… is from page 81 of Geoffrey Brennan’s and James Buchanan’s December 1981 International Review of Law and Economics paper, “The Normative Purpose of Economic ‘Science’,” as this paper is reprinted in Vol. 12 – Economic Inquiry and Its Logic (2000) – of The Collected Works of James M. Buchanan:
One calls forth the Homo economicus assumption, not because it is necessarily the most accurate model of human behaviour but because it is the appropriate model for testing whether institutions serve to transform private interest into public.
DBx: When assessing and choosing institutions, or modifications of institutions, that govern human action we rightly give a high score to those that align the incentives of individuals pursuing their own narrow interests with the public interest. Even if we hope and expect that the individuals acting within the institutional rules will be significantly motivated by large dollops of altruism, it’s nevertheless very useful that each individual, should he or she act self-interestedly, be incited to pursue that self-interest in ways that enhance the ability of other people to better pursue their interests.
This point is straightforward and obvious to any and all careful economists, as well as to true liberals. The homo economicus assumption is a methodological device, useful for scientific purposes within its proper context. It is not, and never was, meant by serious scholars who use it to be a description of – and, much less, a prescription for – human behavior. And yet, people such as Sohrab Ahmari continue doing battle against this man of straw.
…..
Pictured above are Geoff Brennan (1944-2022) and Jim Buchanan (1919-2013).
