Home
/
RELIGION & LIBERTY ONLINE
/
Economic man is a myth, but ‘nudging’ is a distraction
Economic man is a myth, but ‘nudging’ is a distraction
Apr 18, 2025 5:24 PM

The University of Chicago’s Richard Thaler recently won the Nobel Prize for his contributions in behavioral economics, much of which centers on challenging rational choice theory.

“Renowned for his use of data to observe and predict how people behave in the real world,” writes Derek Thompson, “Thaler’s career has been a lifelong war on Homo economicus, that mythical species of purely rational hominids who dwell exclusively in the models of classical economic theory.”

Victor Claar has helpfully summarized Thaler’s work at length, noting his popular framework of “nudge units, which provide a government mechanism for prodding us into “making choices that are better than the ones we might make otherwise.” Claar rightly challenges us to consider the risks of promoting the government as “nudger-in-chief,” and Rev. Ben Johnson offers at least one example of the type of destruction that “nudging” sometimes promotes. Alas, as economist David Henderson reminds us, we’d do well to apply Thaler’s same theory of irrationality to the nudgers who nudgers.

This isn’t to say that behavioral economics as a science is of little value, nor that its applications will only lead to economic disaster. Indeed, in its most basic intellectual assumptions, Thaler’s “lifelong war on homo economicus” offers a healthy correction: Man is not a robot.

In many ways, the economic planners of yore have ignored that reality, using rational man as in put that distortsour public policy, perverts our incentives, and lead to economic ruin. In turn, this leads us to ignore the social and spiritual side of the human person, excusing away our thoughts and affections at the mercy of a cold and limiting earthbound order.

What’s more important, however, is whether those lessons are applied before and beyond the battles about public policy and government intervention.

In Thaler’s case, the goal of es next, distracting us from the broader implications. In doing so, he risks the same mistakes of the rational-choice theorizers, but in the other direction, treating humans as pawns to be moved or consumers to be manipulated.

So if “nudging” isn’t the obvious next step, how are we to respond in a world wherein economic man is now myth?As Father Sirico writes in the concluding chapter of his book,Defending the Free Market, we do so simply by pursuing and preserving freedom (and using that freedom rightly):

In real life, people are motivated by much more than what economists describe as “maximizing utility” – especially where “utility” is understood in narrowly materialistic terms. The economic truth of economic man is true enough (you ignore human self-interest and the laws of supply and demand at your peril), but it is not the whole truth about who human beings are.

Any man who was only economic man would be a lost soul. And any civilization that produced only homines economici to fill its markets, courts, legislative bodies, and other institutions would soon enough be a lost civilization. Familial love, voluntary dedication to philanthropy and faith, the creation of art and music would be at their most minimal level, and whole sectors of life pletely vanish…

The good news is that by rolling up our sleeves and digging for the truth, by retrieving a right understanding of the human person, we can turn things around. The tradition that gave birth to a morally animated liberty—not merely the power to do what onewantsbut the right to do what oneought(as Lord Acton observed)—is not a tradition of mere utility, selfishness, pleasure-seeking, or determinism. Freedom rightly understood is not a license to behave like spoiled adolescents but rather the noble birthright of creators made in the image of God. As long as we refuse to sell this birthright for a mess of materialist pottage, hope remains.

As humans created in the image of God, destined to glorify him in all that they do, our actions will often depart from the tidy boxes and categories of modern academia and economic science, even in the case of Thaler’s cutting-edge paths to “predictability.”

Psychology matters, but how do we account for the roles of Word and Soul and Spirit? Thaler and others in his pioneering discipline are doing us a great service in dismantling false notions of economic man, but how we respond to that reality demands a great deal more than good psychology and clever political game-playing.

It requires freedom, and with that freedom, the will to chooselove – “rationally,” “irrationally,” and otherwise.

