In the study of economics, a person is represented as being a rational individual, making choices that will benefit himself. The Library of Economics (which, by the way, is quickly becoming one of my favorite websites) calls this person the “Economic Man” and describes him as always looking out for himself: He does not give to charity, nor would he ever volunteer his time.
Recently, I’ve been pondering the question of why do people perform selfless acts; more specifically, why do people donate blood? This question leads me into a field of economics called behavioral economics, which I have become increasingly interested in. Behavioral economics is a sort of mixture between economics and psychology, and studies the ways in which human behavior is irrational and unpredictable.
Back to the question at hand, why does a person donate blood? There’s really no clear cut answer; some like donating because it is a good deed and makes them feel good about themselves, while others may like the prestige or recognition they receive. Regardless of their reason, the sacrifice of giving is worth the satisfaction they receive, so in a way they are still making a choice that benefits themselves. This type of situation can be described as self-interested altruism.
I started reading the book Freakonomics the other day, and at one point it discusses that when people were given a small stipend for giving blood, donations actually decreased. What was once seen as a noble charity was reduced to a painful and cheap way to make a few dollars. People want to feel proud of themselves and the choices they’ve made. To those who choose to donate blood, it’s a sub-conscious economic decision.
One of the first things I learned in my intro economics class was that good intentions do not always equal good outcomes. I found this idea fascinating, especially when my professor presented an example of how some safety regulations can actually result in the deaths of more people than it saves.
Take the recent example of some consumer groups advocating the FAA require parents to use an infant seat for children under two aboard commercial flights. One argument in support states that during turbulence it is possible for infants to be injured or killed if the parents are unable to maintain a proper grip. When initially presented with this scenario, the requirement seems like a great idea that will save lives … right? The catch is that many will not stop to think about the consequences this might lead to in the long run, so let’s dig a little deeper.
If parents had to buy an extra plane ticket in order to follow the infant seat requirement, many would choose to drive instead of fly, hoping to save money. Unfortunately for them, data shows that flying on a commercial airliner is far safer than driving in an automobile. Therefore, if the FAA required the use of infant seats, not only would it lead to more deaths, but it would also put the entire family at a higher risk, doing quite the opposite of saving lives, which it was trying to accomplish in the first place.
Welcome to Rational Reactor! I’m Allison, and I am training to become an economics master. I have just completed my freshman year at Florida State University and am planning to major in economics, possibly with a double major of finance.
To be honest, I do not know much about economics… yet. Sure, I watch the news and try to follow what’s going on in the world, but if there’s one thing I’ve learned during the past year in my intro classes, it’s that economists look at the world differently than the average person; they view the world rationally, carefully weighing costs and benefits. It’s something I find fascinating and definitely something that has drawn me to this subject.
With this blog, I hope to not only reflect upon things I am learning in class and current events going on in the world, but use it to keep track of my journey as I gain a new perspective on the world.
Economics is everywhere, so join me as I embark on this journey to become the Rational Reactor.