2 - The Untenability of the Unembedded Homo economicus

Summary

Chapter 2 introduces identity analysis and uses it to examine whether the Homo economicus conception can identify real-world individuals. It describes the self-referential, circular character of that conception, and shows that the belief that Homo economicus identifies real-world individuals rests on a fallacious inference known as affirming the consequent. The chapter reviews how the identity concept came into economics by making a person’s individual identity their utility function. This is compared with how social identity theory understands individual identity, and economics and social identity’s view of representative agents is then distinguished. Sen’s multiple selves view of individual identity is contrasted with both in light of its ontological basis. Section 4 of the chapter critically evaluates rationality theory’s two independence axioms regarding preferences, the logical basis for saying choice is context-independent and for the unembedded Homo economicus individual conception. It argues neither can be defended and that not only must choice be seen to be context-dependent, but that individuals need to be seen as socially and historically embedded.