Behavioral Economics and Human Flourishing: A Neo-Aristotelian Perspective

 This is a guest essay by Dr Edward W. Younkins, Professor of Accountancy and Business at Wheeling University, and Executive Director of its Institute for the Study of Capitalism and Morality. Ed is author of a trilogy of important books on freedom and flourishing: “Capitalism and Commerce”, “Champions of a Free Society”, and “Flourishing and Happiness in a Free Society”. He also has numerous other publications, including several published on this site. (Please see the list after the end of this essay.) 

 

Behavioral Economics has emerged over the past seven decades as a significant development in economic thought challenging the idealized assumptions of perfect rationality that have long dominated neoclassical economics. Yet, for all its insights into human cognition and decision-making, the field has generated controversy regarding its normative implications. Should behavioral economists address their findings to public policy makers who could nudge citizens toward supposedly better choices? Or should they address their recommendations to individuals, empowering them to make better decisions for themselves?

The concepts of nudging and choice architecture initially played a role in gaining the attention of public policy makers to interventions informed by the behavioral sciences. The more recent approach holds that individuals require the knowledge that traditionally has been in the domain of researchers and government officials.

This essay argues for the latter approach. Drawing on the neo-Aristotelian tradition of human flourishing as an essentially self-directed activity, and on the work of Robert Sugden, Winton Bates, Douglas J. Den Uyl, and Douglas B. Rasmussen. Behavioral Economics can make a valuable contribution to human flourishing, but only when its insights are placed in the hands of individuals rather than autocrats. The most useful ideas from Behavioral Economics are those that help self-directed human beings understand their own cognitive tendencies and design choice architectures that serve their own conception of the good life. People need to be empowered to contribute toward designing their own decision environments and therefore choose if and how they want to nudge themselves.

The Development of Behavioral Economics

The intellectual roots of Behavioral Economics run deep. Adam Smith, often celebrated as the father of economics for his Wealth of Nations, also wrote The Theory of Moral Sentiments, which explored the psychological and moral dimensions of human action. Smith understood that human beings are not mere calculating machines but creatures of sentiment, sympathy, and social connection.

The modern Behavioral Economics movement, however, is typically traced to the 1950s and the work of Herbert Simon. Simon introduced the concept of bounded rationality, arguing that human beings, in all but the simplest decision contexts, are simply unable to make fully optimal decisions. Rather than maximizing, Simon suggested that people satisfice. They seek outcomes that are good enough given their cognitive limitations and the information available to them.

The field gained substantial momentum in the 1970s with the work of Daniel Kahneman and Amos Tversky. Their prospect theory offered a descriptive model of decision-making under risk that departed radically from expected utility theory. Prospect theory demonstrated that people are loss-averse (they feel losses more acutely than equivalent gains) and that they weigh probabilities non-linearly, overweighing small probabilities and underweighing large ones. Kahneman later popularized the distinction between System 1 (fast, automatic, intuitive) and System 2 (slow, deliberative, analytical) thinking, a framework that has become central to understanding how cognitive biases and heuristics (mental shortcuts) operate.

Richard Thaler, building on these foundations, developed nudge theory in collaboration with Cass Sunstein. Their 2008 book, Nudge, argued that choice architecture (the way options are presented) can be designed to steer people toward better decisions without eliminating any options or significantly changing economic incentives. Thaler and Sunstein termed this approach libertarian paternalism suggesting that nudges preserve freedom of choice while gently guiding people toward choices that improve their welfare.

Other significant contributions include the  endowment effect (the finding that people value what they already possess more highly than identical items they do not own), regret aversion theory (the tendency to avoid decisions that might later be regretted), mental accounting (people divide financial resources into psychologically meaningful distinct categories rather than treating all resources as fungible), framing (the way alternatives are presented can influence decisions) anchoring and adjustment  (a person tends to start with an initial reference point and adjust away from that anchor), and halo theory (the tendency for one positive characteristic to influence judgments about other characteristics).

 Libertarian Paternalism and the Threat to Autonomy

The normative turn in Behavioral Economics—exemplified by Thaler and Sunstein's libertarian paternalism—has drawn criticism. The core problem is epistemological: how can policy makers know what truly serves individuals' welfare? As critics have noted, behavioral economists often treat perfect rationality as an ideal against which real decisions are judged, and any deviation from this ideal is taken as grounds for intervention.

 Mark D. White has made an argument that the findings from behavioral economists are partial, the policies prescribed by libertarian paternalists are misconceived, and that both strengthen cognitive biases and inspire nudges. White argues against the use of paternalistic nudges by government and makes a positive case for individual choice and autonomy.

 The fundamental objection is that proponents of libertarian paternalism nudges fail to take seriously their targets' true preferences. Without a defensible notion of true preferences, the justification for nudging people toward choices they would not have made of their own accord is lacking. 

Robert Sugden and the Community of Advantage

 Robert Sugden offers a compelling alternative vision for how Behavioral Economics should engage with normative questions. In The Community of Advantage, Sugden reconstructs and defends the liberal tradition in normative economics in light of the findings of Behavioral Economics. He argues that behavioral economists should address their recommendations and findings to individuals showing them how they can coordinate their behavior to attain mutual benefit.

 Sugden's key insight is that the market is a community of advantage—a network of mutually beneficial transactions in which participants come to see one another as cooperative partners rather than rivals. When people participate in market exchanges, they can act with the intention of achieving mutual benefit, rather than merely pursuing personal benefits. Joint action in voluntary transactions permits mutually beneficial cooperative schemes.

 Sugden rejects libertarian paternalism on several grounds. First, he argues that the concept of latent preferences—the idea that individuals have underlying preferences that can be revealed through proper choice architecture—is psychologically ungrounded. People do not have consistent, context-independent underlying preferences. Second, Sugden contends that behavioral economists should not make recommendations about public policy. Rather, recommendations should be addressed to individuals as the directors of their own lives, advising them how to pursue their own interests.

 Sugden abandons core elements of traditional normative economics—notably “the view from nowhere” associated with the idea that an economist or policy maker can objectively determine what would make people better off and advances a contractarian alternative. He advocates addressing individuals as agents responsible for their own decisions.  His approach successfully reconciles the liberal tradition with the findings of Behavioral Economics.

Neo-Aristotelian Flourishing and Self-Direction 

The neo-Aristotelian tradition offers a philosophical framework that complements Sugden's liberal approach to Behavioral Economics. For Aristotle, eudaimonia (human flourishing) is the ultimate end of human action. Flourishing is not merely a subjective feeling of well-being but an objective state of living well and doing well, achieved through the exercise of virtue over a complete life.

Contemporary neo-Aristotelians such as Den Uyl, Rasmussen, and Bates emphasize that human flourishing is essentially a self-directed activity. The agent chooses autonomously to the extent that he selects his actions from a set of alternatives that has not been decreased by the coercive actions of others. As Bates has observed, it is good to be aware of how you are being nudged so that you can make a conscious choice to accept or reject the suggestion involved.

 Rasmussen and Den Uyl characterize human flourishing in terms of objective human goods while emphasizing agent-relativity, individuality, self-directedness, sociality, and practical wisdom. Flourishing is not a passive condition that someone else can simply deliver to an individual. It is an activity involving the exercise of one’s practical wisdom. 

