PATTS College of Aeronautics Human Economic Motivations Essay

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Explain what can be learned about human economic motivations from experimental economics, evolutionary approaches, and anthropological studies of small-scale societies?

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class 4
preferences and
economic progress
1/24/22
Self-Interest, altruism, reciprocity
Last Time
Relative prevalence of the
3 motivations in society as
a whole is
1. Strongly affected by economic
institutions
2. Transmitted across generations
by the socialization process of the
society
? Types of economic
behavior
? Types of human
motivation
? How should we study
human motivation?
Experiments & Anthropology
Ultimatum Game, Public Goods Game
•
•
•
Rejection of inequality,
differences between cultures
changing preferences from repetition
2
Today
? Evolutionary
Approach
? 4th motivation for
human behavior
? Capitalism +
human
motivations
Is this what affluence looks like?
3
Evolutionary approach
To survive, every species must obtain the material means of life.
4
Evolutionary approach
To survive, every species must be accomplish one more task
5
Species survival
Mental
characteristics
Physical
characteristics
Success at
provisioning
and
reproduction
6
Cats
Physical Characteristics: sharp claws,
stealthy, quick, keen eyesight
How to get food: individual hunting
Mental characteristic: pursuit of self-interest
Physical Characteristics: kittens are helpless
How to reproduce: Mother protects young
Mental characteristic: altruism
7
Dogs
Physical Characteristics: sharp sense of smell,
strong jaws, good runners
How to get food: group hunting
Mental characteristic: desire for approval from
leader, loyalty to group
Physical Characteristics: puppies are helpless
How to reproduce: Pack protects and raises
young
Mental characteristic: altruism
8
Humans
Physical Characteristics:
• moderately good vision, hearing,
endurance in running
• very long period of dependence of the
young
Mental characteristic:
• Human mental structure must have
evolved in a form that facilitates
cooperative provisioning and altruistic
raising of the young
Humans have a mixture of motives.
9
Features of human mental structure
? Drive to learn adult roles
? Desire for approval from a group and/or its leader
Key factor: tendency to identify as part of a group
? Sense of obligation
? Loyalty
? Tendency to care for the young
10
Self-interest
Altruism
Reciprocity
& Group
interest
11
4th motive: pursue group goal
Role of group interest as a motivation supports the
political economy approach that treats groups as
economic actors
12
98-99% of human history
13
For capitalism to work,
individuals must act in a
materially acquisitive manner.
? Why?
? How does capitalism shape our
motivations?
? Mechanism: Greatest social
approval goes to the richest.
14
Capitalism
also requires
cooperation.
‘’
15
Capitalism
also requires
cooperation.
‘’
?
Future economic systems might harness the
human drive for social approval to obtain
cooperative provisioning in quite different
ways from that of capitalism.
?
History shows that human economic systems,
and the associated economic motivations and
behaviors, can vary greatly.
?
There is no reason stemming from human
nature to assume that further variation does
not lie in our future.
16
Reading: What evidence supports
that human economic systems, and
the associated economic motivations
and behaviors, can vary greatly?
Harris & Johnson pieces
17
Modern society vs primitive society
? What is a realistic assessment of the economic
progress since the time of primitive huntergatherer societies?
18
Modern Society vs Primitive Society
Results of Research:
? Hunter-gatherers generally
? Had their material needs met
? Had a short workday
? Did not work very intensely
19
Johnson’s Findings
? French middle-class families compared to the
Machiguenga of Peruvian rain forest.
? Machiguenga:
? Hunting and fishing
? Gathering
? Gardening
20
Johnnson’s Findings
? Machiguenga had
? Less production time
? Less consumption time
? More free time
? More leisure time (2+3)
21
Progress
? Human progress from hunter-gatherers to
agriculture to capitalist industry meant more
goods and services for more labor time
? However, for part of the population, needs
were met less fully.
? Advantage: supports larger, denser population
-> military superiority
? Health benefits: advances in health &
knowledge
22
Next :
1. Discussion forum on Moodle by
February 1
2. Chapter 4 for Wednesday
Credits
? Presentation template by SlidesCarnival
? Photographs by Unsplash
24
class 6
markets, supply, and
demand
1/31/22
Last Time
?
Economy as set of social
relationships that organize labor
processes.
?
Surplus product produced when
these labor processes produce more
than is needed to maintain
standard of living and replace
materials used up in production.
