Max-U? Considering humanomics in public policy

Humanomics, an approach to studying human behavior championed by Vernon Smith, Bart Wilson, and Deirdre McCloskey, is rooted in an acknowledgment that human beings self-examine their conduct and sentiments. The economic way of thinking, therefore, must be located within the mass of evidence about human behavior produced outside of its neoclassical silo. Since public choice and public policy analysis, in general, have inherited much of their methodologies from economics, the lessons of humanomics apply equally there, too. The overwhelmingly dominant method of economic analysis, Max-U-under-constraints, invites a policy activist to play with the “rules of the game” to nudge mechanically reacting maximizers toward desirable outcomes. In contrast, humanomics helps the analyst to identify the underlying causes of those outcomes in the ideas and actions, not mindless reactions, of thinking, knowing, and feeling humans. In addition to other achievements, the new approach already has produced, we argue that the humanomics framework provides a clear explanation and motivation for voluntary (uncompensated) human blood donations and offers plausible and testable answers to the open questions about the general success of that policy. For the policy analyst, humanomics suggests that policy proposals must ask more than just whether the policy is effective and efficient. Instead, it must ask whether the policy is consistent with how human beings act in the real world, under real circumstances, with real people.

Find the full article here.