions that result in high profits.
The concept of the economic man is in contrast to the idea of homo reciprocans, an economic theory that is based on the idea that human beings are ultimately motivated by the desire to be cooperative and work with others to create the desired results. Unlike the economic man that is focused on meeting needs regardless of consequences to others, the individual who reciprocates goodwill wants others to be successful, feeling that his or her own success will be enhanced even as others are able to enjoy the benefits of sound economic decision making.
With this idea of the economic man, it is logical to assume that an individual would be focused on what would improve his or her financial situation. To that end, the individual will do whatever seems in harmony with achieving the desired end of obtaining the highest amount of profit as possible. This is true whether the individual is functioning as a consumer who wants the most benefit for his or her purchase of a given asset, or creating goods and services that are in turn sold to consumers at the highest amount of profit possible. In this model, the needs and wants of others are of little to no consideration, unless doing so is perceived as being helpful in achieving that goal of earning the highest amount of return.
While this type of economic theory is generally considered a standard for use in evaluating different phenomena in the world of personal consumption expenditures, there are those who object to the very idea of the economic man. For some, the objection lies in the extreme nature of the model. Since the concept of the economic man does not take into consideration the possibility that the individual may consider the satisfaction of others, if for no other reason than to ensure that others continue to purchase the foods produced by a given manufacturer, it is sometimes considered to be too self-centered to truly represent the way that consumers and suppliers interact. This has led some to place more emphasis on the idea of reciprocity as the general foundation for consumption within a marketplace, with the extreme example of the economic man perhaps applying in isolated situations which exert some degree of influence for a short period of time.
I think this is a popular concept for experimentation among game theorists. There are different games that are used in political science and economy to see how people act given certain situations.
You can also make a game to see if personal interest or public interest outweighs among the players in a situation. Depending on the number of players and the number of times the game is tested, it's possible to reach some sort of conclusion about people's natural tendencies and reactions in a situation where profit or gain is important.
I haven't had a chance to read in detail about any of them. But I think it would be interesting to know what the results are and why.
I don't agree with the economic man hypothesis because I don't think that we can generalize or group people in any way, let alone know what is going on in their heads.
This theory assumes that we can know what people are thinking. It makes a generalization that all people who make business decisions are selfish and are incapable of acting any other way. But people do not act consistently. Even if they are selfish, they can change and act in a different way and with different incentives then before.
There is no way for us to know exactly what businessmen's motives are. That is why I don't think we should make any generalization. I can't say that people who deal in business are selfish or selfless. There are probably people who belong to all sides of the spectra.
I think that the economic man is reality. I think that more than 80% of manufacturers think and work this way. In business, profit is everything. That's why we have the FDA for example, to protect our well-being and health against manufacturers who don't care.
Why else would there be potentially dangerous and hazardous products in the isles? Why would the government have to pull diet pills and cat food off the shelves? Why would experts warn us against cosmetics with unknown additives and plastic which can cause cancer?
All of this is because most manufacturers are "economic men." Some even go far enough to risk consumer's health and lives by using dangerous commodities because it is cheaper and will translate into greater profit.
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