Why Economics Embracing Psychology May Have Lost Its Essence
For a long time, economics was hailed as the "Queen of the Social Sciences." While neighboring disciplines unpacked complex human emotions and social contexts through descriptive narratives, economics alone wielded the powerful weapons of cold, clear mathematical formulas and quantified data.
The microeconomic models that assumed humans to be "perfectly rational and selfish calculators (Homo Economicus)" were exquisite. This very rigor was the absolute identity that set economics apart from all other social sciences.
Lately, however, the territorial expansion of economics shows no signs of stopping. Mainstream economics has now conceded to human "bounded rationality," incorporating cultural and psychological limitations into its analytical frameworks. This is the golden age of behavioral economics.
Faced with this warm, humanizing shift aimed at better explaining real-world behavior, some pose a fundamental question: "The moment you introduce subjective and ambiguous criteria like culture or psychological limitations, hasn’t economics already lost its core essence? At that point, it is no longer economics—it is merely a ‘convergent social science.’"
The Purists’ Warning: Do Not Cross the Line
Purist scholars who love the precision of economics deeply resonate with this criticism. To them, the absolute essence of economics lies in mathematically modeling the "rational and predictable choices made by humans amid scarce resources."
The moment you allow subjective variables—such as "because of culture in this instance" or "due to a bad mood in that instance"—the economic equation inevitably collapses. The baseline stretches and shrinks like a rubber band.
In their eyes, currently trendy fields like behavioral economics or interdisciplinary studies are merely "sub-derivatives of psychology" that have borrowed the external facade (equations and statistics) of economics. Their thunderbolt diagnosis is clear: an economics stripped of its rigor is no longer economics, but rather the product of an identity crisis where the discipline dismantled its own spine just to evade criticism.
The Realists’ Counterargument: Look at Reality, Even if It Gets Messy
On the flip side, realists argue just as fiercely that economics must expand its territory, even if it means crossing that line. In their view, the true essence of economics is not the aesthetic beauty of an equation, but "accurately explaining the economic activities of real human beings."
Traditional, pure economics oversimplified real humans for the sake of keeping its models tidy. In reality, however, humans panic and sell off stocks at a loss when the market crashes (psychology), and they refuse mutually beneficial transactions if they violate morals or traditions (culture).
Realists ask: What is the use of an economics that turns a blind eye to real human beings just to preserve mathematical rigor? They argue that accepting ambiguity and letting the equations get a bit messy to reflect psychology and culture is how economics preserves its true essence—by remaining a useful discipline in the real world.
The End of the Economic Empire, or Its Evolution
Ultimately, this debate comes down to whether economics should be defined as a "mathematical methodology of analysis" or a "teleology studying human survival activities."
If you define economics by its uniquely precise "methodology," then blending it with psychology and culture means it has indeed lost its identity and degraded into a general convergent social science. Conversely, if you define economics by its "purpose" of understanding human beings, then it has not lost its essence; rather, it has evolved by upgrading its tools.
Even now, 90% of the introductory textbooks taught in university lecture halls are anchored by cold, rigorous mathematical economics. Behavioral economics remains a complementary tool filling the gaps of that mainstream foundation.
Conclusion: Upon a Shifting Borderline
Will economics lose its unique identity in its bid to avoid criticism, dissolving into an ordinary convergent social science? Or will it isolate itself within an ivory tower, completely detached from reality by stubbornly clinging to nothing but rigor?
The chaos economics is currently experiencing as it straddles the lines of culture and psychology may not be the downfall of the discipline. Instead, it might be the growing pains of a field forced to confront its most painful vulnerability. One thing is certain: even upon that ambiguous borderline, we are witnessing the dogged obsession of a discipline that refuses to stop trying to calculate human choice.
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