Homo Economicus vs. Human Being: Outcomes of Irrationality

Abstract

This paper investigates the individual outcomes of irrational thinking, including paranormality and non-scientific thinking. These modes of thinking are identified by factor analysis from a 2008 survey. Income and happiness are used as measures of performance. Empirical results reveal that non-scientific thinking lowers income, whereas paranormality does not affect it. While non-scientific thinking lowers happiness, paranormality raises it. Extending the model, we find that higher ability and self-control result in higher income and happiness. Selfishness raises income, but diminishes happiness. These results suggest that Homo economicus generally achieves higher individual performance, except that belief in paranormality raises happiness.

Keywords: paranormality, non-scientific thinking, irrationality, happiness, factor analysis, Homo economicus

JEL Classification: D3