# Homo economicus

 The term homo economicus—a Linnaeus-themed variant of John Mill's 1836 generic utility maximizing "economic man"—is said to be attributed to the work of Italian engineer and physical socioeconomicist Vilfredo Pareto and his 1896 statement that: "man himself; stripping him of a large number of his attributes, leaving out the passions, good or bad, reducing him to a kind of molecule that only acts in response to the forces of ophelimity”, which, as summarized by Australian economics historian Michael McLure (2002), is an abstract entity that only responds to the forces of ophelimity, in other words "an abstract molecule that acts only in response to economic forces". [1]
In hmolscience, homo economicus is a physical economics conception of a generic economic agent acted on solely by external forces, external economic forces to be specific; and to some extent its own internal forces, depending.

“Pareto’s homo economicus is ‘an abstract molecule that responds only to economic forces’.”
Michael McLure (2002), Pareto, Economics and Society [1]

At some point, to clarify, Pareto discusses the internal forces of his homo economicus, but not in such a way that it was the main part of his theory of the molecular economic agent (see: economic molecule).

Overview
The term homo economicus originated somewhere in the 1896-1907 work of Italian engineer and physical socioeconomist Vilfredo Pareto. Pareto's term, him being part of the Lausanne school of physical economics, seems to be a spinoff of his associate-mentor Leon Walras earlier term "molécules économiques" (French) or economic molecule. As authors Thomas Prugh, Robert Costanza, and Herman Daly summarized in 2000: [7]

Homo economicus knows neither benevolence nor malevolence, only indifference. Human beings in this model are first, last, and always extreme individuals: economic molecules, in the conception of Leon Walras, one of the founders of modern economics.”

In circa 1908, Italian economist Maffeo Pantaleoni, in his article “The Phenomena of Economic Dynamics”, classified Pareto's overall theory as "economic dynamics" during the course of which he comments how Pareto referred to man as "homo economicus", the outline of which is as following: [2]

“The ruling idea in economic studies following those of Adam Smith was wealth. Later it became the idea of value and is so still in the case of many writers. The science has contained in a sporadic shape much material for a science of economic equilibrium, such as has been suggested by Pareto in a work which makes only a beginning of a study of economic dynamics.

In describing dynamic phenomena comparisons are used which were formerly taken from mechanics, but now more usually from biology. Economic agents are thought of either as molecules subjected to equal pressure in all directions, or, on the other hand, as parts of a living body subjected to equal stimuli, which are mutually counteracting. There is little use in disputing as to which method is better, since the useful thing is to apply a method rather than to argue about it.

Economic dynamics may be defined as a study of movements of disequilibrium, which lead to positions of equilibrium. When an individual spends his income so as to bring into a proportion the marginal utility of different articles within his purchasing power, the equilibrium exists and is rightly called static, because it will continue indefinitely and return if disturbed. Until this condition is reached, modifications in his demand or in his supply are likely to take place, and the quantity of the goods coming within his reach will change and these changes affect both the man himself and the persons he deals with, involving both the quantity of goods available and the incomes of different producers. The state of equilibrium [see: equilibrium state] yields the maximum of satisfaction relatively to the initial position and to the changes which this allows.

In every society purely economic motives have an extending or contracting radius of activity; in other words, the zones of economic action grow larger or smaller. As Pareto says:

“Man’s actual conduct resembles that of the homo economicus, or that of the homo ethicus, or that of the homo religiosus. It is sometimes a composite of all these characters. There are concrete phenomena in which the economic influences transcend all others, and here it is possible to consider alone the results deduced by economic reasoning; while there are other phenomena in which the economic constituent is insignificant and may be neglected. There are still others which are intermediate in character.”

To this we in the main agree, but find it necessary to examine variations of the zones in which all these homines move, and we must notice that even the homo economicus in his own proper capacity is modified when he enters into a composite with the others.”

Australian economics historian Michael McLure has discussed Pareto’s economic molecule theory in comparison to this generic homo economicus—one who attempts to maximize utility as a consumer and economic profit as a producer—a term deriving from John Mill’s “economic man” utility logic, such that Pareto’s homo economicus is ‘an abstract molecule that responds only to economic forces’. McLure elaborates further: [1]

“In pure theory, homo economicus of Cours [on Political Economy] is analogous to a molecule in the theory of mechanics (note: the impersonal subject pronoun has been used because the homo economicus is an abstract ‘molecule’, not a person). Kirman has pointed out that ‘Pareto regarded equilibrium as the termination point of a process … The time taken for this process is not specified but it certainly is not regarded as … as negligible (Kirman 1987, pg. 806).”

The discussion here of British-French economist Alan Kirman’s synopsis of Pareto’s equilibrium model from his 1987 Dictionary of Economics entry “Pareto as an Economist” is interesting. [3]
 In the 1930s, American physiologist Lawrence Henderson thought, in his Sociology 23 course, that Vilfredo Pareto's 1912 mechanics based socioeconomic equilibrium theory, while not directly based on the chemical thermodynamics based equilibrium theories of American engineer Willard Gibbs, are nevertheless arguing the same point of view, and hence modern socioeconomic equilibrium theories will need to be reformulated in the physical chemistry reaction terms of chemical thermodynamics, a unified synthesis of Gibbs and Pareto, in short. [1]

Chemical homo economicus
In the early 1930s, American physiologist Lawrence Henderson taught a course at Harvard themed on making a connection between socio-economic system models of Pareto and the physico-chemical system models of American engineer Willard Gibbs.

