Homo economicus

The economic man (homo economicus) is an economically rational individual, meaning that actions are performed based on the following principles (preferences) ... 

Because substitution of utilities allows the homo economicus to receive an economic transaction as a sufficient compensation for a species being diminished in numbers because transitivity allows for comparison and ranking of distinct environmental end points and other goods/services because stable preferences ensure that environmental policies will provide a social good. 

The ultimate feature of homo economicus, of relevance for this chapter, is basically that homo economicus can compare welfare with utility with money. 

Many objections have been raised against the notion of humans represented as a Homo economicus. Amongst the objections acknowledged in the economic text books one can find statements recognizing that it is impossible to measure utility completely, and that it is impossible to compare utilities of different people. 

The seller, or usually the corporation, company, business, or firm acts on similar principles as homo economicus. While the objective for the buyer is to maximize utility, the seller tries to maximize profits and/or minimize costs. While the buyers base their actions on a set of preferences, the sellers base the firms actions as consequences of mainly three decisions needed ... 

There are two main scientific areas in which economic valuation takes place, environmental economics and ecological economics. The main difference between the two areas is whether or not the general description of how the economy functions is accepted or not. Environmental economists do basically accept the way the market functions and homo economicus (Sect. 2). Ecological economists... 

As we hinted in part 2 of this chapter, there are concerns with using the traditional neoclassical economics view of homo economicus as an expresser of welfare impacts. Not all persons can or wish to translate welfare into utility into money, and not all would be willing to accept monetary compensation out of moral reasons (these respondents are usually sorted out of WTP surveys as protest answers as we described earlier in this text). 

We may conclude, therefore, that the interaction between emotion and interest cannot be modeled in terms of competing costs and benefits. Concerning the short-lived emotions, the model correctly predicts that there will be a trade-off between emotional rewards and other rewards, but it fails to incorporate the fact that the trade-off itself may be shaped by emotion. Concerning the durable emotions, the model ignores that the pursuit of emotional satisfaction may be so fundamental to a person s life that all other considerations become secondary. In brief summary, the short-lived passions undermine the theory of the rational actor, whereas the durable ones undermine the theory of homo economicus. 

Bowles, S. andH. Gintis, 1993. The revenge of homo economicus contested exchange and the reviwd of political economy. J. of Ec. Perspectives 7, 83-102. 

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