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Economics and the self: A formalisation of self-determination theory

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  • Pugno, Maurizio

Abstract

This paper introduces the concept of self in economics by providing a formalisation of the authoritative approach in empirical psychology called Self-Determination Theory [Deci, E.L., Ryan, R.M., 2000. The "what" and "why" of goal pursuits: human needs and the self-determination of behavior. Psychological Inquiry 11, 227-268]. It shows that the self, as a psychological endowment of autonomy, competence, and relatedness, is important in individuals' ability to choose, and it changes as an unconscious consequence of their choices. If the individuals' psychological endowment is sufficiently great, then they choose more goods and activities which will satisfy their basic psychological needs, i.e. those for autonomy, competence, and relatedness, thus triggering a virtuous circle of self-development, and greater enjoyment of well-being. If the individuals are not sufficiently able, they choose less satisfying activities, thus triggering a vicious circle of self-deterioration, and reduced well-being. Shocks are important for these dynamics, especially during the first parts of their life cycle. This model can be applied to puzzling cases where material incentives and costs fail to account for expected behaviours like addiction and self-destructive behaviour, job satisfaction and responsible economic behaviour, or striving for greater affluence without experiencing greater happiness.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).

Volume (Year): 37 (2008)
Issue (Month): 4 (August)
Pages: 1328-1346

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Handle: RePEc:eee:soceco:v:37:y:2008:i:4:p:1328-1346

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Web page: http://www.elsevier.com/locate/inca/620175

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References

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  1. H. M. Shefrin & Richard Thaler, 1977. "An Economic Theory of Self-Control," NBER Working Papers 0208, National Bureau of Economic Research, Inc.
  2. Corneo, Giacomo & Jeanne, Olivier, 2001. "On relative-wealth effects and long-run growth," Research in Economics, Elsevier, vol. 55(4), pages 349-358, December.
  3. Gary S. Becker, 1991. "Habits, Addictions, and Traditions," University of Chicago - George G. Stigler Center for Study of Economy and State 71, Chicago - Center for Study of Economy and State.
  4. Ernst Fehr & Simon Gaechter, . "Fairness and Retaliation: The Economics of Reciprocitys," IEW - Working Papers 040, Institute for Empirical Research in Economics - University of Zurich.
  5. Tirole, Jean, 2002. "Rational irrationality: Some economics of self-management," European Economic Review, Elsevier, vol. 46(4-5), pages 633-655, May.
  6. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
  7. Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, vol. 75(1), pages 101-16, March.
  8. Paul, Maureen, 2006. "A cross-section analysis of the fairness-of-pay perception of UK employees," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(2), pages 243-267, April.
  9. Tomer, John F., 2001. "Addictions are not rational: a socio-economic model of addictive behavior," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 30(3), pages 243-261, May.
  10. B. Douglas Bernheim & Antonio Rangel, 2004. "Addiction and Cue-Triggered Decision Processes," American Economic Review, American Economic Association, vol. 94(5), pages 1558-1590, December.
  11. Maurizio Pugno, 2005. "The happiness paradox: a formal explanation from psycho-economics," Department of Economics Working Papers 0501, Department of Economics, University of Trento, Italia.
  12. Bruno S. Frey & Matthias Benz & Alois Stutzer, . "Introducing Procedural Utility: Not only What, but also How Matters," IEW - Working Papers 129, Institute for Empirical Research in Economics - University of Zurich.
  13. Blanchflower, David G. & Oswald, Andrew J., 2001. "Well-Being Over Time in Britain and the USA," The Warwick Economics Research Paper Series (TWERPS) 616, University of Warwick, Department of Economics.
  14. Lu�s Santos-Pinto & Joel Sobel, 2005. "A Model of Positive Self-Image in Subjective Assessments," American Economic Review, American Economic Association, vol. 95(5), pages 1386-1402, December.
  15. Gary S. Becker & Kevin M. Murphy, 1986. "A Theory of Rational Addiction," University of Chicago - George G. Stigler Center for Study of Economy and State 41, Chicago - Center for Study of Economy and State.
  16. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 715-753, August.
  17. Lea, Stephen E.G. & Webley, Paul, 2005. "In search of the economic self," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 34(5), pages 585-604, October.
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Citations

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Cited by:
  1. Maurizio Pugno, 2011. "Scitovsky and the income-happiness paradox," Working Papers 2011-07, Universita' di Cassino, Dipartimento di Scienze Economiche.
  2. Fiorillo, Damiano, 2010. "Volunteers and conditions under which crowd-out effect could appear. An empirical evidence of psychological self-determination theory," MPRA Paper 22878, University Library of Munich, Germany.
  3. Christian Schubert, 2012. "Pursuing Happiness," Papers on Economics and Evolution 2012-01, Max Planck Institute of Economics, Evolutionary Economics Group.
  4. Julie A. Nelson, . "09-07 "Getting Past "Rational Man/Emotional Woman": How Far Have Research Programs in Happiness and Interpersonal Relations Progressed?"," GDAE Working Papers 09-07, GDAE, Tufts University.

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