It was sophmore year in college when I first thought about writing memos. While a consistent practice didn’t materialize until almost two years later, I was motivated to write my first memo then and there, where I explored the concept of self-interest.

I remember excitedly sharing it with my roomate, Seb, after I finished writing it.

After my view draft my thoughts evolved and I came across some compelling concepts to strengthen my view.

Here it is:

On Self Interest

Self-interest is often conflated with selfishness. Diving into some economists' criticism of neoliberalism, I have come across a dangerous tendency to use the terms self-interest and selfishness interchangeably. My point is this: when proponents argue in favor of self-interest as a driver of economic activity, that cannot be conflated with arguing in favor of selfishness.

Where does the term self-interest come from?

The explicit use of "self-interest" as a term became prominent in the 17th century, particularly with Thomas Hobbes. In his work Leviathan (1651), Hobbes argued that humans are driven by a fundamental self-interest to preserve their own lives. In the 18th century, Adam Smith famously tied self-interest to economic behavior in The Wealth of Nations (1776). Smith argued that when individuals pursue their self-interest, they inadvertently contribute to the public good.

Some socialist thinkers have misunderstood the term, believing it is equivalent to selfishness — often in an attempt to discredit the role of self-interest as a powerful social organizer and a catalyst for social harmony.

Let's explore their lexical definitions.

Selfish: concerned excessively or exclusively with oneself: seeking or concentrating on one's own advantage, pleasure, or well-being without regard for others.

Self-interest: a concern for one's own advantage and well-being.

While the purely linguistic definitions are remarkably similar, the concepts and connotations underlying each of the terms are not. A key distinction emerges once we recognize that many individuals see it as being to their advantage to consider the impact their actions have on third parties, and many attribute great value to serving and supporting others.

To this end, while selfishness is understood as seeking what benefits the individual without ANY regard for others, self-interest encompasses a decision-making framework that considers the benefit to our individual condition when we show regard to others. When we are pursuing our self-interest, our personal benefit formula always considers the impact our decisions have on others, explicitly or subconsciously. Selfishness arises where the benefits to an individual clash with the well-being of others and our decision-making fails to give any consideration to that conflict.

The degree to which we weigh the impact on others varies from person to person and is affected by information asymmetry, but it is a permanent variable in each individual's personal benefit formula. And self-interest itself makes no preference for money over any other form of benefit; we vary the weight we place on different forms of value when making decisions.

Individuals can make selfish decisions, and they can make self-interested decisions, but they can't make both simultaneously.

But why should we believe that regard for others is baked into self-interest, rather than bolted on? The answer lies in our evolutionary foundations.

According to Michael Tomasello, a developmental psychologist at Duke, human cognition veered away from that of other primates when our ancestors developed shared intentionality. At some point in the last million years, a small group of our ancestors developed the ability to share mental representations of tasks that two or more of them were pursuing together. Very few other species have ever developed this, and it's part of what has allowed humans to form not tribes or herds like most animals, but rather "ultra-society" — groups with an internal structure in which labor and focus are divided.

Once we acknowledge that we as humans developed within a system of shared intentionality, we can look back to Darwin's wisdom:

"Cohesive tribes began to function like individual organisms, competing with other organisms. The tribes that were more cohesive generally won. Natural selection therefore worked on tribes the same way it works on every other organism."

This group-level adaptation has continuously shaped our individual sense of self-interest. Natural selection favored and perpetuated what Tomasello calls "group-mindedness" — the ability to learn and conform to social norms — as otherwise one would be ostracized from the group, killed as a traitor, or at the very least fail to attract partners. Individual adaptations of self-interest were mostly about personal survival, but once humans formed groups bound by shared intentionality, group-mindedness became essential to personal survival. The pursuit of one's self-interest thereby came to implicitly consider its impact on the group.

History reinforces this. In Athens, there was an established democratic procedure — the vote of ostracism — where citizens could vote on a yearly basis to exile a peer for ten years.

And the mechanism doesn't only operate when survival is at stake. As Darwin observed, "the praise and blame of our fellow-men" is an obsession of ours. And as Adam Smith wrote, "How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others." Even when our life is not on the line, we have a powerful desire to be approved of and accepted by others. This desire varies from person to person, but it has nonetheless — with the help of individual- and group-level natural selection — been baked into the personal benefit calculation that drives our decision-making.

I am still trying to explore and understand the framework of that calculation. I recognize it is hard to quantify and that it relies on our less-than-completely-rational judgment; when we think we are pursuing our self-interest, we might not be. There is also a time component: cooperation emerges in the prisoner's dilemma only when the game is repeated and open-ended. When both players know exactly when the game ends, defection unravels everything backward from the final round; it is the unknown horizon — the shadow of the future — that makes tit-for-tat a winning strategy. Long-term, open-ended games lead to fewer sub-optimal outcomes, and most of life is a long-term, open-ended game.

In sum:

Our cognition diverged from other primates the moment we began to engage in shared intentionality and group living.
Natural selection favored and perpetuated group-mindedness, making individual survival depend on the ability to learn and conform to social norms.
Even beyond survival, we are obsessed with "the praise and blame of our fellow-men."

All of this has baked the consideration of others into our personal benefit calculation — our pursuit of self-interest. And so, when we encourage and explore the notion of self-interest — refusing to label it as an explanation for evil or to commingle it with selfishness — we are able to make decisions that are good for us and for society.

"It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest." — Adam Smith

The baker still considers what others want when he decides to bake the bread.

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