 If flourishing is essentially self-directed, then the discovery that individuals sometimes make predictable errors does not automatically establish a warrant for external direction. Instead, it creates a reason for improving people’s capacity for self-direction.

 

Behavioral Economics can function much like a mirror. It can show individuals things about themselves that they might otherwise fail to notice. The appropriate question becomes not: “How can behavioral experts make people choose better? but “How can knowledge of human behavioral tendencies help people become better directors of their own lives?”

 

Bates argues that human flourishing is ultimately self-directed and involves the exercise of practical wisdom and responsibility. Bates observes that people should be aware of how they are being nudged because awareness provides an opportunity consciously to accept or reject the suggestion. He therefore sees Behavioral Economics as potentially useful for human flourishing when its insights are directed toward individuals rather than primarily toward paternalistic policy makers. 

 

Den Uyl and Rasmussen's template of responsibility, developed in The Perfectionist Turn, provides a framework for understanding how individuals can take responsibility for their own flourishing. The template emphasizes that individuals are the best judges of their own interests and that external interventions—however well-intentioned—cannot substitute for self-direction.

From this perspective, the proper role of Behavioral Economics is not to provide policy makers with tools for manipulating choice but to provide individuals with information they can use to make better decisions for themselves. As Bates has argued, Behavioral Economics can make a useful contribution in helping to make us aware of how nudges may affect the choices we make. If one wants to help individuals to make better decisions, it is better to address the information to individuals responsible rather than to autocrats.

 Situations Where Behavioral Economics Serves Self-Directed Flourishing

1. Retirement Saving: Overcoming Present Bias Through Self-Nudging

 One of the most well-documented findings in Behavioral Economics is present bias—the tendency to prioritize immediate gratification over future well-being. This leads many people to undersave for retirement. Rather than waiting for governments to mandate automatic enrollment in retirement plans, self-directed individuals can design their own choice architectures. They can arrange for automatic transfers from their checking accounts to retirement accounts, set up calendar reminders to review their savings progress, or commit to increasing their contribution rate each year. The key is that the individual, not the policy maker, chooses the nudge and the goal.

 2. Health, Exercise, and Nutrition: Designing Personal Choice Architectures

 People frequently intend to exercise, eat well, sleep adequately, or maintain other healthy practices but find their immediate preferences competing with long-term goals. Behavioral Economics can identify mechanisms such as present bias, default effects, commitment problems, and environmental cues. A self-directed individual can deliberately rearrange his or her environment: placing exercise equipment where it is visible, scheduling workouts, preparing healthy food in advance, using reminders, or making unwanted behaviors less convenient.

 The modern food environment is saturated with cues that trigger System 1 responses—impulse purchases of unhealthy snacks, oversized portions, and marketing that exploits our cognitive biases. Self-directed individuals can design personal choice architectures that serve their health goals. They might rearrange their kitchen so that healthy foods are more visible and accessible, use smaller plates to manage portion sizes, or implement a rule that they will only eat what they have prepared themselves. These are nudges, but they are self-imposed nudges, chosen by the individual in service of their own conception of flourishing.

 3. Investment Decisions: Managing Loss Aversion and the Endowment Effect

 Behavioral Economics has enormous practical value in personal finance. People commonly exhibit present bias, loss aversion, overconfidence, status-quo bias, mental accounting, and difficulties with self-control. Awareness of these tendencies can help an individual to construct voluntary mechanisms that support personally selected financial goals.

 Investors are prone to loss aversion, holding onto losing investments too long in the hope of recovering losses, and the endowment effect, overvaluing assets they already own. Self-directed investors can use behavioral insights to improve their decision-making. They might set pre-established rules for selling investments (e.g., sell if an asset declines by 20 percent), or regularly review their portfolio with a focus on opportunity costs rather than sunk costs. Awareness of these biases is the first step toward overcoming them.

 4. Career and Life Planning: Countering Status Quo Bias

 Status quo bias—the tendency to stick with current arrangements even when change would be beneficial—can prevent people from making important life transitions. Self-directed individuals can use behavioral insights to overcome this inertia. They might set a specific date for reviewing career options, seek out information about alternatives systematically, or imagine that a decision has turned out badly and work backward to identify what could have gone wrong. These techniques engage System 2 thinking and help counteract the automatic preference for the familiar.

 The sunk cost fallacy may cause someone to continue pursuing an unsuitable career simply because substantial time has already been invested. The endowment effect can cause an individual to overvalue a current position. Status quo bias can make change seem costlier than it actually is. The halo effect can cause someone to overvalue an institution because of its reputation.

 5. Consumption and Spending: Overcoming Framing Effects

 Consumers encounter choice architectures constantly. Retailers, websites, advertisers, subscription services, and salespeople routinely frame choices, establish defaults, use scarcity messages, exploit social proof, and influence attention.

 How options are framed dramatically affects choices. A product described as "90% fat-free" is more appealing than one described as "10% fat," even though they are identical. Self-directed consumers can protect themselves from framing effects by developing habits of deliberate evaluation. They might translate percentage discounts into actual dollar amounts, compare products on objective attributes rather than marketing claims, or implement a "cooling-off" period for major purchases. By understanding how framing works, individuals can make choices that reflect their genuine preferences rather than the influence of presentation.

 Behavioral knowledge therefore strengthens consumer autonomy. Rather than requiring government to protect people from every persuasive influence, education can help individuals become more capable evaluators of their own choices.

 6. Social and Cooperative Ventures: Mutual Benefit Through Voluntary Coordination

 Sugden's insight that market participants can act with the intention of achieving mutual benefit has practical implications. Self-directed individuals can use behavioral insights to design cooperative arrangements that serve shared goals. For example, a group of neighbors might agree to a system of reminders for recycling, or a team at work might implement a "no-meeting Wednesday" to protect focused work time. These are nudges, but they are chosen jointly and voluntarily, reflecting the participants' own values and goals. They represent the kind of community of advantage that Sugden describes—voluntary cooperation that benefits all participants.

Conclusion: Behavioral Economics for Human Flourishing

 Behavioral Economics has given us powerful tools for understanding human decision-making. Its insights into bounded rationality, cognitive biases, and the influence of choice architecture are valuable contributions to our self-knowledge. But these insights can be used in different ways.

 The libertarian paternalist approach—exemplified by Thaler and Sunstein—treats cognitive biases as problems to be solved by wise policy makers who nudge citizens toward better choices. This approach is problematic. It assumes that policy makers can know what is truly good for individuals, it fails to take seriously the plurality and subjectivity of people's values, and it risks undermining autonomy and self-direction.

 The alternative approach, advanced by Sugden, Bates, Den Uyl, and Rasmussen, treats behavioral insights as resources for self-directed individuals. On this view, Behavioral Economics should inform ordinary people about the evidence and let them decide for themselves. The goal is not to replace individual judgment with expert judgment but to equip individuals with better tools for making their own decisions.

Designing and empirically testing self-nudges should be on behavioral economists’ research agendas. Self-nudging respects individual autonomy and helps to alleviate concerns about paternalism and manipulation. People can learn to use nudges to regulate their own behavior.