The following, for instance, is a 2005 retrospect synopsis by American science historian Hunter Heyck: [4]

Pareto’s work appealed to social scientists who had lost faith in the rationality of the public but not in the rationality of science. Henderson fit the bill perfectly: he was so taken with Pareto’s ideas that he led a faculty seminar on Pareto at Harvard in the early 1930s, from which emerged Henderson’s study Pareto’s General Sociology: a Physiologist’s Interpretation.

Pareto’s mathematical analysis of society was based on his engineer’s understanding of the thermodynamics of equilibrium systems. For example, one of Pareto’s central concepts was that of ‘ophelimity’, now usually called Pareto optimality. Ophelimity was a redefinition of marginal utility in thoroughly thermodynamic terms. Pareto defined a system as having maximum ophelimity when the increase of the ophelimity of any element in the system necessarily reduced that of some other element (or elements) in the system. Thus ophelimity, like energy, always was conserved in a closed system, making the reallocation of ophelimity a zero-sum game. This concept, it should be noted, especially welfare economics, where it plays an important role in the work of Paul Samuelson and Abram Berg.”

This, however, is historical anachronism. At the time when Pareto was studying civil engineering at Polytechnic University of Turin, from 1865 to 1870, thermo-dynamics (see: etymology) was barely yet a coined term, and it would not be until 1875 when Rudolf Clausius would call his second edition The Mechanical Theory of Heat a "textbook" suitable for standard engineering study, in Germany, let alone in Italy. While it is true that Pareto did begin to use the term "thermodynamics" on about 16 various pages of his 1912 Treatise on General Sociology, he only uses the term "entropy" once in the fourth volume, which is the key term one would have to grapple with if he or she was so inclined to attempt to reformulate the general equilibrium theory of economics in "thoroughly thermodynamic terms" as Heyck alleges.

In any event, in 1935, Henderson, in his Pareto’s General Sociology: a Physiologists Interpretation, elaborates on a large number of Pareto-Gibbs comparisons, such as the following: [1]

“Gibbs considers temperature, pressure, and concentrations, so Pareto considers sentiments, or, strictly speaking, the manifestations of sentiments in words and deeds, verbal elaborations, and …”

Henderson, however, never actually stated that Pareto derived his theory from Gibbs but rather he only “compared Pareto’s social system to a physicochemical system as defined by Gibbs and emphasized that the equilibrium of the social system is logically identical to physiological equilibrium.” [12] In fact, in his appendix "Note 5", Henderson states is views on this matter explicitly:

“It is very unlikely that the general characteristics of Gibbs’ system had anything to do with Pareto’s construction of his social system. In other words, it is very probable, I thing certain, that Pareto did not keep Gibbs’ work in mind and a fortiori that he did not imitate it, when he worked out his social system; so that Pareto’s system is not the result of the application of the theories of physical chemistry to sociology.”

Henderson, however, does have this application in mind, and in his end note appendices, actually goes though a comparison of the equilibrium properties of the following liquid phase chemical reaction, namely of reactants carbon acid H2CO3 with disodium phosphate Na2HPO4 to form the products of sodium bicarbonate NaHCO3 and monosodium phosphate NaH2PO4:

$H_2CO_3 + Na_2HPO_4 \rightleftharpoons NaHCO_3 + NaH_2PO_4 \,$

to that of the equilibrium properties of social systems, at the end of which he states:

“This simple example illustrates [the] logical principles [physical chemistry] that find universal application in the physical, biological, and social sciences.”

Henderson's treatise is fairly decent and in need of detailed analysis.

References
1. (a) McLure, Michael. (2002). Pareto, Economics and Society: the Mechanical Analogy (molecules, pg. 124; molecule, 4+ pgs; comparison table, pg. 65-66). Routledge.
(b) Kirman, Alan P. (1987). “Pareto as an Economist”, in: The New Palgrave: A Dictionary of Economics, Volume Three (editors: J. Eatwell, M. Milgate, and P. Newman) (pgs. 804-09). MacMillan Press.
2. Pantaleoni, Maffeo. (1919). “The Phenomena of Economic Dynamics” (pdf), Abstract of Paper, in: Papers and Discussions of the Twenty-Second Annual Meeting, New York City, Dec 27-31 (pgs. 112-22; homo economicus, pg. 115). Princeton University Press.
3. (a) Kirman, Alan P. (1987). “Pareto as an Economist”, in: The New Palgrave: A Dictionary of Economics, Volume Three (editors: J. Eatwell, M. Milgate, and P. Newman) (pgs. 804-09). MacMillan Press.
(b) Kirman, Alan (contributions) – DictionaryOfEconomics.com.
(c) Alan Kirman (curriculum vitae) – Les Universites a Aix en Provence.
4. (a) Crowther-Heyck, Hunter. (2005). Herbert A. Simon: the Bounds of Reason in Modern America (pg. 69). JHU Press.
(b) Hunter A. Crowther-Heyck (about) – ACLS.org.
5. Henderson, Lawrence J. (1935). Pareto's General Sociology: A Physiologists Interpretation (Gibbs, 9+ pgs). Harvard University Press.
6. Parascandola, John. (1992). “L. J. Henderson”, in: Science at Harvard University: Historical Perspectives (editors: Clark Elliott and Margaret Rossiter) (pg. 182). Lehigh University Press.
7. Prugh, Thomas, Constanza, Robert, and Daly, Herman. (2000). The Local Politics of Global Sustainability (economic molecules, pg. 78-79, 84). Island Press.