John B. Davis’ Identity, Capabilities, and Changing Economics, Cambridge University Press, 2024, pp. 288 + xiv, $34.99

John Davis’s new book is a fascinating methodological and philosophical reflection on the individual in economic theory, focused on issues of agency and identity. He identifies a significant limitation of the standard model of the (boundedly) rational agent, around which the book is organized, the neglect of the reflexive and adaptive capacities of people. This critique will be familiar to readers of James Buchanan’s (1979) “Natural and Artifactual Man,” in which the Nobel Prize winner suggests that we should study humans not merely as they are, but in their process of becoming. In his essay Buchanan sides with Frank Knight’s idea that life is not just about satisfying our preferences, but about the acquisition of better preferences. Davis describes this capability of humans as their reflexive nature, the ability to reflect on our current preferences and to aspire to a different set of preferences or capabilities. When all goes well, this reflexive capability enables individuals to look at themselves critically, and to figure out what they would like to improve. This capability should lead them to realize themselves and their identity more fully. But Davis suggests that the flipside of our ability to reflexively adapt our preferences is that we adjust to our circumstances, however bad these may be. This adaptive part of human nature might lead us to adopt what he calls ‘bad preferences’ (p. 21; 176–178). Both our adaptive and reflexive capacities suggest that the self is not nearly as fixed, or stable, as the standard economic theory of the individual suggests.

Find the full review here.