This approach aligns with the neo-Aristotelian tradition, which understands human flourishing as essentially a self-directed activity. Flourishing is not something that can be imposed from outside; it must be chosen and pursued by each individual. The role of Behavioral Economics, then, is not to provide a substitute for individual judgment but to enhance it—to help individuals understand their own cognitive tendencies, recognize when they are being influenced, and design choice architectures that serve their own conception of the good life. 

The six situations discussed above illustrate how this might work in practice. In each case, the individual, not the policy maker, is the agent of change. The individual chooses the goal, selects the nudge, and takes responsibility for the outcome. This is Behavioral Economics in service of autonomy, freedom, and human flourishing.

Perhaps the deepest application is metacognition—thinking about one’s own thinking. Behavioral Economics gives individuals a vocabulary for examining their own judgments. A person can recognize confirmation bias, anchoring, loss aversion, present bias, overconfidence, framing effects, availability effects, status-quo bias, and other tendencies. The goal should not be to eliminate bias completely. That would be unrealistic. Rather, individuals can learn to recognize when particular biases may be influencing an important decision.

As Sugden reminds us, the market is a community of advantage—a network of voluntary exchanges in which participants can pursue mutual benefit. The same spirit should guide the application of Behavioral Economics. Let us share our insights with one another, learn from the evidence, and design our own choice architectures. Let us be the directors of our own lives, using the tools that Behavioral Economics provides to pursue our own flourishing, in our own way, on our own terms. 

Recommended Reading

Bates, Winton. 2016. “Is Economics Becoming a Branch of Psychology?” Freedom and Flourishing. May 22.

Bates, Winton. 2020. “How is Behavioral Economics Related to Human Flourishing?” Freedom and Flourishing. May 19.

Bates, Winton. 2021. Freedom, Progress, and Human Flourishing. Lanham, MD: Hamilton Books.

Den Uyl, Douglas J and Rasmussen, Douglas B. 2016. The Perfectionist Turn; From Metanorms to Metaethics. Edinburgh: Edinburgh University Press.

Hertwig, Ralph and Reijulas,Samuli . 2020. “Creating Citizen Choice Architects” Behavioral Scientist (Sept.28).

Kahneman, Daniel. 2011. Thinking, Fast and Slow. Farrar, Straus and Giroux, 2011. 

Rasmussen, Douglas B. and Den Uyl, Douglas J. 2005. Norms of Liberty: A Perfectionist Basis for Non-Perfectionist Politics. Penn State University Press.

Simon, Herbert A. 1957. Models of Man: Social and Rational. New York: Wiley. 

Simon, Herbert A. 1982. Models of Bounded Rationality: Behavioral Economics and Business Organization." MIT Press.

Smith, Adam. 1759. The Theory of Moral Sentiments. Various editions.

Sugden, Robert A.  2018. The Community of Advantage; A Behavioral Economist’s Defense of the Market. Oxford University Press.

Thaler, Richard H. and Sunstein, Cass R. 2008. Nudge Improving Decisions About Health, Wealth, and Happiness. Yale University Press. 

Thaler, Richard H. 2015. Misbehaving: The Making of Behavioral Economics. New York: W.W. Norton.

White, Mark D. 2013. The Manipulation of Choice: Ethics and Libertarian Paternalism. Palgrave Macmillan.

Other essays by Ed Younkins on this site:

Younkins, Edward W. “What Contribution did David L. Norton Make to our Understanding of Ethical Individualism?” Freedom and Flourishing. January 18, 2025.

----------------------------“How can dialectics help us to defend liberty?” Freedom and Flourishing. July 8, 2025.

---------------------------“How can Austrian Economics be reconciled with the Neo-Aristotelian philosophy of Freedom and Flourishing?” Freedom and Flourishing. October 2, 2025.

----------------------------- “Can Polarized Moral Politics be Bridged by a Neo-Aristotelian Philosophy of Freedom and Flourishing?” Freedom and Flourishing. December 13, 2025.

----------------------------- “Does Humanomics Need a Moral Anchor?” Freedom and Flourishing. January 22, 2026.

----------------------------- “Is Character Education Compatible With Individualistic Perfectionism?” Freedom and Flourishing. February 27, 2026.

 ----------------------------- “Are Spontaneous Order and neo-Aristotelian Arguments for a Free Society Compatible?” Freedom and Flourishing. March 19, 2026.

----------------------------- “Are Spinoza’s Philosophy and Neo-Aristotelian Philosophies of Freedom and Flourishing Compatible?” Freedom and Flourishing. June 4, 2026. 

----------------------------- “The Architecture of Freedom: Randy Barnett’s Natural Law Case for a Free Society” Freedom and Flourishing. June 26, 2026.

----------------------------- “Robust Political Economy and Neo-Aristotelianism: Complementary Visions of Freedom and Flourishing” Freedom and Flourishing. July 10, 2026.

------------------------------ “Is Ayn Rand’s Philosophy Consistent with Aristotle’s Virtue Ethics?” Freedom and Flourishing. July 26, 2026.

-------------------------------"Henry B. Veatch’s Neo-Aristotelian Defense of Reality, Reason, and Rights” Freedom and Flourishing. August 30, 2026.

Who are you?

 The following essay is an edited transcript of a podcast episode I released a few years ago. I have decided to publish the transcript in essay form because I want to refer to it in a subsequent essay. It is easier to find particular words and paragraphs in an essay than in a podcast. Besides, when I listened to that podcast episode again, I decided that the sound of my voice distracted from the ideas I was presenting. 

My main qualification for talking about personal identity is that I have been around for long enough to have thought quite a lot about my own identity. I hope that what I have to say will interest other people. In any case, writing this podcast script should also help me to remember what I have learned about myself.

Rather than meander through the circuitous history of my thinking, I will focus here on what I now consider to be a sensible approach to the topic. I will begin by discussing the most superficial aspects of personal identity and will end up considering whether your identity would be retained if your consciousness was uploaded into a machine. Along the way, I will touch upon a range of other issues that might be of interest:

·       Is your identity defined by personal information about you?

·       Does your life-story define who you are?

·       How can aspects of your identity change over time?

·       Is the essence of your identity located in your conscious mind?

·       Where did Descartes go wrong in asserting “I think, therefore I am”?

·       What kind of being are you?

·       How does self-direction fit in to your identity?

Let us begin.

Is your identity defined by personal information about you? 

Your passport has information about your name, nationality, date of birth and sex. It also shows a photo that looks something like you. Other government documents may include additional information such as your place of residence.

If you wanted to tell me who you are, you might provide further information such as your occupation, marital status, whether you have had children and how many, ethnicity, religion, political views, education level, schools attended, employment history, the places you have lived in the past, your hobbies, books you have read, sports you have played or enjoy watching, movies you liked, and other entertainment preferences.

A person with all that information would know a lot about you. They might be well placed to predict how a person like you might spend money or vote, but they would have only a superficial view of who you are as an individual.

Does your life-story define who you are?

Your own understanding of who you are probably includes a narrative covering important events in your life, a view about important things you have learned from life, your personal values, and how you came to hold those values.

