Gino Ignacio

12 Iustitias

How do both self-interest and selfishness affect economies?

Economics is the study of social behaviour guiding in the allocation of scarce

resources to meet the unlimited needs and desires of the individual members of a given
society. The decisions that people make can have a great impact on the economy.

When self-interest and selfishness are involved in economics, it affects the

people in the society and the economy. In order to understand how self-interest and
selfishness affect economies, we first need to know the meaning of economics. There
are many definitions of economics. Paul Samuelson and William Nordhaus (Economics
17th Edition, 2001) say that it is the study of how societies choose to use scarce
productive resources that have alternative uses, to produce commodities of various
kinds, and to distribute them among different groups. Meanwhile, Gerado Sicat
(Economics New Edition, 2003) defines it as the study of how individuals and society in
general make choices that involve the use of scarce resources from among alternative
wants that need to be satisfied. For his part, Bernardo Villegas (Guide to Economics for
Filipinos, 1998) defines economics as a social science that studies the optimum
allocation, over time, of scarce human and non-human resources among their alternative
uses in order to satisfy unlimited human wants and needs.

According to the definition of Bernardo Villegas, economics is a social science.

This means that it deals with the interaction of individuals, groups, and institutions that
make up society. Any change in the mindset of a society will result in changes in the
economy. When people desire a certain product, demand is created for it. The individual
desire for something that can benefit ones self is known as self-interest. Also, Gerado
Sicat said that in economics, people make choices that involve the use of scarce
resources to satisfy the wants and needs of society. This means that the choices that
people make can influence the economy in a society.

Self-interest refers to actions that elicit the most personal benefit. It is a concern
for ones own well being. Self-interest is important in economics because in a market
economy, individuals own most of the resources available, labor, land and capital, and
use voluntary decisions, made in self-interest, to control the marketplace. In this type of
system, the government plays a small role and the economy is shaped by two forces,
self-interest and competition. Self-interest is arguably the single largest motivator of
economic activity.

Self-interest is an important part of an economy. It defines the economy because

it influences how the economy operates. Since self-interest is regard for ones own
desires or needs, this creates demand for products. Both the customer and the seller
benefit from this because the customer gets what he or she wants and the seller earns
money for selling the products.

Selfishness changes the way resources are handled and distributed in a negative
way. When a small percentage of the population controls most of the resources in a
community, the resources are distributed unequally. This small group of people could
use the economy to suit their own needs. This is unfair to the rest of the people because
not everyone gets an equal amount of resources.

Sources:
Nordhaus, W. D., & Samuelson, P. A. Economics, 17th Edition. New York: McGraw-Hill,
2001.

Sicat, G. P. Economics. New Edition, Volume 1: Elementary Economics. Pasig City,

Philippines: Anvil Publishing, Inc., 2003.

Villegas, B. Guide to Economics for Filipinos. Manila: Sinag-Tala Publishers, Inc., 1998.

Rillo, J. D., Cervantes, M. dR., Pagoso, P. R., & Dancel, G. T. Economics: Basic
Principles, Applications and Issues. Quezon City, Philippines: Vibal Publishing House,
Inc., 2010.

Ruby, D. A. (2003) Economics as a Social Science. The Digital Economist. Retrieved

July 12, 2016, from: http://www.digitaleconomist.org/economics.html.

Self-Interest Definition | Investopedia. Investopedia. (2010). Retrieved July 12, 2016,

from http://www.investopedia.com/terms/s/self-interest.asp