Two worlds collide: A review essay of Humanomics: moral sentiments and the wealth of nations for the twenty-first century

Smith and Wilson endeavor to humanize the study of economics by using axioms from Adam Smith’s Theory of Moral Sentiments (TMS) to create a new model of human action that builds upon previous experimental work. Their model emphasizes that human action is context dependent: Human beings are not wholly solipsistic but adjust their behavior to earn approbation and avoid disapprobation from their peers. Whereas both neoclassical and behavioral economists have attempted to account for such behavior through utility functions, the authors instead do so by incorporating Smith’s insight that all human action is social. The authors’ deep analysis of TMS underscores the valuable insights that modern economists can find in Smith’s writings and uncovers the underlying foundation that the Austrian tradition has in Smithian political economy. For that reason, Austrians will find Humanomics to be both a valuable guide for understanding Smith’s world and a reminder that the future of humanomics will rely on the insights already gathered and explored by their tradition.