Classical economics usually starts with a very simple idea: people care about themselves and try to make the best decisions they can. This gives us the familiar figure of Homo economicus — perfectly rational, always calculating, always choosing the option that maximizes personal benefit. It’s a clean model and, for some situations, a useful one.
But real human behavior is messier. People want to improve their lives, but “benefit” can mean many things: money, family, reputation, fairness, community approval, or simply feeling good about helping someone else. And in everyday life, politics, and markets, individuals are pulled in many different directions — emotions, biases, social pressure, bad information, and simple misunderstanding. As a result, people often behave in ways that are not fully rational or not fully self-interested. Take Covid times or all bubbles.
Behavioral economics shows that people systematically make mistakes: they procrastinate, follow the crowd, overreact to small signals, discount the future too heavily, and misjudge risks. These “irrational” patterns are not random; they follow regular psychological rules. Behavioral economics tries to understand these rules and explain why ordinary decisions often deviate from classical rationality.
Identity economics. It emphasizes that people don’t act only as isolated individuals maximizing money or utility. They make choices as members of groups: as parents, citizens, workers, women, men, Indigenous people, immigrants, religious communities, etc. Identity shapes what people value, which rules they obey - often seemingly irrational and strage for other groups, and what behavior they consider appropriate. When identity changes — for example, through migration, cultural shifts, or social conflict — economic behavior also changes. Modern politics, social media, and cultural polarization make identity even more influential than before. It will shape out world for some time. Most likely a very long time.
This perspective is especially important in Indigenous economics. Many Indigenous communities focus less on individual self-interest and more on land, ancestry, collective rights, and governance structures that differ from Western institutions. Land is not just an asset; it is tied to identity, culture, and responsibility. Decisions are often made with community well-being in mind, not only private payoff. Because of this, standard economic models often fail to capture the incentives, constraints, and social structures operating in Indigenous settings. Say the truth, it has to be built anew.