So, if you were to write an autobiography covering all those aspects, would that encapsulate a comprehensive understanding of your identity? I doubt it. If you are anything like me, a few days after you finished writing the book you would think of something important that you wanted to add.

What I am suggesting is that even though we know more about ourselves than anyone else can possibly know about us, our self-knowledge is never perfect. As you go through life, you may discover more about who you are, and some aspects of your identity may change.

How can aspects of your identity change over time?

Let us assume for the moment that the concept of identity implies the existence of an unchangeable essence at the core of who you are. I will consider the validity of that assumption later, but I first want to discuss how some aspects of your identity can change.

It is obvious that there are various ways in which the information in your passport and other identity documents can be changed. I will focus on how more fundamental aspects of identity, such as character traits, may change over time.

It may be possible for your character to change as a consequence of changes in the social and economic environment in which you live. People do tend to respond to incentives. For example, if the social and economic environment rewards cooperation for mutual benefit, that provides an incentive for people to develop habits of trustworthy behavior that will enable them to participate more fully in those benefits. The opposite happens if the social and economic environment rewards predatory activity.

However, that does not mean that your identity is “socially constructed”. The social and economic environment affects the incentives you face, but you can still choose how to respond to those incentives. People often think carefully before responding to incentives. And they sometimes choose to respond differently than they have in the past. The behavioralist assumption that people respond automatically to stimuli is a distorted view of human nature.

Individuals can also choose to change their behavior in ways that change their identity. You may discover that you have an aptitude to do something – for example, to assist other people to learn – and some aspects of your identity may change as you acquire skill in doing that.

It is even possible for people to discover that they have potential to change their personality to some extent. Traits such as extroversion, conscientiousness, agreeableness, and emotional stability tend to be fairly stable in adults, but some research suggests that people can even change such traits if they make active efforts to do so. We discover our potential as we actualize it. There is some discussion of that process in Chapter 8 of my book, Freedom, Progress, and Human Flourishing.

If fundamental aspects of your personality can change over time, that raises the question of where we should look if we want to find an unchangeable essence at the core of your being.

Is the essence of your identity located in your conscious mind?

In his book Thinking Fast and Slow Daniel Kahneman, a psychologist, suggests that the system in the mind that makes judgements and choices is “who we think we are” (Kahneman 2011, loc. 7547/9800). He is probably correct that most people tend to identify themselves with that system.

However, I argue in Freedom, Progress, and Human Flourishing, that people are making a cognitive error when they identify themselves in that way (Bates 2021, p.140).

In order to explain why, I need to explain the two systems in the mind that Kahneman employs in his discussion. System 1 engages in intuitive thinking (fast thinking) and tends to produce quick answers to complex questions. It operates with little effort and no sense of voluntary control. System 2 allocates attention to the effortful mental activities that demand it. Kahneman suggests that System 2 is who we think we are (Kahneman 2011, loc. 7547-7556/9800).

When I first read about Kahneman’s System 1 and System 2 several years ago, I saw parallels with the concept of Self 1 and Self 2 developed by Timothy Gallwey, a sports and business coach and author of popular ‘inner game’ books (Gallwey 1986, pp. 18-19). Gallwey observed that when he was playing tennis, he seemed to have two identities: Self 2 was playing tennis and Self 1 was constantly interfering by telling him how to play. It struck me that Gallwey’s Self 1 might correspond to Kahneman’s System 2 and that Gallwey’s Self 2 might correspond to Kahneman’s System 1.

The point I want to make is that it is not possible to judge whether it is more appropriate to identify with System 1 or System 2 without considering the nature of the activity that you are engaged in at a particular time. If you are playing sport, it often pays to identify as a fast thinker, responding intuitively and ignoring the unhelpful advice of the inner coach who is warning you to think carefully to avoid making an error.

If you are making a career choice, it makes sense to identify yourself as a person who thinks carefully about important decisions.

Should we view the system that makes judgements and choices as some kind of inner philosopher who thinks dispassionately? There was a time when I thought that. However, I had to ditch that idea after I read Antonio Damasio’s book Descartes Error. Damasio, a neurologist, pointed out that when people suffer brain damage that causes loss of most of their emotional lives, they are unable to make simple decisions even if their reasoning and logical abilities are intact (Damasio 1994, p.78).

In his book, The Happiness Hypothesis, Jonathan Haidt argues that “Reason and emotion must both work together to create intelligent behavior, but emotion ... does most of the work”. He presents a useful metaphor - an elephant and its rider - to explain the relationship between the controlled and automatic systems that determine human behavior. Haidt writes:

“The controlled system ... is better seen as an advisor. It’s a rider placed on the elephant’s back to help the elephant make better choices. The rider can see further into the future, and the rider can learn valuable information by talking to other riders or by reading maps, but the rider cannot order the elephant around against its will. ... The elephant and the rider each have their own intelligence, and when they work together well they enable the unique brilliance of human beings” (Haidt 2006, p 160).

Haidt is inviting us to identify ourselves as both rider and elephant.

That seems to me to make more sense than to identify myself only with the rider, or the system in my mind that makes effortful judgements and choices. When I exercise my cognitive abilities in non-judgmental observation of bodily sensations and ideas floating past, I identify with a natural self that embodies instinct and emotion as well as reason, and all the inherent potential that individual humans are born with. I invite you to engage in similar meditative practices to see if you come to the same conclusion.

That might be a good point to end on. However, many of you will be reluctant to trust your meditative insights unless you can be persuaded that there is a philosophically respectable basis for them.

We should not even view the meditative insights of prominent philosophers as being beyond question. The philosopher I have in mind is René Descartes, who claimed “I think, therefore I am” in the 17^th century, after he had engaged in a meditative process.

Where did Descartes go wrong?

Descartes reached his conclusion, “I think therefore I am”, after going through a process of considering what sources of knowledge could not be doubted, and discovering that he could not doubt that he was thinking.

I have already mentioned Antonio Damasio’s book, Descartes Error. What does Damasio see as the source of Descartes’ error? Damasio makes the point that beings existed before long before the evolution of humans who are aware that they are thinking (Damasio 1994, pp. 248-9).

In his book, The Metaphysics of Emergence, Richard Campbell suggests that Descartes was on the right track in observing that he was unable to doubt that he was thinking. Campbell suggest that the error arose when Descartes asked himself, “What then am I?” That question “presupposes that he takes himself to be some sort of thing” (Campbell 2015, pp.282-3). Campbell suggests that Descartes question immediately entrapped him in the traditional metaphysics of entities.

At this point I must explain why Cambell considers it to be problematic to consider oneself as an entity rather than as a process.

What kind of being are you?

You observe that you are thinking, and conclude that you are a thinking being. You also observe that you are a being that has a body, and that you experience sensations and emotions.

It appears obvious that you are an entity that has all those qualities. But you are also the observer engaged in self-reflection. You can engage in radical reflexivity as you observe the thoughts passing through your own mind.

However, if you are an entity, how can you be both the observer and the being that you are observing? Could you be two entities? I don’t think so. The observer, who is you, does not exist independently of the being who is observed, who is also you.

