Individual is Selfish

Chapter 2, Section 3: Individual is Selfish

That individual makes predictable choices — the first postulate of economics — is already a constraint. But it's not enough, and we need install other important ones as well. Here a second postulate is: any behavior of a individual is selfish. That's saying, under constraints, the individual acts to maximize his interest. No matter it's hard-working or rest, cheating or donation ... they are all selfish.

 As a postulate, the constraint is not arguable, and whether human nature is selfish or not is irrelevant: what's really important is not what human really are (that's a question for psychology, physiology or philosophy), but what we assume they are. Then here comes a problem, if we assert cheating, donation ... and so on are all selfish behaviors, is there anything that cannot be explained by "selfish"? The postulate comes as a constraint, but in the end it constrains nothing, how can it be justified? A good question. And the answer is: if we assert at will any behavior as selfish, like a tautology that cannot be wrong, the postulate would become empty and useless; but if we can install more constraints to indicate the circumstances under which an individual would make a selfish decision, and the variations of these constraints lead to inevitable variation of the selfish behavior, then there'd be a whole new story.

For instance, donation or help without a reason has nothing to do with selfishness. But under certain constraints, the cost of a donation is lower or its profit is higher, the actions of donation would increase. Then the postulate of selfishness comes into play. Here I can list some examples. Twenty years ago, Deng Pufang, the son of Deng Xiaoping, visited Hong Kong and raised a donation of 50 million Hong Kong dollars (he was disabled). Apparently my son doesn't have such a capability. If the donors donate just for benevolence, let's put my son's problem aside first, why did they make the donations so serious instead of mailing the checks quietly to a charity? There do be anonymous donors. But why donation would increase when there is a tax deduction for it? Where does sympathy come from? Why do people believe "good deeds will be rewarded"?

Under what constraints would people believe karmas or speak of benevolence, righteousness and virtue? Under what conditions would people have greater sympathy? And when would people be generous to ear fame? I really appreciate the generosity of Shao Yifu and alike in educations — naming a donated university building "Shao Yifu" is deserving and appropriate. To say Mr. Shao's donations were based on his own interest is not degrading him at all; if I were equally rich, I would never be that generous. If we gave up the postulate of selfishness, economics would have no other means to explain Mr. Shao's donations to universities is by choice instead of by chance. No behavior is random; donation is no exception.

And if we allow for exceptions, then any unexplainable phenomena can be attributed, and there'd be no longer irrefutable economic theories. In that way, the whole structure of economics would fail and collapse.

What's really difficult, is not whether the postulate is right or wrong, but how we explain selfishness leads to both cheating and donation under different constraints. As is said in Chapter 1, the examination and definition of constraints is the most demanding job in economics. A lot of human behaviors still have not had satisfactory explanations even today (this is why economics so interesting; a science that has answered all its questions is doomed), and that's mainly because we haven't had enough understanding of their constraints.

(Translator: Selfishness equals maximization of self-interest. In fact, since individual decides, which comes as the first postulate of economics, there can only be two options for him in any behavior: minimization, or maximization. Any other point between the two extremes cannot be deemed a decision, because it means random: given other things being equal, how can an individual acquire 6/7 of the maximum one time and 4/7 another time? Is there any reason that 6/7, if not the maximum or minimum, is superior over 4/7? Minimum, though, is too trivial to be viable, because that implies a breakdown. Therefore, that individual maximizes is actually equivalent to individual decides.)