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What is Dual Interest Theory

“Virtues are swallowed up by self-interest as rivers are lost in the sea  (attributed to  La Rochefoucauld, in Hodgson, 1999, p. 139)”

“Selfishness beats altruism within groups. Altruistic groups  beat selfish groups. Everything else is commentary (Wilson 2015, p. 23).”


“The Me needs a We to Be, and, without a Me there is no We?” (asked by Chris Andrew, University of Florida Colleague, after a deep and extended conversation about what would later become Dual Interest Theory.  My answer: “Yes, you got it. You are seeing the joint Me&We.”)


The substantive testing ground for an alternative theory is  “…whether the proposed... is less burdened with empirical anomalies than alternative ones (Khalil 1998, p. 614)." 


[Note: If you prefer reading a more stylized journal paper, written with the more heterodox economist in mind, here is one that is in process,  see  .


Also, the latest formal paper is:   Lynne, G. D. and Czap, N. V.  “Towards Dual Interest Theory in Metaeconomics.”  Journal of Interdisciplinary Economics (July 2023): 1-19]

Most importantly, before we get started here, referring to the Khalil (1998) quote in the heading, Dual Interest Theory (DIT) in Metaeconomics after 3-decades of rigorous testing is less burdened with empirical anomalies because it represents the real Human who has a dual nature. And, it is said dual nature Human who operates in the Real-World Economy, the Economy embedded within the Spaceship Earth system, not the Econ of Single Interest Theory (SIT) in Microeconomics. 

The dual nature of Human and other mammalian (see Singer 2009) nature, which was fully reflected in the intuition of Adam Smith back in the 1700s, is now well documented in the science of paleontology (see Cory 1999) and evolutionary biology (Wilson 2015 quote at the top), as well as behavioral and neuroeconomics science.  The mammalian and especially the Human brain has evolved and is wired with the primal tendency to selfishness (ego-based self-interest, the only interest represented in SIT in Microeconomics) and selflessness (empathy-based other interest represented in DIT in Metaeconomics) to temper the primary driver of self-interest.  Striking a good balance is how altruistic (empathy-tempered) groups beat selfish groups, as in finding good balance in the joint selfishness & altruism,  selfishness & selflessness, arrogance & sentiments, ego & empathy, self-interest & ethics, self & other-interest. Said balance is the reason   the Human species as a group has survived, and can in the future survive and remain viable:  As  Wilson (2015)  says, everything else is commentary.  

And, because DIT rests on solid empirical ground, some further motivation to continue into this post: DIT in Metaeconomics resolves both  "the Adam Smith problem" which was about a joint Wealth & Sentiments and "the Chicago School problem” which is about self-interest without ethical reflection (see Liu, 2022, and the What Comes Next Blog post)." 


Metaeconomics resolves both problems by seeing that Adam Smith saw a joint self & other as a moral sentiments driven-interest, and, it transcends the self-interest only focus of the Chicago School by bringing ethics represented in the shared other-interest back into the analytical system: Metaeconomics transcends the Chicago School by seeing the joint and nonseparable character of self & other as the moral and ethical-interest, the ethic shared with the other tempering the inherent excesses of the self-interest. 


So, Metaeconomics  also lends support and gives credence to the emerging Humanomics, as McCloskey and Carden (2020, p. 176) refer to it, ".. an economics with the humans and their ethics left in.”  Metaeconomics is such an economics: The Ethic is brought into view in the construct of the shared other-interest.  Adam Smith practiced Humanomics.  The Ethic is about the other virtues, represented in justice which takes courage and temperance, shorn up by faith, hope, and love (see McCloskey 2006; Review in Khachaturyan and Lynne 2010).


Said other virtues are  represented in the shared other-interest along path 0M in Figure  1 working to temper the virtue of prudence represented in the self-interest along path 0G in Figure 1.  The best path 0Z emerges. And, temperance is a virtue, too, especially when combined with courage in self-command over the more primal self-interest in prudence-only.  Adam Smith saw the key role of virtues, the ethics, and would likely have found DIT of use in integrating the ego in the Wealth of Nations and the empathy in the Moral Sentiments.


For more on the emerging notion of  Humanomics, which could benefit from the powerful abstraction that is DIT, see McCloskey and Carden (2020),  McCloskey (2021, 2022), who build in part on Smith and Wilson (2019).  For how Metaeconomics specifically overlaps with Humanomics, see Lynne (2020, esp. Chapter 7 Financial Policy: Tempering Excessive Greed; also, see the Leave Me Alone Blog, especially the Appendix at the end of the Details). 

So, because DIT in Metaeconomics is built on the empirical reality of how the brain has evolved, relating to how the reflective and thus rational mind must always be seeking good balance in self & other-interest,  it  resolves many old puzzles and paradoxes that cannot be adequately explained using SIT in mainstream Microeconomics.  DIT easily explains why people vote, donate blood, run into burning buildings to save a stranger, and, even explains more mundane day-to-day choices like why do people tip. SIT has to conclude no rational person would do any of said things: DIT clarifies it is rational because of the joint payoff in the domain of doing the right thing, the shared other (empathy-based ethics)-interest, in good balance with self-interest payoffs.  See the Metaeconomics Blog for more applications, with many new insights into current problems. 


