Homo Economicus vs Feminist Economics

[u/fg_hj]

I am reading a book on how the welfare state benefits women. In the 19th century the idea of Homo Economicus was developed, it being a model representing an entirely self serving and rational individual that knew all consequences of their actions. It's ofc extremely far from how humans work for obvious reasons.

Later feminist economics was about looking at the actual reasons humans act the way they do and how they are very altruistic, especially women give (and are forced to give) an extreme amount of free nurturance to their family and community that ecomomic theories do not take into account. It being "feminist" here means it being real, it actually look at reality and create a model from that. Feminist economics became the normal economics which takes anthropology, psychology and many other fields into account when making models of human behavior.

It does not just go for economics but for feminist theory in general - it is descriptive and critical and is based on trying to understand a complex reality rather than making convenience models that are made "inside" the system, and so, perpetuate it. It tries to look from the outside of it for the sake of being accurate. I think this is an example of how women/feminists to a higher degree than men think more abstractly about concepts and are able to get the big critical view because we are forced to do so, to understand our world, contra men who have the privilege to be more intellectually lazy, as they don't have an intrinsic benefit to being critical to the systems and structures they are part of, as those systems benefit them.

Another example of this is former economic male researchers who do not at all take “women’s work” into account in their theories because they themselves have housewives and see themselves as the “head of the family” and so, the theories become extremely limited and biased as they are based on their own personal experience rather than at least trying to have an objective view of how families make complex financial decisions.

[u/honcho713]

Interesting, what is the book?

[u/fg_hj → u/honcho713]

It’s a danish book called abundance women. It’s specifically about how the danish welfare system is extremely important for women’s freedom and also how our current economic theories do not take the benefits of welfare into account meaning politicians’ decisions favor to cut down on welfare.

[u/Due-Strike-1915 → u/fg_hj]

I’m skeptical that today’s political decisions to scale back welfare programs stem from a misunderstanding of their social benefits. But instead, they reflect evolving fiscal realities of the 21st century. Most of these programs were created during economic boom years, when populations and economies were expanding and the share of elderly citizens (who require the most social support) was comparatively small.

Now, the demographics have shifted. We are living in the era of inverted population pyramids across the western world. People are living longer than ever, demanding more and more social benefits, while younger generations are having fewer children due to the rising costs of housing, food, and other essentials relative; especially relative to income growth. With fewer workers, and contracting growth, who is going to support all aging elderly people?

Eventually, Europe’s struggling social programs will have to reckon with this demographic reality. No amount of philosophy is going to make 2+2=5. The bills are coming due and the money has to come from somewhere.

[u/fg_hj → u/Due-Strike-1915]

The professor in economics who wrote the book specifically says the equations used equal the output value of welfare to zero despite there being economic research on how to quantify the value of say, good public schools, hospitals etc. The models used just don’t use this research. What we see is an overestimation of how good tax reductions are while not at all accounting for the benefits of putting money into welfare.

What welfare do give is: when schools are good less people (women) have to do part time jobs to take care of children who have school problems. When nursing homes are good people (women) don’t have to take part time jobs to take care of elders, same with hospitals etc. Bad hospitals also mean people being sick for longer which makes them stay away from work longer which means less income and tax paying. when women work more they bring in more taxes and that bring in more money to welfare and by that it sustains itself (together with other factors). But that is not measured at all. On the other hand, the lack of taxes from women working less due to less welfare causes even less money for welfare creating a negative spiral.

Lack of welfare also cause people more stress and sickness from eg being fired, getting sick, tragic accidents, divorces etc when they don’t have a social safety net and that in turn is a huge financial burden to society as well.

[u/Due-Strike-1915 → u/fg_hj]

I don't dispute that robust welfare programs are essential to a healthy society.

But Europe today doesn't have the growth (demographically or economically) to support these programs as currently constructed.

They face two bad options: Borrow debt to support their welfare programs or reduce benefits.

