A brief discourse on human conduct in economics

Abstract

Since the transformation from Political Economy to Economics and from Classical to Neoclassical theory in the late nineteenth century, a theory of human behavior has constituted the initial foundation upon which all economic theory is based and developed. Two main theories of human behavior developed by William Stanley Jevons and Carl Menger have been generally accepted to have ushered in this Marginalist Revolution. Jevons’ marginal utility theory popularized by Alfred Marshall is still extensively used today, while the Austrian approach of Menger was effectively removed from academic discussion in the nineteen thirties; mainly as a result of the annexation of Austria and the dissolution of the Austrian School of Economics. Given the inability of economists to fully operationalize the marginal utility theory and realistically explain and resolve a broad range of behavioral anomalies using Neoclassical and Post-Neoclassical Economics, this thesis attempts to examine and address the most fundamental issues of human behavior in economics to explain how utility theory and modern Neoclassical and Post-Neoclassical Economics are flawed and how a realistic theory of human behavior, developed from the scholarly work of the early Austrian Economists, can be used to develop the basis of a scientific economics, derived from observation, that holds the potential to both expand the scope of economic understanding, redirect the focus of the discipline, and possibly unify the many disparate theories in the field.