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Smith's take on human behavior provided me a refreshingly new framework for economic analysis. Throughout my education thus far, our thought process has idealized the rational actor, an entity totally aware of its own interests, never varying from the rational outcome. What Smith does so well is not only acknowledge but analyze the "human elements" that are really the core drivers of most of our decisions. Others have glossed over these "passions", but I wholeheartedly agree with Smith that these human emotions overtake our impartial decisions, and accordingly we must analyze and consider them in order to understand behavior. While brief, Smith's thoughts on fairness really hit home with me. Human emotions and passions are not only tied to our own feelings but to those around us. Smith contends that people all desire justice, this is not a new argument. However, he does also state that the impartial spectator takes a role internalizing other people's sense of fairness. In turn, people want others to see them as fair and just, and act accordingly in order to promote an image to society and their own impartial spectator. This really demonstrated to me just how prevalent and spot on behavioral economics really is, and that one must consider not only the behavior of an individual but how others will view that behavior as well. Also of note was Smith's ability to identify the sympathy for the "rich and great". It seems to me like this phenomena would be more prevalent today, given the status of celebrities globally and how technology has allowed us to interact with them more intimately than ever. However, Smith acknowledged this tendency several centuries ago, which further reinforces the idea that human behavior has been "irrational" for some time and will likely continue on into the future.
Toggle Commented Sep 16, 2014 on 398 reading for Tuesday at Jolly Green General
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Sep 16, 2014