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Macroeconomics 10th Edition by William McEachern
Edition 10ISBN: 978-1133188131Macroeconomics 10th Edition by William McEachern
Edition 10ISBN: 978-1133188131 Exercise 2
RATIONAL SELF-INTEREST If behavior is governed by rational self-interest, why do people make charitable contributions of time and money?
Explanation
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Rational self-interest and cost:
Rational self-interest is an option which is chosen to maximize the expected benefits with a given cost.
For instance, people would prefer charity as it deducts income tax amount and also satisfies the deed. So, charity could not be considered as a pure selfishness or as greed activity. Therefore, helping a needy person and feeling pleasure is also a kind of rational self-interest.
Hence, a person sometimes helps others in terms of money and time as it reduces his cost and increases his self-satisfaction level.
Rational self-interest is an option which is chosen to maximize the expected benefits with a given cost.
For instance, people would prefer charity as it deducts income tax amount and also satisfies the deed. So, charity could not be considered as a pure selfishness or as greed activity. Therefore, helping a needy person and feeling pleasure is also a kind of rational self-interest.
Hence, a person sometimes helps others in terms of money and time as it reduces his cost and increases his self-satisfaction level.
Macroeconomics 10th Edition by William McEachern
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