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.

Ideas about human nature also differ across cultures. Many indigenous communities see people as deeply connected to communities and ecosystems. Some Asian and African philosophies prioritise harmony, duty, and relationship over individual gain.

Humans are not fixed to one kind of behaviour. We respond to the systems around us. In societies that reward competition, people may act more selfishly. In communities that support care and cooperation, people tend to behave more generously.

That means our economic systems don’t just reflect human nature, they shape it. When we design economies based on narrow ideas like Homo economicus, we encourage more competitive behaviour. But when we design for cooperation and shared wellbeing, we grow those human qualities.

Research in behavioural economics shows that humans don’t always make detailed and and accurate calculations about costs and benefits when we make choices. Instead, we often use mental shortcuts called heuristics. These are simple rules that help us decide or make choices quickly in complex situations. Heuristics are part of how we think, especially in social settings where emotions and relationships matter.

For example, the anchoring heuristic leads us to rely too much on the first number or idea we hear. For example, after seeing initial high prices for a product we become more willing to pay higher prices than if we had not been exposed to them before deciding. The social proof heuristic leads us to follow what others are doing, like choosing a product with many positive reviews or copying popular behaviours to gain approval. These shortcuts, and many others (Section 6.4.x coming soon!), shape how people make economic choices.

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

Assumptions shape who we become

What we’re told about ourselves influences how we act. If students learn that humans are selfish and competitive, they may begin acting that way. Studies show that economics students who are taught self-interested models became less cooperative over time. The idea becomes a self-fulfilling prophecy.

We overlook care in the economy

If we believe humans are only selfish, we may ignore care work. Much of which is unpaid and driven by empathy. This includes raising children, supporting relatives, or helping in communities. In a regenerative economy, care must be seen as essential. It deserves attention, resources, and support from families, businesses, and governments.

We miss out on better solutions

Evidence from behavioural economics and anthropology shows people often act for others, not just for themselves. Recognising this opens new paths to wellbeing and fairness. If leaders believe people only respond to money or competition, they may ignore tools like shared values, trust, and cooperation.

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

Option 2: Rewriting the story - Scarcity vs. Sufficiency

Time: 40 minutes

Note to teachers: If possible you should print out the first two pages of this PDF on separate sheets of paper. The first page is the scarcity storyboard, the second page is the sufficiency storyboard with the first frame completed. Students complete the remaining frames, but need to be able to reference the scarcity storyboard to react to it. So double-sided printing doesn’t work well for this. The third page of the PDF has sample text for the sufficiency storyboard to give you some idea of what students might produce.

Many economics courses begin with the idea that resources are limited and human wants are unlimited. According to economists, this creates scarcity, a situation where there is ‘not enough’. This economic narrative (Section 1.3.11) shapes how people think and how they behave.

1. Examine the storyboard

Look closely at the 6-frame storyboard (Figure 3) showing how the scarcity narrative influences human behaviour.

• What assumptions about human nature are shown?

• How do assumptions affect the behaviour of people in this story? Why?

2. Now flip the script
Imagine the story began with a different idea: sufficiency. Resources are still limited, but human needs are limited, and human wants are socially determined. There is enough for all to live well.

Use the blank storyboard (Figure 4) to create an alternative version that starts from sufficiency, instead of scarcity. Write ideas in words, and add symbols, sketch or more detailed drawing to go with it, if you can.

• How do people behave?

• What kinds of relationships, choices, or systems emerge?

3. Compare and discuss
In small groups, share your storyboards.

1. • What changed when the starting point changed?

   • What does this tell you about how economic ideas shape our actions?

• 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

• Cooperation is Possible and Happening - an article by Grassroots Economist Will Ruddick describing the way cooperation works at the Kibbutz Tzuba. He covers the history, governance in practice, the religious roots of the commoning, and everyday life. Difficulty level: easy

• 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

• Cognitive Biases - A list and explanation of cognitive biases, or heuristics, from The Behaviour Lab. Difficulty level: medium

• Cognitive Biases: Anchoring - a 5-minute video explaining the anchoring heuristic. Difficulty level: easy.

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

economic growth: an increase in the total value of goods and services produced in a period of time

Homo economicus: a hypothetical person who acts to maximise their own personal utility or satisfaction; used in economics

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

empathy: the ability to understand other people’s feelings

other-regarding: when people care how others see them and act to gain social approval or promote fairness

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

reciprocity: exchanging things and favours with others for mutual benefit

culture: the beliefs, values, attitudes, behaviours and traditions shared by a group of people and transmitted from one generation to the next

indigenous community: the original settlers of an area (pre-invasion/colonialism) who have retained their culture apart from colonisers

ecosystem: the interaction of groups of organisms with each other and their physical environment

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

behavioural economics: a method of economic analysis that applies psychological insights into human behaviour to explain economic decision-making

heuristics: mental shortcuts that help people make quick decisions

anchoring heuristic: an individual's judgments or decisions are influenced by a reference point or 'anchor'

social proof heuristic: a mental shortcut where people rely on the actions of others to guide their own behavior, especially in situations of uncertainty or ambiguity

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

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

anthropology: the study of human societies and cultures and their development

values: ideas about what is important or good

scarcity: when there is not enough of something

economic narrative: the stories we tell about how the economy works, how we should study the economy and participate in it