rational agent

To the economist utility is a stand-in for usefulness. In fact, it is often interpreted as a subjective measure with reference to the consumer. In this sense it cannot be used to distinguish between wants and needs. The distinction is left up to the consumer. And, according to rational agent theory humans (Homo economicus) act with perfect rationality in making choices based on their subjective utility assignments for various options. There are two basic flaws in this approach to building economic theories and models. First, humans are by no means rational, in the pure sense, but are strongly influenced by emotional factors, often subconsciously, that bias their decisions toward that which 'feels' good and away from that which 'feels' bad. Second, the formation of emotional linkage to things out in the world is strongly influenced by perceptions of linkage to deep biological needs even when there is no real connection. This is the job of advertising — make that premium object have sex appeal always works!

Both of these 'truths' about human nature and decision making have been amply explored by psychologists (and c.f. criticisms from the previous article link). Unfortunately for main-stream economists they are forced to deny the evidence because their models and theories will fold in light of reality! They really are in a bad spot. Too bad they have been able to shield our Commander-in-Chief from this reality. He still puts his faith in the classical/neoclassical versions of growth and consumption as the basis for human well-being.