Individuals act on self-interest. No, that doesn’t mean that people are only motivated by selfish materialism. It comes down to an understanding that actions made today will have consequences tomorrow. Those decisions drive our economy. They are based on the best choices someone can make today, which will provide the best future for themselves and their loved ones. So where do charity and altruism fit into that economic worldview?
Nobel laureate Dr. Gary Becker says they play into each other more than people think, but an important distinction should be made, “Even a bunch of selfish individuals, under appropriate circumstances, can lead to results that are in the public welfare. So for example, an entrepreneur, who may be perfectly selfish in my concept, not worried directly about the well-being of others, because of what he or she does and because of competitive forces, etc., may well, of course, improve the well-being of others, but that’s not altruism in my concept. I say that’s the basic result that Adam Smith saw. And the greatest result, I think, in social science is that a collection of private selfish individuals may in their collective actions contribute to the public well-being, but you want to sharply distinguish from Adam Smith to the moral sentiments who really did deal with altruism.”
Hear the rest of the conversation with Becker and political scientist Aaron Wildavsky and find out what they say these concepts can teach us about society and economics in the latest episode of the Free To Choose Media Podcast.
Originally Recorded: 1993