Richard Campbell suggests a way out of this dilemma. Drop the assumption that you are a fixed, given entity. The alternative he suggests is to perceive yourself as a complex process system. That enables you to perceive of radical reflexivity as a process. He writes:

“If the assumption that there is a fixed, given entity called ‘the self’ …  is rejected, the way is open to understand consciousness as a flow: a complex, emergent and interactive process which is radically reflexive” (Campbell 2015, p.292).

Our observations of the world tell us that many other animals are also aware of their surroundings. We have no problem in understanding that their awareness emerged or evolved to help them to survive and reproduce. Our human consciousness is just another step in that evolutionary process. Radical reflexivity - awareness of our own awareness - has emerged to help us to flourish as individuals in the cultures in which we live.

Campbell suggests that the flow of consciousness is analogous to a river maintaining its identity as it flows though different places. Your understanding of who you are is informed by the flow of your consciousness through time. In other words, your sense of identity is informed by your autobiographical memories. Campbell explains that this sense of identity also involves an element of projection into the future:

“I am a complex process system continually projecting myself out of my past into my future, my sense of myself necessarily involves my ‘has been’ and my ‘not yet’ (Campbell 2015, p.292).

As you think about your “not yet”, you might imagine a future that is different than your past. Perhaps that is just wishful thinking. Or you might be considering options available to change your life in various ways, or how to achieve a vision that you have for your own future. That brings me to the concept of self-direction.

How does self-direction fit into your identity?

As explained in Freedom, Progress, and Human Flourishing, I subscribe to the view that wise and well-informed self-direction is integral to the process of individual flourishing. The nature of humans is such that as individuals mature, they normally have the potential to exercise the practical wisdom and integrity required to direct their own flourishing in accordance with goals they choose and values they endorse.

However, wise and well-informed self-direction is not an attribute that is manifested by all adult humans. It is to some extent a product of the incentives in the social environment in which people live. When the social environment requires individuals to accept responsibility for the outcomes of the choices they make, they have a strong incentive to become wise and well-informed.

Acquisition of skills in self-direction is also a product of personal attitudes. Unfortunately, some people perceive that nothing they do will make any difference to their lives. Others, who have similar history, perceive the potential to improve their lives and often make inspiring efforts to so by investing in personal development.

In my personal experience, it is easier to avoid behaving like a grumpy old man when I remind myself to be the person that I have potential to become.

That brings me close to the end of what I have to say. However, before I sum up, I will keep my promise to talk about the question I said I would end on.

Would your identity be retained if your mind was uploaded into a machine?

Some neuroscientists think this might be feasible within a few decades. They point to scientific advances that suggest it might be possible, and say they are not aware of any laws of physics that would prevent it.

I am not qualified to have an informed view on the technical feasibility of mind uploading, so I will think of it merely as a thought experiment.

Imagine that your mind has been uploaded and you wake up with your memories intact in an environment that looks like the real world as you know it. Is this emulated mind actually you? As I see it, that is something that your emulated mind would have to decide for itself.

However, that does not prevent me from speculating how an emulated mind might perceive its own identity if separated from the body which it remembers as an integral component of the complex processing system from which it was derived. Perhaps the emulated mind might feel as though it is having a dream and is unable to wake up. It might feel more like a ghost than the natural self – the mind-body system – that it remembers as its former self.

It might identify as “the ghost in the machine”.

Summing up

I began by suggesting that personal information about you gives only a superficial view of who you are as an individual. Your life story might encapsulate all the important things that you know about yourself, but self-knowledge is never perfect. As you go through life, you may discover more about who you are.

Aspects of your identity may change over time. Your character might be influenced by changing incentives of the social and economic environment. And you may even change aspects of your personality to some extent, by choosing to develop new habits.

So, where is the essence of your being located? I argue that it is a mistake to think it is located solely in your conscious mind.

Descartes correctly observed that he was thinking, but in concluding “I think, therefore I am” he overlooked the fact that he had already assumed that he was some kind of being.

You are the kind of being that can observe itself. It is difficult to comprehend how you can be both an observer and the object of your observation if you think of yourself as an entity. Thinking of yourself as both observer and object poses no problem if you think of yourself as a complex processing system.

You cannot doubt that you think. You are aware of both the flow of inner experiences – thoughts and feelings – and of your experience of the world in which you live. Thinking about your experience of the world enables you to contemplate the goals you seek, to make choices in pursuit of those goals, and to learn from experience. Your sense of identity is informed both by autobiographical memories and by future projections.

If you accept that wise and well-informed self-direction is integral to your flourishing, you are likely to think of yourself as seeking to become the kind of person who has the practical wisdom and integrity to flourish in accordance with goals you choose and values you endorse.

I have speculated that if your mind was uploaded into a machine, the emulated mind would not perceive itself to be a real person with a body as well as a mind. It might remember you as its former self, but would see itself as being something like a ghost.

You understand who you are from the ongoing experience of your whole self, living in the real world. Walt Whitman captured that well in his poetry. I will leave you to contemplate a fragment from his poem, “A song of myself”:

“My respiration and inspiration, the beating of my heart, the passing of blood and air through my lungs,
The sniff of green leaves and dry leaves, and of the shore and dark-color’d sea-rocks, and of hay in the barn,
The sound of the belch’d words of my voice loos’d to the eddies of the wind,
A few light kisses, a few embraces, a reaching around of arms,

The play of shine and shade on the trees as the supple boughs wag,
The delight alone or in the rush of the streets, or along the fields and hill-sides,
The feeling of health, the full-noon trill, the song of me rising from bed and meeting the sun.”

 
References

Bates, Winton, Freedom, Progress, and Human Flourishing (Hamilton Books, 2021).

Campbell, Richard, The Metaphysics of Emergence (Palgrave Macmillan, 2015).

Gallwey, Timothy, The Inner Game of Tennis (Pan Books,1975).

Haidt, Jonathan, The Happiness Hypothesis (Basic Books, 2006).

 Kahneman, Daniel, Thinking Fast and Slow (Penguin, 2011).

 Whitman, Walt, Complete Works of Walt Whitman, Leaves of Grass, Book III ‘Song of Myself’. (The poem, ‘Song of Myself’, was first published in 1855 in the collection Leaves of Grass.)

Does Humanomics Need a Moral Anchor?

 

This is a guest essay by Dr Edward W. Younkins, Professor of Accountancy and Business at Wheeling University, and Executive Director of its Institute for the Study of Capitalism and Morality. Ed is author of a trilogy of important books on freedom and flourishing: “Capitalism and Commerce”, “Champions of a Free Society”, and “Flourishing and Happiness in a Free Society”. He also has numerous other publications, including several published on this site. (Please see them listed after the end of this essay.)  

 Modern economics, particularly in its dominant neoclassical form, is often characterized by models that treat human beings as Homo economicus—rational utility maximizers responding predictably to incentives and constraints. This idealized abstraction enables precise mathematical modeling but, as critics argue, collapses the rich complexities of human behavior into a narrow calculus of preferences and payoffs. Homo economicus assumes coherent pref­erences, consistent rationality, and a reduction of social life to instrumental choices. But this framework struggles to account for trust, social norms, feelings of fairness, moral judgment, learning, culture, and meaning—features of economic life that we observe every day. 

