Self interest and economics

More Virtuous Than We Think : Democracy Journal

Here's an extract from an interesting review:

To be clear, most policymakers probably recognize that people behave
from diverse motives. But standard economic analysis indicates that
policy should normally be based solely on the self-interest assumption.
Bowles’ second assertion is that policies based on the assumption that
people are motivated primarily or entirely by selfish motives often work
poorly and sometimes backfire. Worse, such policies may actually
promote selfishness and amorality.

Put more positively, public and
private policies often work much better if they are designed with the
recognition that people act in part from self-interest and in part from
“social preferences,” which include “altruism, reciprocity, intrinsic
pleasure in helping others, aversion to inequity, ethical commitments,
and other motives that induce people to help people more than is
consistent with maximizing their own wealth or material payoff.”
Furthermore, incentive-based policies may strengthen or weaken these
motivations. Simply put, public policy can promote or erode civic
virtue.