So, if intrigued, the technical details for DIT as a transcendent over SIT analytical system are next.  And, for a quick look at Mathematical Metaeconomics, in particular the Humanomics version of it, see .



Technical Details of Dual Interest Theory


DIT in  Metaeconomics was first proposed in Lynne (1995, 1999). For  an overview reflecting the current state of it, see Lynne (2020, Lynne and Czap 2023). Work  continues, especially in the ongoing, experimental laboratory based research program reflected in Czap et al (2018) working to test DIT. The research  explores the possibility of  joint, nonseparable, interdependent self&other-interest arising due to nonallocable inputs in production and supply, and nonallocable goods in consumption and demand.  The following demonstrates how nonallocable inputs and goods can be considered in standard isocurve models. 


Dual Interest in Production and Supply: Joint Isoquants 

We start with production, supply, and isoquant considerations. We focus on the inputs x1 and x2 (see Figure 1), with x2 being a bundle of inputs like seed, fuel, fertilizer and land, and x1 a bundle of conservation related inputs like conservation tillage.  These inputs are used to produce corn q1 for the Market on path 0G and to produce wildlife q2 who also live in and around the corn field, for general use by everyone, such as hunters, bird watchers, with these uses reflected generally by Community:Government, using the same farmland, on path 0M (Figure 1). 


Producing at the least cost, maximum profit point A in response to the feedback from the Market, i.e. maximizing Self-interest profits, results in supplying a large quantity of corn represented in isoquant IG3 and a very small amount of wildlife represented in isoquant IM1. In contrast, if this farm worked to maximize Wildlife, the result would be point C, with a large amount of wildlife represented in IM3, a large payoff in Other-interest,  and a very small amount of corn represented in IG1, a very small payoff in Self-interest.  There would be little to no monetary payoff at point C, in that hunting and bird watching are not generally Market goods  --- generally no one person has a private property in the wildlife --- and the Government, as representative of the Community, the common/public property owner, does not generally supply wildlife at a price.  So, what will the farmer do?

Well, it depends upon the larger context, what price P signals are coming out of the Market reflected in Figure 1 and what value V is coming out of the Community: Government as reflected in Figure 2. Also, the value V will often be brought into Figure 1 space through tax T, paying taxes to bring the best mix in the private & public. The possibilities frontier R0R0 in Figure 2 is derived from moving along the capital constraint curve R0R0 in Figure 1; notice how areas outside of the elliptical area defined by paths 0G and 0M (Figure 1) are irrational, as depicted by the positive slopes on the R0R0 possibilities frontier (Figure 2).  We also now see that if the value V of wildlife is viewed as zero (so, then, also unwilling to pay tax T to help provide for and protect wildlife), then the Vo of IM = 0,  slope of the value Vo curve is zero, line is the driving force in the balance of interests on this higher plane; this suggests point A in both Figure 1 and 2. Also, if corn is not highly valued, as in a hunting or wildlife preservation frame, then the favored  Vo of IM is very large, as indicated by the negative infinity slope of the Vo curve at point C: Lots of wildlife will run in the corn fields, and little corn will be produced


It is also, then, economically irrational to not consider both interests in the rational zone between  the two paths 0G and 0M. Ironically, maximizing self-interest on path 0G, as Microeconomics teaches, is not economically rational (nor is maximizing other-interest on path 0M).

In fact, Microeconomics always suggests an economically inefficient point A.   Very little wildlife would be produced, even though there is generally, when people are asked, a shared other-interest in having some wildlife traveling with the farmers and food consumers on this Spaceship Earth.  So, what do? Microeconomics pointing as it always does, implicitly, to pure capitalism --- so, everything is privately owned, there is not any public property such as in wildlife ---  would call for creating private property in the wildlife, with said owners then  negotiating with the farmer, and paying the farmer the price for having wildlife in the corn fields. In this case, we would see a Price evolving for both corn and wildlife, shifting the higher interests toward some value Vo in Figure 2, resulting in some choice like B in Figure 1, perhaps involving paying some tax T to reach it.  Even more intriguingly, Microeconomics because it sees only a single interest at work, does not even have the IM set of wildlife production curves in the analytical lens, unless the resource is privately owned, even though these are joint products, inherently a common/public  property in the beginning. Microeconomics framing, using Single Interest Theory, rather presumes, implicitly, without empirical test that the inputs on a farm would be completely allocable between these two processes, presuming complete independence between corn and wildlife production. 

Metaeconomics would lead in a quite different direction, especially because it sees corn and wildlife as joint products, due to nonallocable inputs, and that another value V system may also be at work.  The natural system, in effect, causes  the two processes to be interdependent, inputs allocated within the natural system, with the farmer having very limited control, in that both products use the same spaceship earth system, simultaneously. Also, real people have value V (and associated tax T to bring it forward) beyond the price P expressed in Markets, and, often prefer keeping such things as wildlife as a public property.


