By: Russ Roberts
In: Econ Journal Watch, 11(2)
Date: May 2014
- Role of individual in standard view of economic theory:
- Human beings are integrated, consistent, maximizing, utility-seeking, calculating creatures.
- Fundamentally self-interested.
- Goal is to maximize utility through consumption.
- Value of freedom is to increase utility via maximization of choice.
- Knowledge maximizes utility and creates efficiency.
- Role of government in standard economic theory:
- Maximize the size of the pie.
- Distribute the pie in order to maximize more general concept of societal well-being.
- Correct for various shortcomings in either personal or market decision-making.
- Externalities, public goods, imperfect information, paternalistic regulation (behavioral errors)
- Individual in religion:
- Human beings seek meaning, have conflicting goals and desires.
- Fundamentally flawed and imperfect.
- Tendency to pursue short-term pleasure at the expense of longer-term satisfaction.
- Restriction of choices is (sometimes) beneficial.
- Sacrifice and restrictions enhance well-being.
- Power of community.
- Importance of using skills and gifts to make the world a better place.
- Need to recognize limitations of standard economic theory…
- Passions within Reason – Robert Frank
- Some behavior makes sense only as a product of moral emotions.
Evolution sometimes favors “strategically irrational” behavior – signaling.