Demsetz on Economic Man

by Don Boudreaux on April 17, 2010

in Economics

One of my all-time favorite economists is U.C.L.A.’s Harold Demsetz.  I’m finally getting around to reading his 2008 collection of essays, From Economic Man to Economic System.

The first essay in this book is entitled “Where Economic Man Dwells.”  It’s vintage Demsetz.  Here’s a slice from pages 8-9, in which Demsetz discusses “the caricature of economic man created by the model’s critics”:

Consider again the persons depicted in Puccini’s opera [La Boheme].  The landlord is cast as a dolt and narrow-minded seeker of [apartment] rent; no matter that he has invested considerable sums in providing living spaces to those in need of them.  His artist-tenants, on the other hand, are viewed as kind, fun-loving pleasure seekers.  They acquire such pleasures by delaying payments of the rent due the landlord, which is narrow-mindedly seeking to use the funds of someone else, and by succeeding in bilking an elderly, past lover of coquettish Musseta.  Now, I ask you, which of these two classes of characters is the more narrow-mindedly self-seeking?  They both seek their self-interests.  The difference between them is in the methods employed.  The landlord supplies living space and offers contractual arrangements to use this space, expecting thereby to receive funds from tenants.  The elderly lover buys lunch for others out of past remembrances of romance and present hopes of renewing this romance.  The artists, on the other hand, pursue self-interests in duplicitous ways, delaying performance on the rental agreement that provides them with living space and deceiving and elderly seeker of romantic engagement.  Critics of economic man generally visualize the landlord-type as the only person who fits the caricature they have fashioned.

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