What is an Ego`N`Empathy Economy?

 

What is Metaeconomics?

Metaeconomics is an empathy-based, science- and humanities-grounded alternative to mainstream Microeconomics. Instead of assuming only ego-based self-interest as in Single Interest Theory (SIT) in Microeconomics, Metaeconomics uses Dual Interest Theory (DIT), which explicitly includes empathy-based shared other-interest as an internal part of human behavior.

What is Dual Interest Theory (DIT)?

Dual Interest Theory (DIT) holds that human behavior arises from two interacting motivations: ego-based self-interest (relating to Incentive) and empathy-based shared other-interest (holding the Ethic). Economic stability depends on balancing ego and empathy, self and other(shared)-interest, incentive and ethic—rather than privileging one over the other.

How does Dual Interest Theory (DIT) in Metaeconomics relate to Adam Smith?

Adam Smith emphasized that moral sentiments—the Ethic—must temper self-interest. Metaeconomics formalizes Smith’s insight using modern behavioral science, treating Smith’s two major works as one integrated argument: Wealth and Sentiment, Self and Other(shared)-interest, Incentive and Ethic. The Ethic is essential for tempering the Incentive, and therefore for economic efficiency and market viability.

Writing convention?

In Metaeconomics, the symbol “&” is used deliberately to emphasize that paired terms are joint, interdependent, and nonseparable, not merely additive. Expressions such as ego & empathy, self & other(shared)-interest, wealth & sentiment, and incentive & ethic denote co-arising drivers of human behavior and economic outcomes, consistent with Dual Interest Theory (DIT). Where “and” appears, it carries this same strong meaning; the use of “&” simply makes the jointness more explicit.

 

 

The answer to the question "What is an Ego`N`Empathy Economy?" starts with Adam Smith's "The Theory of Moral Sentiments", first published in 1759, but he labored on it, with many revisions and editions, until his passing in 1790...in fact, at least one historian of Smith argues he "worked himself to death" on it, wanting to make sure it was published before he perished (he did not quite make it; the final edition was published posthumously, in 1790).  The reason he labored: Smith saw the essential role of the Sentiments (we would now use the words empathy-sympathy: The word empathy was not coined until into the  late 1800s to early 1900s) as he saw them, were key to building a truly viable, good capitalism.  This is to say, the Sentiments book gives you "the rest of the story"... the primary story being in the book he is  most well-known for, "On the Nature and the Causes of the Wealth of Nations", which was first published in 1776, with only minor edits made to it (he finished this one early on), until the final edition in 1789. This Wealth book was about ego based self-interest; the Sentiments book was about empathy based other(shared with others)-interest.  This other-interest was to reflect the moral dimension, evolved among and jointly within the moral community of producers, consumers and traders in the market economy, arising out of the Sentiments (projection of own-self into the situation of others, the impartial spectator notion) an essential feature of a good capitalism. The self-interest was viewed as more primal; the other-interest, given sufficient self-control to bring it into the economic choice, would work to temper that driving force represented in the self-interest. The two books, together, are about Balance in the Self&Other-interest...as depicted in the Balance Scale... leading to balance in Market&Government, with "&" meaning interdependent, joint, and non-separable.

 

      Unfortunately,  Smith became the Father of Economics only for the self-interest part, for the notions in the Wealth of Nations book, which is now represented in Neoclassical Economics [and Microeconomics, as well as the New Classical (non-Keynesian) Macroeconomics], wherein good capitalism is believed achieved with self-interest only.  This is unfortunate because Smith's version of a good capitalism recognized the jointness, nonseparability, and interdependence in the ego&empathy of the individual, in the individual's psychology, which was then reflected and expressed  in the joint pursuit of self&other-interest, the individual's economic psychology.We would guess that Adam Smith would be quite perturbed by the distortion  that has been attributed to him by Neoclassical Economics, and especially Public Choice School of Economics  While Smith saw the essential role for the Government, the Public Choice School falsely claims that self-interest is the only force in Government, too.  Smith would likely be quite pleased with Metaeconomics, due to it seeing the need for tempering self-interest with the sentiments, and that both a good, humane Market and Government was not only possible but could be attained with sufficient attention to both reality (science-based) and ethics. 

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     So, again, what is an Ego`N`Empathy Economy? Well, it is simply an economy where ethical institutions (laws, rules, regulations, culture, moral community, all of which arise out of ego&empathy, with sentiments/empathy playing a major role) are in place to ensure that empathy based ethics temper ego.  The shared other-interest reflecting a widely accepted moral and ethical community, tempers self-interest. This also requires a highly disciplined economy,  arising out of self-discipline and self-control by each person.  And, when self-control fails, which leads to unethical choices, Government is charged with bringing the ethical back, helping bringing  the moral and ethical community back into the  Market, with a nudge. And, when the nudge does not work, Government may have to enter with regulations, law, and control.  Also, that Government has to be a humane entity, reflecting the ethical system, and, based in science, empirical reality. ,

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Metaeconomics, like Thaler and Sunstein (2008), proposes for empirical test a kind of libertarian paternalism:  It is about maximum  individual freedom and liberty, a humane and liberal system. Yet, it is fully realized that sometimes  Markets fail, pointing to some  need for paternalism, using the "big stick" with regulations, law and control when "walking softly" fails. 

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Related Metaeconomics Concepts

This topic is part of the broader Metaeconomics framework, which uses Dual Interest Theory (DIT) to integrate ego-based self-interest and empathy-based shared other-interest in support of stable, efficient, and humane economic systems—formalizing insights anticipated by Adam Smith. For concise definitions, terminology, and links to related concepts, see the Metaeconomics FAQ hub: https://www.metaeconomics.info/faq-frequently-asked-question

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The general matter of empathy is examined in DeWaal (2009) and Rifkin (2009).

DeWaal, F. 2009. The Age of Empathy. New York: Harmony Books.

Rifkin, J. 2009. The Empathic Civilization:  The Race to Global Consciousness in a World in Crisis. New York: Jeremy P. Tarcher.

Also see the Rifkin YouTube video... 

https://www.youtube.com/watch?v=l7AWnfFRc7g

Thaler, R.H. and Sunstein, C.R. Nudge:  Improving Decisions About Health, Wealth, and Happiness. New Haven, Massachusetts: Yale University Press, 2008.

 

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