Diversity in Economics: A Discussion of Behavioural Economic Approaches

It is generally assumed in the established teaching of economics that man is a Homo oeconomicus: he acts rationally based on material gains. However, does this assumption provide an accurate picture of human behaviour? Do people act rationally or is their behaviour primarily governed by emotions and experiences? Georg Weizsäcker, Humboldt University of Berlin, emphasizes that economists are completely familiar with this representation of an ideal image, which is also very useful to them. They deal with the so-called Homo oeconomicus on a daily basis, as he represents an ideal image for decisions in economic models. However, Homo oeconomicus has a very bad reputation, particularly among behavioural economists. They use him as a reference point and focus their research on presenting this reference point as unrealistic. Closer analysis of the ideal image, however, is meaningful. One can only know that the assumptions underlying Homo oeconomicus can be rejected, once there is comprehensive proof that Homo oeconomicus does not generate a phenomenon. This can teach us a lot about human decisions. Indeed Georg Weizsäcker also argues that the precept of sensible action is particularly important in difficult times. According to Martin G. Kocher, University of Munich, behavioural economics not only opens the door to a new economic interdisciplinarity, but has also helped to transform economics from a very theoretical science to a highly empirical field. Felix Gelhaar, University of Kiel, and Simon Bartke, Institut für Weltwirtschaft, Kiel, point out that behavioural changes can only be achieved in the long-term via changes in preferences. It is therefore necessary to influence culture and social norms via, for instance, long-term work on consumer information or adjustments to the subject matter taught in schools.