The explanation lies with the behavioral model of homo economicus and critique
of the “human factor.” This is the behavioral model preferred by Gary S. Becker as
well as many other well-respected neoclassical economists (Becker 1976, p. 817).
The behavioral model of homo economicus, in particular, as it is proposed in
microeconomic literature is characterized by absolute rationality and utility maximization. Consequently, homo economicus exclusively pursues self-interests and is
aware of what works to his own advantage. The term selfish is often applied when
describing homo economicus. However, the modern homo economicus must be
differentiated because his behavior is not always and everywhere that of an optimizer
(Kirchgässner 2013, p. 32). This is the context which produced the concept of
bounded rationality, which dates back to Herbert Simon in the late 1950s (Simon
1957). It builds on the psychology of human decision-making behavior, and the
approach came to be known as “behavioral economics” in later publications (1987).
It introduced a somewhat “weakened” variant of homo economicus. In terms of the
sustainable development approach, this allowed a totally new concept of humans and
the human factor. As Ferraro and Reid have pointed out:
Dissatisfaction with the Homo Economicus worldview has led to much critique, notably in
the debates related to sustainable development, where there is a growing awareness of the
negative implications of its philosophy, especially its ethos of self-interest in the management and utilization of natural resources. (Ferraro and Reid 2013, p.127)
Manstetten and Faber emphasize the sustainable economy as the core of a human
motivational structure, characterized by respect for the interests of all people. This
applies in particular to future generations (Manstetten and Faber 1999). The new
differentiation of the human factor has far-reaching consequences for the environmental, economic, and social dimensions. The dichotomy in thinking about progress
is clear. Stiglitz chooses a completely different focus for his criticism of the economic findings of the neoclassical economists and also questions the progress of
economic research. He also criticizes the insufficient acknowledgment of the available evidence of market and policy failure in the field of economics while citing
many examples of recent research findings that suggest the widespread assumption
of efficient markets is not adequately supported by the scientific evidence.
Markets provide incentives, but market failures are widespread and a continuing discrepancy
exists between social and private returns and in some sectors – like healthcare, insurance and
financial markets – the problem is greater than in others, and the state concentrates its efforts,
understandably, on those sectors. (Stiglitz 2010, p. 309)
Another unsolved challenge is presented by the many interdependencies that exist
between the various subsystems in a society. These are as yet not addressed or are
still not adequately considered in economics. To improve the depiction of the
challenges and the complexities, more interdisciplinary or cross-disciplinary
research is required (Vilsmaier and Lang 2014). One reason for this absence of
awareness in the context of economic analysis is that it can be advantageous to hide
these interdependencies (von Hauff 2014). This corresponds to Lerner’s dramatic
assessment that economics is the queen of the social sciences (Lerner 1972). Sturn
further notes:
1 Progress in Economic Thought: Neoclassical Economics Versus. . .
5
of the “human factor.” This is the behavioral model preferred by Gary S. Becker as
well as many other well-respected neoclassical economists (Becker 1976, p. 817).
The behavioral model of homo economicus, in particular, as it is proposed in
microeconomic literature is characterized by absolute rationality and utility maximization. Consequently, homo economicus exclusively pursues self-interests and is
aware of what works to his own advantage. The term selfish is often applied when
describing homo economicus. However, the modern homo economicus must be
differentiated because his behavior is not always and everywhere that of an optimizer
(Kirchgässner 2013, p. 32). This is the context which produced the concept of
bounded rationality, which dates back to Herbert Simon in the late 1950s (Simon
1957). It builds on the psychology of human decision-making behavior, and the
approach came to be known as “behavioral economics” in later publications (1987).
It introduced a somewhat “weakened” variant of homo economicus. In terms of the
sustainable development approach, this allowed a totally new concept of humans and
the human factor. As Ferraro and Reid have pointed out:
Dissatisfaction with the Homo Economicus worldview has led to much critique, notably in
the debates related to sustainable development, where there is a growing awareness of the
negative implications of its philosophy, especially its ethos of self-interest in the management and utilization of natural resources. (Ferraro and Reid 2013, p.127)
Manstetten and Faber emphasize the sustainable economy as the core of a human
motivational structure, characterized by respect for the interests of all people. This
applies in particular to future generations (Manstetten and Faber 1999). The new
differentiation of the human factor has far-reaching consequences for the environmental, economic, and social dimensions. The dichotomy in thinking about progress
is clear. Stiglitz chooses a completely different focus for his criticism of the economic findings of the neoclassical economists and also questions the progress of
economic research. He also criticizes the insufficient acknowledgment of the available evidence of market and policy failure in the field of economics while citing
many examples of recent research findings that suggest the widespread assumption
of efficient markets is not adequately supported by the scientific evidence.
Markets provide incentives, but market failures are widespread and a continuing discrepancy
exists between social and private returns and in some sectors – like healthcare, insurance and
financial markets – the problem is greater than in others, and the state concentrates its efforts,
understandably, on those sectors. (Stiglitz 2010, p. 309)
Another unsolved challenge is presented by the many interdependencies that exist
between the various subsystems in a society. These are as yet not addressed or are
still not adequately considered in economics. To improve the depiction of the
challenges and the complexities, more interdisciplinary or cross-disciplinary
research is required (Vilsmaier and Lang 2014). One reason for this absence of
awareness in the context of economic analysis is that it can be advantageous to hide
these interdependencies (von Hauff 2014). This corresponds to Lerner’s dramatic
assessment that economics is the queen of the social sciences (Lerner 1972). Sturn
further notes:
1 Progress in Economic Thought: Neoclassical Economics Versus. . .
5