Economics—as a field of study and as a way of thinking—has a reputation for selfishness. In large part, this can be traced to the idea that people always have their own best interests in mind and make decisions in accordance with these interests.
This idea is an important part of Economics, and is introduced early to those who are entering the field, but it is by no means a complete understanding. Unfortunately, it has a tendency to be treated in popular opinion as though it is a complete understanding; as a succinct description, rather than a simplistic summary. Moreover, it is often extrapolated until Economists appear to be a legion of Ebenezer Scrooges, ruthlessly seeking profit, caring about no one other than themselves.
In this cold, “rational” world, no one would do anything that causes them to incur a cost for the benefit of someone else. No one would perform favors, since any “favor” would be need to be compensated by the other party with something of equal or greater value (at which point it would cease to be a favor, and instead become a service). No one would volunteer, since the time they spend helping other people could instead be spent helping themselves.
This is not how the world works. People perform favors. People volunteer. But why, if they are all purely self-interested? Has Economics, and its depressing view of human nature and motivation, gotten it wrong? Or is there simply a misunderstanding of what ‘self-interest’ really means?
Of course economically minded people are looking for ways to get the maximum utility at the lowest cost. Why not find the best possible option? Why pay more for it than is necessary? However, more money for myself is not necessarily everyone’s idea of maximum utility. Economics is not just about explicit, monetary costs and benefits.
For example, people who volunteer do not get paid (in money) for their time and energy. However, that does not mean that these people receive nothing in return for their service. Perhaps they feel good about helping. Perhaps they independently enjoy the activity in which they volunteer to participate. Perhaps they need community service hours for resume building. In any case, they receive some kind of utility in exchange for their efforts. They consider their options and make a decision about what they believe will be the best use of their time.
In other words, they act in their own self-interest. They do not waste time doing something that they do not believe will benefit anyone, including themselves. However, acting in their own self-interest does not preclude helping others; in fact, for some individuals, acting in their own self-interest may actively include helping others. It all depends on the individual.
That is not to say that there are not individuals who gain no utility from helping other people, and so for whom self-interest can be used in the most extreme sense. However, it is important to understand that an Economic way of thinking does not assume that all people (or even most people) fall into this category. Rather, it allows for the incorporation of other interests into the idea of self-interest. It assumes that people want to spend their time and money in the best way possible, and the effect of decisions on other people is part of this estimate of best.
Self-interest is not synonymous with selfishness.