According to Adam Smith, how does self-interest benefit society? It causes people to seek out high-paying jobs. It encourages people to be more benevolent. It causes people to behave more cautiously. It encourages employers to pay high wages.

Question

Hensley

History

5 May, 19:57

According to Adam Smith, how does self-interest benefit society? It causes people to seek out high-paying jobs. It encourages people to be more benevolent. It causes people to behave more cautiously. It encourages employers to pay high wages.

+5

Answers (1)

Know the Answer?

Hugh Palmer · Answer 1

According to Adam Smith, self-interest benefits society since:

It causes people to behave more cautiosly.

The underlying concept behind self-interest in economics, is the one of "the invisible hand" introduced by Adam Smithin 18th century. It basically means that when economic actors make economic decisions, based on self-interest, this unintendedly benefits society as a whole. As a consequence, decisions are made cautiosly (because people act rationally), meaning that, for instance, a family (demand) will adjust their consumption according to the prices, seeking to consume more at lower prices, the same way as, on the other hand, businesses (supply) will seek to obtain maximum benefits at the lowest cost possible.