?
Class-based economic systems
when a distinct group in society
controls the surplus.
?
Size of surplus often conflictual.
2
This time
? What are markets?
? What do markets
require?
? How can we analyze
markets?
? Demand
? Supply
? Market equilibrium
3
Differences between text (UC) & class
? UC discusses “marginal cost” and “average
cost” – you are not responsible for these
concepts.
? UC emphasizes the role of information and
incentives in markets. Class will also
emphasize market as a rationing method and
allocation mechanism.
4
What are markets?
? Production is social.
? Hence, the output must be
distributed among members
of society.
? Markets: A system of
distribution.
? Markets also can play a role
in determining what is
produced.
5
Definition of a market
A relationship between buyers
and sellers of something, in
which the buyers offer money in
exchange for a good or service.
Voluntary relationship
Does not refer to a place, but activities that
can happen anywhere
Determines the price and quantity that
goods are sold/bought for
6
Competitive Markets
? Markets with large number
of buyers and sellers
? Rivalry between buyers and
sellers means that no one
has control over the price.
Many markets are not competitive in this
sense.
Which of the following is NOT a necessary feature
of a society that has a market economy?
Private property
A stock market
Something that
functions as
money
Self-interest as
an important
motive
8
1.
Well defined
property
relations
Requirements
for Market
Exchange
9
2.
System for
enforcing
exchange
agreements
Requirements
for Market
Exchange
10
3.
Motivation is
self-interest
Requirements
for Market
Exchange
11
4.
Individual
freedom of
participants in
market
exchange
Requirements
for Market
Exchange
12
5.
Equality before
the law for
market
participants
Requirements
for Market
Exchange
13
Simple Model of a Competitive
Market
Assumptions:
1. Homogenous product
2. Large number of buyers and sellers
3. All the exchanges take place at the same
price
#3 implies no real
passage of time
14
Demand curve
Price, P
Shows the quantity buyers would offer
to buy at each possible price
€ 4.50
This demand curve
shows consumer
demand.
• 3 ? 2,500
• 2 ? 5,000
• 1 ? 8,200
€ 4.00
€ 3.50
€ 3.00
€ 2.50
€ 2.00
•
It also shows consumer’s
willingness to pay (WTP).
•
Downward sloping
demand curves fit the
Law of Demand
€ 1.50
€ 1.00
€ 0.50
Demand
(D)
€ 0.00
0
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000
Supply Curve
Shows the quantity producers would
offer to sell at each possible price
Price, P
€ 4.50
This supply curve shows
producer supply.
• 1?0
• 2 ? 5,000
• 3 ? 7,800
•
•
It also shows sellers’
willingness to accept
(WTA).
Upward sloping supply
curves fit the Law of
Supply
Supply (S)
€ 4.00
€ 3.50
€ 3.00
€ 2.50
€ 2.00
€ 1.50
€ 1.00
€ 0.50
€ 0.00
0 1,0002,0003,0004,0005,0006,0007,0008,0009,000
Q, loaves of bread
Price, P
€ 4.50
€ 4.00
The price that equates the supply and
demand is the equilibrium (or market
clearing) price.
Supply (S)
€ 3.50
Equilibrium
€ 3.00
€ 2.50
Market clearing price
€ 2.00
P*
Equilibrium price
€ 1.50
€ 1.00
Demand
(D)
€ 0.50
€ 0.00
0
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,00010,000
Quantity, Q
Q*
Demand curve:
Shows the quantity buyers would offer to buy at
each possible price
Supply curve:
Shows the quantity sellers would offer to sell at
each possible price
Market clearing price (P*):
The price at which quantity demanded equals
quantity supplied
18
Price, P
If price is higher than P*, there is excess supply.
€ 4.50
Supply (S)
Suppose price was
3.
€ 4.00
3>2
Qd
€ 3.50
Excess Supply
Qs
€ 3.00
Fewer suppliers will be
willing to sell at the lower
price.
€ 2.50
P* €
Suppliers will lower price to
attract more consumers.
2.00
€ 1.00
The market-clearing price
(P*) is where there are no
forces internal to the
situation pushing it to
change.
€ 0.50
Demand
(D)
€ 1.50
€ 0.00
0
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,00010,000
At 3, 2,500 loaves
are demanded.
Q*
AtQuantity,
3, 7,800 loaves
Q
are supplied.
At P*, Qs=Qd
Excess Supply
Notation:
? Qs = quantity supplied
? Qd = quantity demanded
? P = price
? Pm or (P*) = market clearing price, for which
Qs = Qd
20
Price, P If price is lower than P*, there is excess demand.
€ 4.50
Supply (S)
€ 4.00
€ 3.50
€ 3.00
More suppliers will enter the
€ demand
2.50 at the
market to meet
higher prices.
€ 2.00
P*
€ 1.50
The market-clearing price
(P*) is where there are no
forces internal to the
situation pushing it to
change.
At P*, Qs=Qd
Qd
Qs
The price will be bid up by
those demanders who are
unable to buy as much as
they want at the given
price.
€ 1.00
1
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Explanation & Answer:
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Tags:
experimental economics

human economic motivations

smallscale societies

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