Why the rational human model of economics fails to explain our actual behavior
In short: Conventional economics relies on the idea of Homo economicus, a perfectly rational actor. MIT Professor Frank Schilbach challenges this model by exploring how stress, sleep deprivation, and psychological factors drive counterproductive choices. This episode examines why prioritizing mental health as an end in itself is superior to viewing it merely as a productivity tool.
Professor Frank Schilbach argues that traditional economic models often fail because they assume people always act in their own material interest. In reality, human decision-making is frequently influenced by psychological states that lead to irrational or counterproductive outcomes. By integrating psychological insights into economics, Schilbach explores interventions that can improve not just financial stability and earnings, but also social cooperation and benevolence.
A central theme of his work is the shift in how we value mental health. While economists have historically treated mental health as a means to achieve higher productivity, Schilbach advocates for recognizing it as an essential component of human well-being in its own right. He applies this philosophy to his own teaching at MIT, where he schedules assignment deadlines for 6 or 8 PM rather than early in the morning to better support student mental health.
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Sources
- Summary by Intellect · source: Wellbeing is the Goal with Prof. Frank Schilbach (S4:E2)
- Also: Wellbeing is the Goal with Prof. Frank Schilbach | Psychology and Economics | Economics | MIT OpenCourseWare
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