 

 Enter Humanomics, a burgeoning intellectual movement that seeks to re-ground economic inquiry in the realities of human experience. At its core, Humanomics aims to integrate moral and social dimensions into the scientific study of economic behavior, recapturing insights from Adam Smith that have been marginalized in mainstream economic theory. Rather than reducing humans to narrow maximizers of utility, Humanomics treats them as sentient, social, purposeful, learning agents whose actions are shaped by sentiments, norms, ethical commitments, and reflective judgment.

 

The longest part of this essay reviews the work on this growing movement conducted by Nobel laureate Vernon L. Smith and experimental economist Bart J. Wilson. That portion of the essay is followed by a discussion of distinguished interdisciplinary economic historian Deidre Nansen McCloskey’s alternative, bur compatible, vision of Humanomics. This is followed by a discussion of neo-Aristotelian philosopher Douglas B. Rasmussen’s proposal that the traditional concept of homo economicus be replaced by dual concepts pf homo agens (acting man) and homo moralis (moral man).  An argument is then made that the neo-Aristotelian framework developed by Rasmussen and Douglas J. Den Uyl called Individualistic Perfectionism may provide a philosophical grounding for Humanomics.

 

 Adam Smith’s Philosophical Vision

 

To understand Humanomics, we must revisit Adam Smith (1723–1790) not merely as the author of The Wealth of Nations (WN)—often oversimplified as the father of free market economics—but also (and arguably even more importantly) as the author of The Theory of Moral Sentiments (TMS). Smith’s intellectual project embraced both economic systems and moral psychology. For Smith, markets emerge not in a vacuum but within networks of interpersonal relations guided by sympathy, propriety, and shared language. The often-quoted “invisible hand” metaphor in WN can only be read in full context when seen alongside his moral philosophy; humans are not egoistic automatons but social beings whose moral sentiments play a foundational role in shaping institutions and behavior.

 

Humanomics begins with this fuller Smithian anthropology: humans act purposefully, learn from experience, and are motivated by both self-interest and social sentiments like gratitude, resentment, trust, and fairness. Experimental evidence in economics, particularly from the works of Vernon L. Smith, shows that in simple game environments humans often behave cooperatively and reciprocally, even when self-interest alone would predict otherwise. These findings are hard to square with narrow neoclassical models but fit comfortably with a Smithian understanding of human nature as complex and multifaceted. 

 

Like Aristotle, Adam Smith focused on the cultivation of virtues and character building. Smith extended Aristotle’s ideas into modern commercial society. In turn, Humanomics builds on the connection between Aristotle’s eudaimonia and Smithian flourishing.

 

Humanomics as a Synthesis of Sentiments and Markets

 

In contemporary economic language, the dominant paradigm is sometimes referred to as Max-U: maximizing utility subject to constraints. Humanomics challenges this by asking a deeper question: What should the subject of economic theory be? If economics is a science of human wellbeing and prosperity, then it cannot abstract away the human condition; it must account for how people actually think, feel, communicate, and form norms.

 

In their 2019 book Humanomics: MoralSentiments and the Wealth of Nations for the Twenty-First Century, Smith and Wilson articulate a framework grounded in Adam Smith’s combined insights from TMS and WN. They argue that conventional economics has “lost sight of the full range of human feeling, thinking, and knowing in everyday life,” and that re-centering economics on sociality and sentiments enriches its explanatory power. Humanomics thus defines economics as a “science of human beings,” not simply a calculus of utility functions.

 

The core thesis of Humanomics is that economics must be re‑founded on a “model of sociality” that captures the full range of human feeling, thinking, and knowing. Smith and Wilson argue that the prevailing “maximize utility” (Max‑U) paradigm is inadequate because it reduces all action to outcome‑based preferences, ignoring the origins of action in moral sentiments and the context‑dependent rules that guide human conduct. In contrast, Smith’s model explains why people often act in ways that cannot be reduced to narrow self‑interest—for example, why subjects in anonymous laboratory games display high levels of trust and cooperation.

 Humanomics thus proposes a paradigm shift: from utility maximization to a “science of human beings” that integrates insights from TMS and WN into contemporary empirical analysis. This shift is not merely theoretical; it is driven by decades of experimental economics. Vernon Smith’s own Nobel‑winning work revealed that in market‑like settings, individuals often behave as narrowly self‑interested agents, while in personal social‑exchange games they exhibit strong other‑regarding tendencies. The Humanomics model reconciles these seemingly contradictory findings by appealing to Smith’s distinction between impersonal exchange (where anonymous rules of justice suffice) and personal social interaction (where fellow‑feeling and moral sentiments are paramount).

 Key to the Humanomics approach is its focus on rule‑following adaptation. Smith and Wilson emphasize that human beings are not merely preference‑satisfiers; they are rule‑followers who learn from social experience. We develop “rules of conduct” through observation, imitation, and the feedback of gratitude and resentment. These rules allow us to navigate both social and economic domains.

 

Extending Adam Smith’s Vision: Vernon  Smith and  Bart Wilson’s Contributions

 

Smith and Wilson extend several core ideas from TMS into contemporary economic analysis:

•  Fellow feeling (the capacity to enter into the emotions of others): Smith’s notion that we naturally project ourselves into the situations of others, sympathizing with their joys and sorrows, becomes a foundation for understanding cooperation and norm compliance in experiments;
•  Beneficence and justice: Smith calls beneficence (voluntarily doing good)  the “ornament” of society and justice its “main pillar”; Humanomics uses this to distinguish nonobligatory kindness from the strict norms whose violation calls for demands for redress; and
•  Impartial spectator (an imagined neutral observer): People internalize a standpoint from which they judge their own conduct. Humanomics treats this internalized judge as an explanatory mechanism for behavior that adheres to norms even when no external enforcement exists.

 

These themes allow Humanomics to construct non‑utilitarian models of choice in which rules, sentiments, and perceived propriety are primary, and utility is not reduced to felt pleasure or material payoff.

 Humanomics does not discard markets or rational choice altogether; it reinterprets them within a broader framework where market interactions are embedded in social relations. Markets are not mechanical devices for exchange but arenas where trust, reputation, norms, and sentiments actively shape outcomes. A simple market price is not just a number; it is a signal embedded in social practices and meanings. Similarly, cooperation in a trust game, or generosity in a dictator game, cannot be fully explained by narrow self-interest but makes sense when one accounts for gratitude, fairness, loyalty, and moral sentiment

 Smith and Wilson develop Adam Smith’s ideas in several crucial directions. First, they operationalize Smith’s moral psychology for experimental economics. They design games that test predictions derived from TMS, such as the role of gratitude and resentment in triggering reward and punishment. This provides empirical grounding for Smith’s often‑overlooked psychological insights.

 They develop a positive alternative to Max‑U. Instead of assuming that actions are driven solely by preferences for outcomes, Humanomics models action as rule‑governed and rooted in human relationships that involve what Smith called fellow‑feeling. This alternative framework not only explains anomalous experimental results but also offers predictive power about how people will behave in various social‑economic contexts.

