Are Humans Inherently Selfish?

Behavioural Economics and The Rational Choice Theory

Behavioural Economics refers to the study of the decision-making processes of individuals in an economy. According to Classical Economics, in an ideal world people always make decisions which will benefit them in the greatest possible way. In other words, humans are always supposed to be rational. 

However, by mere observation, we can conclude that this is not the case. Humans are emotional creatures - take the example of a man donating some of his money to a homeless shelter. Donating money to a homeless shelter doesn't benefit the man in any way. At first glance, it seems to be a form of completely irrational behaviour - going against rational choice. It seems to indicate that humans aren't inherently selfish. 

But that isn't the end of the story. According to Behavioural Economics donation to a cause that one believes in is a form of maximization of satisfaction. Making a small donation increases one's satisfaction by making one feel more generous. The idea that one has done their good deed of the day increases one's happiness. So in a way, the theory of rational choice holds. 

Other than satisfaction there is another major force influencing our behaviour - other people. Studies have shown that humans have a tendency of doing what the crowd does. Humans follow the crowd even if it doesn't help to increase their individual happiness. Because of such irrational behaviour we often end up making mistakes which affect us negatively. A relevant example would be when people vote for a political party, that they don't actually believe in, just because everyone else does so. 

Such behaviour is often exploited by large companies in their advertising campaigns. Since humans often follow the crowd, companies try to advertise the number of satisfied customers they've had, often inflating that value. When other people see that number, they naturally tend towards using that company's product, irrespective of the utility they'll derive out of it. 

So we conclude that humans aren't inherently selfish beings - they are just inherently irrational beings trying to get as much satisfaction out of life as possible.

Written by Rayandev Sen; edited by Alidar Kuatbekov.