Published in March 2015 issue of Prospect Magazine
“How do you get your dinner is the fundamental question of economics.” So writes the Swedish author Katrine Marçal. Adam Smith used this example in 1776, laying the groundwork for the concept of the “economic man,” the rational, self-interested agent used in standard economic models: “It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner,” wrote Smith, “but from their regard to their own interest.”
But, as Marçal notes, he forgot who was actually preparing his meal: his mother, who spent her life taking care of her unmarried son. Had a woman come up with this faceless, universal agent, it would have been quite different; but the ruthlessly rational male public sphere and the caring female domestic sphere were kept too far apart for anyone to see that both benevolence and self-interest shape our actions, even where money is concerned. This oversight, suggests Marçal, explains why economics today works for the rich but not for the poor; and primarily for men, rather than women.
Marçal is right that economics simplifies people. But Marçal simplifies economics. The burgeoning field of behavioural economics, which attempts to tackle the exact problem she describes—that people often behave differently from how economists typically expect them to—is dealt with in a brief discussion of the work of Daniel Kahneman and Amos Tversky from the 1970s. Development economics is not mentioned. Much space is devoted to…