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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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  • Pugno, Maurizio, 2008. "Economics and the self: A formalisation of self-determination theory," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(4), pages 1328-1346, August.
  • Handle: RePEc:eee:soceco:v:37:y:2008:i:4:p:1328-1346
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    Cited by:

    1. Christian Schubert, 2012. "Pursuing Happiness," Kyklos, Wiley Blackwell, vol. 65(2), pages 245-261, May.
    2. Kågström, Jonas, 2011. "Today's perfect - tomorrow's standard," Department of Economics publications 8120, Swedish University of Agricultural Sciences, Department of Economics.
    3. Julie A. Nelson, "undated". "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.
    4. 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.
    5. Pugno, Maurizio, 2013. "Scitovsky and the income-happiness paradox," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 43(C), pages 1-10.

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