IPMA International Project Management Association
27 June 2016 / 6:57

The end of a species called „homo economicus“ – or did it ever exist?

In economics we learn a lot about a species called “homo economicus”. Those beings are seen as consistently rational and narrowly self-interested agents who usually pursue their subjectively-defined ends optimally. Many theories and concepts in economics (and project management) are based on this concept, yet the species seem to be extinct in real life. Despite of all economic and political advise the Brexit happened last week. The polls were wrong, the book makers were wrong, nobody really forecasted what would happen. It was perceived rather surreal by many people on the continent as well as on the islands. On Friday the stock markets went crazy while the two alternative results (Brexit or Remain) were quite obvious. Consistently rational behaviour? Did the people in England and Wales (Scotland and Norther Ireland voted to stay in Europe) act irrational? Or did they act selfish pursuing their own interests only? The social media is full of views and comments and the questions remain unresolved. The heated debate in the United Kingdom (and in many parts of Europe) indicates that the idea of an “homo economicus” is dead, it was never alive! The same appears in projects, in organisations and society, local communities, our state and country.

People follow their own rational, intrinsic motives and self-interests rather than obeying any extrinsic stimuli. Sometimes this seems to be an emotional behaviour. However, we may simply not understand the rationale behind. This may also explain why many politicians and project managers fail. They do not understand the psychological needs, desires, anxieties and motives of the people they are working with or for. In an online chat someone from the UK argued that the Brexit is great, because now it is much easier for his 25 year old son to afford housing. He accused the European Union to have caused the massive increase in real estate prices in the UK. Others see the “massive” influx of foreigners as a reason to leave the EU. The argument, that more foreigners have entered from the Commonwealth was ignored. A rational debate is difficult to facilitate in such a heated atmosphere, the same increasingly happens all over the world. This could be dangerous. Nationalism and egoism has caused far too many conflicts and wars. But what type of species do we need instead? What is moving us forward?

Maybe a species called “homo faber”  is what we need, the “working man”. Working him- or herself out based on needs, desires and values, acting on his/her own interest but making something happen. That´s a bit like the “projectors” Daniel Defoe described in his novel “An essay upon projects” in 1697. However, this might be a very western, individualistic approach. In Eastern and Latin countries the social needs, desires and values are much higher as opposed to the ones of people living in Northern Europe and Northern America. Or what about the “homo ludens”, the “playing man”? This species is more interested in amusement, humor and leisure. Whatever we add to the word “homo”, the difficulty remains to explain people and their behaviour.

We should not try to believe in stereotypes and try to discover the motives, needs, desires, anxieties of people we are collaborating with. This might be difficult to understand. Especially with an engineering background. Even with economics you might have limited understanding of psychological needs. In order to be successful we need to get more insights of the underlying, psychological motives of people before starting into an endeavor such as a project. Stakeholder management is one approach towards a better understanding, but I believe we need to do much more based on psychological know-how. Fortunately, there are more and more books reflecting on psychology in the domain of projects and programmes. We need to explore more this field to successful. Finally, I would argue that we need to re-define the basis of our economy, people in real life are not consistently rational, they are not narrowly self-interested agents who usually pursue their subjectively-defined ends optimally, they follow their own agenda and this may be misinterpreted by us from our external perspective. It´s time for reflection… in our private life, in business, in our projects, in politics and in society at large.

1 Comment

  • Gianluca di Castri says:

    In the behavour of human beings, irrationality plays a substantial role. This is why econometrics, albeit is an important tool, cannot explain all the economics. Homo oeconomicus is a kind of standard, that does not exist in reality.

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Author of this post

Dr. Reinhard Wagner has been active for more than 35 years in the field of project-related leadership, in such diverse sectors as Automotive, Engineering, and Consultancy, as well as various not-for-profit organizations. As Managing Director of Tiba Managementberatung GmbH, a leading PM Consultancy in Munich/Germany, he supports executives of industrial clients in transforming their companies towards a project-oriented, adaptive and sustainably successful organization. He has published more than 40 books as well as several hundred articles and blog posts in the field of project management. In more than 20 years of voluntary engagement he served the German Project Management Association (GPM) as well as the IPMA in various roles and was granted for his international commitment with the Honorary Fellowship of IPMA and several of its member associations. He received his doctorate in the field of projectification of society and continues to be active in it through his research and lectures.