Homo Economicus vs. Human Being: Outcomes of Irrationality

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. JEL classification number; D03 Keywords; paranormality, non-scientific thinking, irrationality, happiness, factor analysis, Homo economicus  The authors are grateful to comments by Noah Smith and to financial support by 21 Century Center of Excellence Program of Osaka University. Faculty of Economics, Kinki University, 3-4-1 Kowakae, Higashi-Osaka, Osaka, 577-8502, JAPAN, Phone: +816-6721-2332; e-mail: [email protected] ‡ Institute of Social and Economic Research, Osaka University; 6-1 Mihogaoka, Ibaraki, Osaka 567-0047; phone +81-6-6879-8552; fax +81-6-6879-8584; e-mail: [email protected] Graduate School of Economics, Osaka University, 1-7 Machikaneyama, Toyonaka, 560-0043 JAPAN, Phone: +81-6-6850-5223, Fax: +81-6850-5274, e-mail: [email protected] 1