 

In addition,  they re‑center economics on human flourishing. In their 2024 interview, Smith and Wilson connect Humanomics to the broader goal of human flourishing, which they describe as “discovery as a process that is adaptive and that anticipates new forms of knowing”. By restoring the moral‑social dimension to economic analysis, Humanomics seeks to inform policies and institutions that promote genuine human well‑being, not merely material efficiency.

 

A central insight of Humanomics is its emphasis on learning as a fundamental process. Unlike the static optimization models of neoclassical economics, Humanomics views human behavior as evolving through trial, error, reflection, and adaptation. Individuals do not come equipped with fully formed preference ordering; they learn who they are, what they value, and how their actions affect others. Experimental economics plays a crucial role here, providing empirical evidence about how people behave in controlled settings that approximate various institutional arrangements.

 

The result is a form of economics that is not just about equilibrium states but about processes of discovery. It recovers Smith’s method—humans are curious, puzzled by anomalies, and constantly refining their understanding. When models fail to predict observed behavior, Humanomics asks whether the underlying assumptions about human nature are the problem, not just whether the parameters are mis-estimated. 

 

Because Humanomics insists on incorporating social norms, sentiments, culture, and context, it naturally becomes interdisciplinary. It invites insights from psychology, anthropology, sociology, philosophy, and history into economic inquiry. This stands in contrast with an overly reductionist economics that isolates variables analytically while ignoring how human context shapes meaning and action. In real policy contexts—such as education, public health, public choice, or charity—Humanomic insights can lead to different conclusions than narrow cost-benefit analyses. Analysts must ask not merely whether a policy is efficient but whether it respects real human motivations, social norms, and institutional contexts. 

 Bart Wilson’s contributions to Humanomics focus on the moral ecology within which economic behavior takes place. Drawing on Smith, Wilson argues that human beings inhabit a world structured by rules — not only formal laws but informal norms of propriety, fairness, and respect. These rules are not arbitrary; they emerge from social interaction and are sustained by shared moral sentiments.

 Wilson’s concept of “moral ecology” refers to the environment of norms and expectations that make cooperative behavior possible. Just as biological organisms depend on ecological systems, human beings depend on moral systems that support trust and reciprocity. Markets, in this view, are not self‑sustaining mechanisms but institutions embedded in a moral ecology.

 Wilson also emphasizes the importance of language and grammar in shaping social rules. He argues that moral rules function like grammatical rules: they guide behavior without requiring explicit calculation. This analogy echoes Adam Smith’s observation that moral norms arise spontaneously from social interaction, much like language. Humanomics thus extends Smith’s insights into the contemporary study of rule‑governed behavior.

 

 Experimental Evidence and Field Applications

 

Humanomics has a strong empirical foundation in experimental economics. Laboratory games have repeatedly shown that people often act cooperatively and reciprocally in ways that standard Max-U models do not predict. In market experiments, trading behavior often approximates neoclassical predictions, but in social exchanges and repeated interactions, people reveal trust, fairness, and punishment behaviors inconsistent with narrow rational self-interest. Humanomics treats this not as noise to be explained away but as central phenomena that any reliable theory must account for.

 

Field applications extend this logic: for example, blood donation behavior and charitable giving often occur without direct material incentives but are driven by moral sentiments, social identity, and reciprocal expectations—patterns Humanomics explains in a unified framework rather than as anomalies. 

 

Vernon Smith’s experimental work especially provides empirical grounding for Humanomics. His experiments consistently show that individuals behave in ways that reflect moral sentiments rather than pure self‑interest. For example, in trust games, participants often send money to strangers even when there is no guarantee of return. In ultimatum games, individuals frequently reject unfair offers even at personal cost. These behaviors contradict the predictions of standard economic models but align closely with Adam Smith’s account of moral judgment.

 Vernon Smith interprets these findings through the lens of TMS, arguing that individuals care about fairness, propriety, and the approval of the impartial spectator. Humanomics thus bridges the gap between experimental results and classical moral philosophy. It shows that Adam Smith’s insights remain relevant for understanding real human behavior.

McCloskey’s Vision of Humanomics

 In Bettering Humanomics: A New, and Old, Approach to Economic Science (2021), Deirdre Nansen McCloskey offers a spirited critique of the dominant currents in contemporary economics and proposes an alternative vision she also calls Humanomics.  McCloskey, a distinguished economic historian trained across economics, history, rhetoric, and the humanities, argues that modern economics has become overly narrow in its methods and impoverished in its understanding of human agency. Her work is rooted in the conviction that economics should advance as a science of human betterment that integrates quantitative analysis with a deep appreciation of human motives, language, ethics, history, and culture. 

 McCloskey’s project is both a critique of modern economics and a revival of an older, richer tradition that traces back to Adam Smith. Her Humanomics emphasizes humans as purposeful agents embedded in moral worlds of meaning, speech, and persuasion rather than merely isolated utility maximizers reacting to incentives. This perspective challenges what she sees as the prevailing behaviorist and neo-institutionalist frameworks that dominate economics. 

 In addition to drawing on Adam Smith, McCloskey acknowledges debt to work by experimental economists Smith and Wilson. However, while their approaches overlap in their broad aim to re-humanize economics, they differ in focus and methodological commitments.

 At the core of McCloskey’s Humanomics is the claim that economics should be a discipline that genuinely takes human action seriously. For McCloskey, this means moving beyond the narrow positivism and behaviorism that treat human beings as reactive entities whose behavior is only meaningful insofar as it can be observed and statistically quantified. Rather, she calls for a science that recognizes humans as speaking, thinking, persuading, valuing, and moral beings. Human action, in this view, cannot be fully understood without acknowledging the roles of language, narratives, ethics, and culture. 

 Her critique is directed both at neo-institutional economics (which stresses the role of rules and institutions but tends to treat individuals as passive units responding to institutional constraints) and behavioral economics (which often focuses on systematic deviations from rational choice without adequately theorizing autonomy, meaning, and moral agency). McCloskey contends that these frameworks, in privileging observation over interpretation, fail to capture the why behind human actions and preferences. 

 A central move in McCloskey’s project is to reclaim the tradition of Adam Smith  as a thinker deeply attuned to moral sentiments, rhetoric, and the narrative dimensions of human life. McCloskey argues that classical political economy—and especially Smith’s work—treated human beings as ethical and rhetorical creatures. In her view, this older tradition offers a template for a more holistic economics that respects human complexity. 

 McCloskey also situates her Humanomics within a broader narrative: the Great Enrichment of the last few centuries, during which material living standards rose dramatically across much of the world. For her, understanding this transformation requires a focus on ideas, language, and values—the very realm that conventional models tend to marginalize. Material incentives alone are insufficient explanatory tools; instead, human rhetoric, ethics, and innovation are central drivers of economic progress. 

 McCloskey’s Humanomics calls for an interdisciplinary methodology. She argues that economics should retain the tools of mathematical modeling and empirical analysis, but also incorporate insights from history, philosophy, literature, and rhetoric.

 At a broad level, McCloskey and Smith and Wilson share a commitment to re-humanizing economics by restoring attention to moral, social, and rhetorical dimensions of human life. All three thinkers draw inspiration from Adam Smith’s holistic perspective and reject the narrow positivist view of human action. They agree that humans cannot be understood merely as reactors to incentives or as mathematical objects in maximization problems. 

