Self-interest

Self-interest - February 17, 2005 ECONOMIC SCENE The Theory...

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February 17, 2005 ECONOMIC SCENE The Theory That Self-Interest Is the Sole Motivator Is Self-Fulfilling By ROBERT H. FRANK A NEW YORKER cartoon depicts a well-heeled, elderly gentleman taking his grandson for a walk in the woods. "It's good to know about trees," he tells the boy, before adding, "Just remember, nobody ever made big money knowing about trees." If the man's advice was not inspired directly by the economist's rational-actor model, it could have been. This model assumes that people are selfish in the narrow sense. It may be nice to know about trees, it acknowledges, but it goes on to caution that the world out there is bitterly competitive, and that those who do not pursue their own interests ruthlessly are likely to be swept aside by others who do. To be sure, self-interest is an important human motive, and the self-interest model has well-established explanatory power. When energy prices rise, for example, people are more likely to buy hybrid vehicles and add extra insulation in their attics. But some economists go so far as to say that self-interest explains virtually all behavior. As Gordon Tullock of the University of Arizona has written, for example, "the average human being is about 95 percent selfish in the narrow sense of the term." Is he right? Or do we often heed social and cultural norms that urge us to set aside self-interest in the name of some greater good? Derek Hudson A decision about which Champagne to serve for a party in France turned into a test of the self-interest model.
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Self-interest - February 17, 2005 ECONOMIC SCENE The Theory...

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