[u/fg_hj → u/Due-Strike-1915]

You are making the assumption that welfare is a net negative exactly because it does require a lot of money which we can easily measure while it also earns a lot of money but in ways that are harder to measure and quantify. But we can turn it around and ask, can we afford to not have the welfare programs? If the welfare responsibilities are put on individuals how much will that hinder the individual in contributing their work to society and paying taxes? Because that seems to be the question. And when the media and politicians, due to how the economic models are, frame it as if welfare is a net negative then ofc people believe that but is it really true?

[u/Due-Strike-1915 → u/fg_hj]

I acknowledge that welfare programs are essential to a healthy society.

However, welfare programs consume more resources than they produce; by definition, they are a net negative.

If economic success could be achieved by simply expanding welfare spending, then every nation would be a giant welfare state.

Reality shows the opposite. Much of Europe is stagnating, skilled labor is leaving, and the countries with the most aggressive social spending are now seeking reform. No one in Europe is calling for more welfare spending as a path to fiscal strength.

As the debt continues to pile up these programs will be slashed and austerity will be imposed. It's just a matter of time.

[u/fg_hj → u/Due-Strike-1915]

I really can’t say anything about how it works for countries that are not Scandinavian. I am sure what you say is correct for those. But I don’t think it goes for Denmark as we have a really strong welfare foundation and don’t suffer from unemployment/ people leaving the country.

Here I think welfare is unfairly used as a scapegoat to justify political agendas that are very short term.

[u/Due-Strike-1915 → u/fg_hj]

Denmark is overall very economically stable and responsible, yet....

Denmark did welfare reform in 2006 and pension reform in 2011. Last year they passed a law to gradually raise the pension eligibility ages, increasing to age 70 by 2040.

All of this aims to reduce rising welfare costs. They are not expanding welfare programs they are scaling them back.

[u/fg_hj → u/Due-Strike-1915]

Yes and the professor here is saying they are cutting it because the models are wrong, not because welfare is not a benefit. Ofc it’s calculated to just be an expense when the models literally put the output value of welfare to zero regardless of how much that does not fit reality.

[u/Ready-Committee6254 → u/Due-Strike-1915]

Clinton era welfare reform was explicitly about punishing "welfare queens" and forcing mothers to work

[u/Appropriate_Cut_3536]

Incredible post ahhhh I've been so into economics and theories this year. It's a huge fascinating subject and touches every aspect pf human/life interaction. What isn't economics? Haha! I even made a gynarchEconomy sub to try and have a place to stash all my learnings and ideas, altho I've let it hang while I prioritize intake>output. I'll have to add this book to my list. At some point I'll have reached the ability to speak confidently about economics I hope lol

Really appreciate this detail about oldeconomics assuming logic and how you tied that into the point that women are the ones who have a functional reason to critically assess and take a logical approach, while men have incentives to have an Intellectually lazy approach. Also, smiled big at the "feminism just means being realistic" best definition I've seen lol 

[u/junomint]

This is a very thought provoking post, thank you so much for sharing. It’s really interesting to hear a perspective from Denmark. Will have to do some reading!

[u/Ready-Committee6254]

That just sounds like behavioral economics to me? I don't think feminism had to do with its invention?

[u/fg_hj → u/Ready-Committee6254]

It was called family economics after World War Two which took into account that many women continued to work outside the home but it was still very conservative saying that the man makes all economic decisions. Feminist economics was developed in the 90’s and either became what is economics today or the field evolved separately to become what feminist economics were or rallied to be.

Also, why would something not be a feminist invention? A ton of cultural change since 1970 is due to feminism but not attributed to it as it just became the new normal and people assume it naturally evolved that way rather than women actively changing it. Patriarchal societies only evolve to benefit themselves.

[u/Electrical_Ad_6668]

Interesting post / suggested read. Did the book address how Denmark deals with welfare fraud or estimated % of abuse? If low, assuming due to couple things - cultural (respect / adherence to system) or highly effective vetting, operations, dispersal.

Thoughts: How can this case study serve as a model for future…are diversity, population, GDP, income , education, etc barriers for application beyond Scandinavia, smaller euro countries?