 Both approaches emphasize interdisciplinarity and contextual richness rather than strict behaviorist reductionism. McCloskey’s Humanomics is particularly expansive in its inclusion of the humanities—language, history, rhetoric, and ethics—alongside economics. Smith and Wilson Humanomics, while acknowledging moral sentiments and context, tends to stay closer to an economic framework that can be operationalized in experimental and theoretical work. 

 

Rasmussen’s neo-Aristotelian Contributions

 

While Vernon Smith and Bart Wilson ground Humanomics primarily in a reinterpretation of Adam Smith and empirical findings, Douglas B. Rasmussen brings a philosophical depth that complements and extends the project.

 

In his recent work (2024), Rasmussen proposes replacing the abstraction of Homo economicus with the paired concepts of Homo agens (acting man), and Homo moralis (moral man). In this view, human beings are purposeful actors (Homo agens) who choose means to achieve ends, and they are also moral agents (Homo moralis) who evaluate not only the effectiveness of their actions but whether the ends themselves and the means to attain them are good for a human life. Unlike Homo economicus, which reduces behavior to utility calculations, this dual conception captures the ethical and purposive dimensions of human action. 

 

Rasmussen’s homo agens comes from Austrian economics and Ludwig von Mises’s “action  axiom” especially as interpreted by Murray Rothbard which holds that human action is purposeful behavior involving the use of scarce means to attain ends. Homo moralis adds the further question of whether the ends chosen and means employed are genuinely good for a particular human being (i.e., tying economic agency to the ethics of individual human flourishing).

 

Rasmussen maintained that neo-classical economists’ grounding of economics in universal self-interest and revealed preference is arbitrary and tautological (i.e., any consistent pattern of behavior can be interpreted as ‘utility maximization”), Rothbard’s homo agens avoids this by characterizing human beings as agents who pursue ends through chosen means, the content of which can be altruistic, egoistic, and so on. This supports a version of Humanomics that does not need homo economicus as a foundational assumption yet preserves economic theorems such as diminishing marginal utility as implications of purposeful action rather than hedonistic psychology.

 

Rasmussen’s framing resonates with Humanomics by emphasizing the agent’s reflective choice, not just behavioral regularities. It anchors Humanomics in a philosophical anthropology that recognizes human beings as rational, moral, and teleological—that is, oriented toward ends that are remembered, evaluated, and integrated within a larger conception of the good life. This aligns with classical and neo-Aristotelian notions of human flourishing, where economics cannot be fully separated from ethics and politics. 

 

Rasmussen’s broader philosophical work on human flourishing situates economics within a normative framework: economics is not just a positive science predicting behavior but a moral inquiry into conditions that enable humans to live well. Drawing on Aristotelian and natural law traditions, Rasmussen argues that flourishing involves exercise of reason, moral judgment, and substantive choice—aspects that narrow economic models often neglect. These philosophical foundations enrich Humanomics by giving it a normative anchor: preferences and choices are not just given but evaluated in terms of their contribution to a fulfilling human life. 

 

Rasmussen’s contribution to Humanomics is best understood through his broader neo-Aristotelian framework of individualistic perfectionism and his sustained work on human flourishing, moral agency, and political philosophy. Rasmussen does not approach Humanomics primarily as an economist, but as a philosopher concerned with the nature of human action, practical reason, and the ethical conditions necessary for individuals to flourish. His work provides Humanomics with a deeper normative and anthropological grounding that complements the empirical and Smithian recovery undertaken by Vernon Smith and Bart Wilson.

 

Rasmussen’s individualistic perfectionism holds that there is an objective standard of human flourishing grounded in human nature, but that flourishing must be achieved through the self-directed activity of individuals rather than imposed collective ends (Den Uyl and Rasmussen [2016]). This view aligns closely with Humanomics’ insistence that economic behavior cannot be reduced to mechanical optimization. Preferences are not merely given; they are formed, revised, and evaluated through practical reasoning over time. Economic choice, on this account, is inseparable from ethical self-authorship.

Under this view, policies or institutions that optimize efficiency but undermine agency, community, or moral sentiments may be judged inadequate. Humanomics, when infused with Rasmussen’s perspective, becomes not just a descriptive science of human behavior but a critically engaged social science that judges economic arrangements in terms of how they contribute to individual flourishing.

 

 Conclusion

 

Humanomics represents a significant intellectual shift toward a human-centered economics rooted in the full breadth of Adam Smith’s thought and enriched by contemporary philosophy. By privileging social relations, moral sentiments, and purposeful action, Humanomics provides a more holistic framework for understanding economic life. The contributions of scholars like Vernon Smith and Bart Wilson reorient economics toward a science of human beings, while philosophical thinkers like Douglas B. Rasmussen deepen its conceptual foundations by restoring moral agency and flourishing to the center of inquiry.

 

In an age where economic science faces criticism for its abstraction and detachment from lived experience, Humanomics offers a compelling alternative: one that holds onto the analytical rigor of economics while honoring the complexity of what it means to be human. In reviving Adam Smith’s unified vision of moral sentiments and economic life, Humanomics challenges the reductionism of modern economics and opens new pathways for interdisciplinary research. It invites economists, philosophers, and social scientists to reconsider the moral foundations of markets and the narrative structures that shape human action. In doing so, it honors Adam Smith’s legacy while extending his insights into the twenty‑first century.

 

Recommended reading

 

Bates, Winton. (2021) “Why Should Economists Practice Humanomics?” Freedom and Flourishing. October 4, 2021.

Den Uyl, Douglas J., and Douglas B. Rasmussen. (2016) The Perfectionist Turn: From Metanorms to Metaethics. Edinburgh University Press.

McCloskey, Deidre Nansen McCloskey. (2023) Bettering Humanomics; A New, and Old, Approach to Economic Science. University of Chicago Press

Rasmussen, Douglas B (2024), Homo Agens and Homo Moralis in Humanomics. The Independent Review.

Smith, Adam. (1759) 1982The Theory of Moral Sentiments.  Indianapolis: Liberty Fund.

Smith, Adam. (1776) 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Indianapolis: Liberty Fund.

Smith, Vernon L., and Bart J. Wilson. (2019) Humanomics: Moral Sentiments and the Wealth of Nations for the Twenty-First Century. Cambridge University Press, 2019.

Smith, Vernon L. and Bart J. Wilson. (2024) “Humanomics: An Interview with Vernon Smith and Bart Wilson.” 2024. Profectus Magazine. October 14, 2024.

 

Some other essays by Ed Younkins

Younkins, Edward W (2025) “What Contribution did David L. Norton Make to our Understanding of Ethical Individualism?” Freedom and Flourishing. January 18, 2025.

Younkins, Edward W. (2025) “How can dialectics help us to defend liberty?” Freedom and Flourishing. July 8, 2025.

Younkins, Edward W. (2025) “How can Austrian Economics be reconciled with the Neo-Aristotelian philosophy of Freedom and Flourishing?” Freedom and Flourishing. October 24, 2025.

Younkins, Edward W. (2025) “Can Polarized Moral Politics be Bridged by a Neo-Aristotelian Philosophy of Freedom and Flourishing?” Freedom and Flourishing. December 13, 2025.