HOMO ECONOMICUS Meaning and
Definition
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Homo economicus is a term used in economics to describe a theoretical concept or model of human behavior that assumes individuals are rational, self-interested decision-makers who always act in a manner to maximize their own utility or economic well-being. The term "homo economicus" is derived from Latin, where "homo" means "man" or "human" and "economicus" relates to economics.
According to this concept, homo economicus is a rational being who possess perfect knowledge of all available choices and accurately assesses the costs and benefits associated with each option before making decisions. This idealized individual is assumed to be solely motivated by achieving their own material self-interests and avoids making decisions that would lead to a decrease in their utility.
Homo economicus is often utilized as a basic assumption in economic models and theories to study or predict human behavior within economic contexts. However, critics argue that this concept oversimplifies and fails to capture the complexities, social considerations, and psychological factors that influence human decision-making.
In summary, homo economicus is an economic construct that represents individuals as rational decision-makers who always act in their own self-interests to maximize their utility. Despite being a simplified representation, it provides a foundation for analyzing and understanding economic behavior and decision-making processes.
Etymology of HOMO ECONOMICUS
The term "homo economicus" originates from Latin, with "homo" meaning "man" and "economicus" deriving from the Greek word "oikonomikos". In Greek, "oikonomikos" refers to economic management or the administration of a household. The term was later adapted into Latin as "oeconomicus", which referred to the management of a household or estate. In the 19th century, the term "homo economicus" emerged as a concept in economics, defining a hypothetical individual who acts in a rational manner to maximize their own economic self-interest, often used as a simplifying assumption in economic models. The term has since become widely used in economic theory.