Image: Behavioural Economics, Chatham House (CC BY 2.0)

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
The economics of Bedford Falls (Part 1 of 3)
Upon it’s initial release in 1946, Frank Capra’s It’s a Wonderful Life was something of a financial flop,failing to reach the break-even point of $6.3 million. Although it was nominated for Best Picture at the Academy Awards, it wasn’t until subsequent decades that it became recognized as one of the greatest Christmas films ever made.* The movie is long overdue for another reappraisal, for it’s also one of the best films ever created about economics and financial services. In a...
Lessons on Christian vocation from ‘A Christmas Carol’
“Is Christmas too materialistic? Well, it’s not as materialistic as God ing flesh, redeeming our sinful flesh, and sending us back into the material world to live out our faith in love and service to our physical neighbors.” –Gene Veith We are routinely told that Charles Dickens’ beloved story, A Christmas Carol, was instrumental in giving us Christmas as we know it — marking the holiday not just as a moment of reflection on Christ’s birth, but as a secular...
5 Facts about Christmas
Christmas is the most widely observed cultural holiday in the world. Here are five factsyou should know about the memoration of the birth of Jesus: 1. No one knows what day or month Jesus was born (though some scholars speculate that it was in September). The earliest evidence for the observance of December 25 as the birthday of Christappears in the Philocalian posed in Rome in 336. 2. Despite the impression given by many nativity plays and Christmas carols, the...
Is it immoral to waste food?
“Eat your broccoli,” our mothers would say. “Think of the starving children in Africa!” It’s a moral claim we’re all familiar with. If some of our food goes to waste, someone, somewhere, will face imminent harm and the environment will go to the dogs. Indeed, it’s the central message of the popular new documentary, Wasted!, which claims, for example, that one-third of all food produced is never eaten, that 40% of that same food goes to waste, and that 90%...
Skepticism of free markets grows within the Catholic Church
At the top of the Catholic hierarchy, Capitalism has been abandoned. This criticism of free markets, and even profit in general, have caused others within the Catholic Church to e concerned. As the debate grows, it’s helpful to clear up the main arguments of those who oppose and those who support Capitalism.In an article written for CatholicVote, Senior editor for the Acton Institute, Fr. Ben Johnson, does just that. Addressing the positions of First Things editor R. R. Reno and...
Did Christianity destroy Western culture?
It is always worth remembering how Christianity reformed Western culture – especially during the Christmas season, when we meditate on how Christ refashioned human nature to be a fitting abode of the divine nature. From teaching – and in some cases, inventing written languages – to preserving ancient manuscripts, to founding the university system, it would be impossible to imagine Western civilization without Christianity’s contributions. With this in mind, textbooks once referred to the West merely as “Christendom.” But a...
Radio Free Acton: Alex Chafuen on the birth and work of the Acton Institute; Upstream on Star Wars: The Last Jedi
On this episode of Radio Free Acton, Fr. Ben Johnson, Senior Editor at the Acton Institute, speaks with Alex Chafuen, President of the Atlas Network and as of January 1, 2018, Acton’s new Managing Director: International, on his past and ing work with Acton. Then, on the Upstream segment, Bruce Edward Walker hosts a roundtable discussion with Acton staff on the recently released Star Wars: The Last Jedi. Check out these additional resources on this week’s podcast topics: Learn more...
The economics of Bedford Falls (Part 3 of 3)
[Note: This is the finalpost in a series highlighting some of the financial aspects and broad economic lessons of Frank Capra’s holiday classic, It’s a Wonderful Life. You can find part one hereand part two here.] Economist Don Boudreaux outlined ten foundational lessons that should be learned in every well-taught principles of economics course. Examples of nearly all of the ten lessons can be found in Capra’s Christmas classic, but for the sake of brevity I’ll merely highlight two of...
The economics of Bedford Falls (Part 2 of 3)
[Note: This is the second post in a series highlighting some of the financial aspects and broad economic lessons of Frank Capra’s holiday classic, It’s a Wonderful Life. You can find part one here.] George’s Life Savings in a Life Insurance Policy George attempts to secure a loan from Potter based on his life insurance policy. He says it has a $15,000 face value and a $500 cash value. Why is his life insurance policy worth cash? George has atype...
On the real meaning of Christmas
“Opinions alter, manners change, creeds rise and fall,” says Rev. Robert A. Sirico in this week’s Acton Commentary, “but the moral law is written on the tablets of eternity.” In 1776, there were fewer than one billion people on Earth. A vast majority of them were poor, and living under tyrannies. Just over two centuries later, there are more than seven billion human beings. Rapid medical discoveries and inventions have helped to double the average lifespan, vastly reduce infant mortality,...
Related Classification
Copyright 2023-2025 - www.mreligion.com All Rights Reserved