1.3.1 Human nature

An economy is all the human-made systems that we use to transfer and transform energy and matter to  meet our needs and wants. People interact with each other in these human-made systems. So to understand the economy, we must understand how human beings generally behave, called human nature.

A thought experiment

Imagine two aeroplanes make an emergency landing, on Planet A and Planet B, and are damaged. As smoke fills the cabin, everyone knows they must escape.

• On Planet A, passengers check on others nearby. Those needing help exit first. People risk their lives even for strangers. 

• On Planet B, there is chaos. Everyone fends for themselves, and the vulnerable get trampled.

Assumptions are what we believe to be true, without necessarily having supporting evidence.  Most mainstream economic theories assume that:

Humans can be selfish and competitive. We also seek status and having power can make us feel more secure. But that is not the whole story of human nature.

Research shows that we are very often empathetic and cooperative. You might have experienced this during the Covid-19 pandemic. While there was some panic shopping and vaccine hoarding, most people supported each other in their communities. Though there are some contexts where individual selfish behaviour ‘wins out’ over cooperative behaviour within single groups, research shows that cooperative groups are more successful than selfish groups. Our complex societies very much depend on empathetic and cooperative behaviour.

Advertising takes advantage of social comparison, often equating material goods with happiness. Free digital services, like social media, gather your personal information to show you ads that match your interests. This makes you more likely to buy things, perhaps more than necessary. This consumption of unnecessary goods uses too much energy and material resources and creates more waste that harms ecosystems.

But social conditions can reduce our wants too. In societies with less economic inequality, there is less social comparison and less aspirational consumption. We can influence social and economic conditions, particularly with regard to inequality, to lessen our impact on ecosystems.

The assumption that human beings are selfish, competitive, with unlimited wants is a problem for various reasons.

Assumptions shape us

Assumptions about human nature shape who we become. If told you are selfish and competitive with endless needs and wants, you may actually develop those characteristics. Research has found that economics students who are taught these self-interested assumptions become more selfish and less cooperative with others. If we want more empathetic and cooperative human behaviour, then our economics courses should highlight those traits.

We often overlook the role of care in the economy

If we believe that humans are selfish and competitive, it can lead us to overlook the role of care in our economy. While some care work is paid, most care work is unpaid and done with empathy, selflessness. But this work may be ignored or exploited in a world where we believe most people are selfish. Care work is essential for human wellbeing, something we all should be engaged in, and it must be actively supported by communities, businesses, and governments. Understanding the human drive for social connection and cooperation is essential.

We overlook powerful tools for change

When business people and politicians have studied economics, their assumptions about selfish and competitive human behaviour influence business decisions and policies. This can lead businesses to prioritise their profits over human wellbeing and the environment. Politicians may underestimate how values, reciprocity and social networks can help address social and economic problems. They may underestimate the role of economic inequality in negative human behaviours. Recognising the empathetic and cooperative aspects of human nature is important for better decision-making.

Economist Kate Raworth explains why we need to update our assumptions about human nature in the short video below.

• Does studying economics make you selfish? A short news report on research about studying economics and students developing selfish traits. Difficulty level: easy

• The Economy: A User's Guide | No.2: Human Natures - Brett Scott challenges the idea that humans are only self-interested. He shows how economies also involve care, cooperation, and hierarchy, drawing on David Graeber’s work to explain three moral principles found in all economies. Difficulty level: easy

• Economic Man vs. Humanity: A Puppet Rap Battle - a fun, animated rap video about human nature from the Doughnut Economics Action Lab. The link includes a PDF of the lyrics and guiding questions for discussing the ideas in the video. Difficulty level: medium

• The Problem with Superchickens - A National Geographic podcast about research on superchickens which supports evolutionary biologist D.S. Wilson’s claim that “Selfishness beats altruism within groups. Altruistic groups beat selfish groups.” Difficulty level: medium

• The ultimatum game - a short video explaining the ultimatum game, a classic experiment in behavioural economics that shows complex, non-’rational’ behaviour in human beings. Teachers might like to run this experiment with students, or students could try to run the experiment themselves. Difficulty level: medium

• The Big History Project takes a zoomed out view of history from the Big Bang to the present. Chapter 4 examines the rise of the human species and the role of human cooperation and the stable climate of the Holocene in the development of agriculture and larger human civilisations. Difficulty level: medium

• Unlimited Wants, Limited Resources | How & How NOT to Do Economics with Robert Skidelsky - A short lecture by economist Robert Sidelski where he challenges the assumption of economists that human wants are unlimited. Difficulty level: high

Bregman, Rutger (2020). Humankind. London: Bloomsbury Publishing.

Frank, R. H., Gilovich, T., & Regan, D. T. (1993). Does Studying Economics Inhibit Cooperation? The Journal of Economic Perspectives, 7(2), 159–171. http://www.jstor.org/stable/2138205.

Institute for New Economic Thinking. (2019). Unlimited Wants, Limited Resources | How & How NOT to Do Economics with Robert Skidelsky [Video]. YouTube. https://youtu.be/CifipPzK7ao.

Raworth, K. (2017). Doughnut economics: seven ways to think like a 21st century economist. London: Penguin Random House. (Chapter 3: Nurture Human Nature)

Wilson, D. S., & Sober, E. (2024, April 3). Natural selection and multilevel selection as causal theories. ProSocial World. https://www.prosocial.world/posts/natural-selection-and-multilevel-selection-as-causal-theories.

Link to Quizlet interactive flashcards and terminology games for Section 1.3.1 Human nature

economy: all the human-made systems that transfer and transform energy and matter to meet human needs and wants

system: a set of interdependent parts that organise to create a functional whole

transfer: to move something from one place to another

transform: a change in the state, energy or chemical nature of something

energy: the ability to do work or cause change

matter: anything that takes up space and has mass

human nature: how human beings generally behave

economics: the study and practice of how we organise ourselves to meet human needs and wants in the planetary ‘household.

assumption: what we believe to be true, without necessarily having supporting evidence

utility: personal satisfaction or benefit

power: the ability to influence events or the behaviour of other people

empathetic: the ability to understand other people’s feelings

hoarding: aquiring and holding excessive amounts of goods or money, beyond an amount that is useful or needed

wealth: the total value (stock) of someone’s assets such as money, house, or investments

economic inequality: unequal distribution of income and opportunity between different groups in society

aspirational consumption: buying goods in order to increase self-esteem and social status

overconsumption: buying and using more products and resources than you need

waste: unwanted or unusable materials

ecosystem: the interaction of a community of organisms with their physical environment

care: the act of providing what is necessary for the health, welfare, upkeep, and protection of someone or something

exploit: using and benefiting from resources; the term is often used negatively to imply using power to take advantage of a situation

profit: the difference between the amount of money earned from selling something and the cost to produce it

values: ideas about what is important or good

reciprocity: exchanging things and favours with others for mutual benefit