Forty years ago, Chicago economist Gary Becker wrote an essay describing “the economic approach to human behaviour”. In his view, “the combined assumptions of maximising behaviour, market equilibrium and stable preferences, used relentlessly and unflinchingly, form the heart of the economic approach”. He went on to claim: “The economic approach is a comprehensive one that is applicable to all human behaviour.” His own work included an economic analysis of family life. In 1992, he was awarded the Nobel Prize in economics for “having extended the domain of microeconomic analysis to a wide range of human behaviour”.

Professor Becker’s expression may seem somewhat extreme. But the Chicago-published Journal of Political Economy has carried articles explaining, for example, that people commit suicide when the net present value of their future utility is negative. (This prompted a future Federal Reserve governor to pen an exasperated response on the economics of brushing teeth.)

Prof Becker’s description of “the economic approach” is a fair characterisation of the dominant paradigm in modern economics. This tends to decry as “unscientific” analysis that does not investigate the properties of equilibria established by agents engaged in rational choice. It is also a starting point for critics of modern economics, who point out that people do not always maximise, preferences are not stable and markets are often out of equilibrium. These objections are well founded. Our motivations are complex, our behaviour sometimes unpredictable and markets rarely achieve equilibrium. Yet such superficial criticism fails to identify the real problem in this approach.