So, with this starting point, Metaeconomics might point, empirically, to offering some government programs, payments to farmers, the value V reflected in the shared other-interest between farmers and everyone else, to provide for some wildlife habitat on their farms.  Given enough political attention to the problem, and the willingness to pay the taxes represented in tax T by hunters and bird watchers (and tax T paid by others in support) to produce the money for the farmer payment, the Government  could in effect reflect the value V of wildlife relative to the price P of corn. With payments reflecting shared value V, the payments coming from collections of tax T,  the farmer might shift a bit toward path 0M, perhaps moving to path 0Z, and arriving at point B.   In fact, if the  payment for wildlife habitat is high enough, reflecting the high value V hunters and bird watchers often place on using this aspect of the private property, in effect the common property in wildlife, overall profits coming from the Market price & Government payments could be identical at both points A and B.

Another scenario also suggested as an empirical question by Metaeconomics would have the Government require, mandate wildlife production, without any financial compensation, at point B.  That is, Government as a representative of the public interest in the level of value Vo (Figure 2) might mandate that farmers move at least to point B (Figure 1).   Profit would be considerably less, with hunters and bird watchers having a "free ride" while the farmer pays all the cost. Farmers would likely not be very pleased, either, as liberty and freedom have been sacrificed for wildlife production.


Metaeconomics would  also, on another empirical path, suggest the farmer could be nudged to become mindful of the value Vo (Figure 2), the overall shared other(internal to the farmer, but shared with others "downstream" of the farm)-interest this farmer has in a viable, sustainable spaceship earth system.  It is possible the farmer, too, sees wildlife as part of the aesthetics, the environment in living on the farm, made better by having wildlife on the land, too, in addition to the corn. Acting on gains in the other-interest, this farmer might voluntarily move over from path 0G to path 0Z (Figure 1), sacrificing a bit of corn production on IG2 < IG3, while increasing wildlife production to IM2 > IM1. This farmer may find a more peaceful existence, a more fulfilling life, less amiss, at point B rather than point A (in both Figures 1 and 2), perhaps feeling less Phoolish (after Akerlof and Shiller, 2015): In fact, in our research experience on conservation practices (see Lynne et al., 2016, for a summary; also see Chapter 8 in Lynne, 2020, which also includes the latest research since 2016) we often found farmers disappointed that "the Market made me do it", i.e. the Market sends only price signals for corn and sends no signals about wildlife, so, to survive, point A is chosen, even though point B is preferred. Farmers are not only economically inefficient at point A, but also quite unhappy.


Also, as the quote at the start suggests, the virtues can be swallowed into the Self-interest, too, as in path 0M being swallowed into the new path 0Z, which now appears like a Self-interest path, albeit now a virtuous path. In effect, path 0G and 0M converge into one path 0Z --- the two sets of isoquants converge into one set --- which Frisch (1965, p. 273) referred to as complete coupling. If the two isoquants have converged, it will appear as in Microeconomic renditions, as though there is only one set of isoquants; unfortunately, it would be very misleading to in effect "hide" the Moral Dimension. 


Notice, too,  that in the three Metaeconomics styled analyses, wildlife are retained as a common property, with the Government bringing the value  V of wildlife into the mix, involved in the first case with payments, voluntarily accepted or not; controlling, in the second case, with the farmer not having a choice; and, with complete liberty and freedom on the part of the farmer in this third case. That is, in this last case, Government nudging (or, specific nudging by the hunters and bird watchers themselves) could bring about free choice by the farmer, or not, in producing some wildlife. Metaeconomics suggests these kinds of cases need to be examined with an empirically based approach, and pragmatism brought to bear in the end. 


In fact, the reality since the 1930s, here in the US, has put us into all three Metaeconomics approaches.   Government while representing the Community has been operating to represent the overall societal interest of value Vo, and is using tax T dollars/prices paid for wildlife through tax T consumers pay, through the US Farm Service Agency, to bring about point B outcomes. We have also dabbled a bit with controls, as in conservation compliance to get crop subsidy payments, requiring point B choices. Government, through the US Natural Resource and Conservation Service and the US Cooperative Extension Service, has also engaged in encouraging farmers through technical support and educational programming to join the Community of conservation farmers.

Also, we have not, historically, since the formation of the US in 1776, favored the Microeconomics approach which requires absolute, private property ownership in wildlife. So, why do we cling to Microeconomics, when we have this Metaeconomics alternative that, practically speaking, just works better in explaining what is ongoing, and suggests what to do about it, in realistic terms, based in empirical reality for what is pragmatic? It seems in reality that both farmers and consumers have viewed the value V of wildlife on a higher plane from the price P for corn, as depicted at points like B in Figure 2, and have preferred that some public/common property in wildlife works better, pragmatically speaking.  This does not mean that some private property in such products, goods like wildlife is not desirable, but it does put it into perspective.


Metaeconomics  raises an empirical  question(s) about the best mix of private&public-property, the best mix of market&government, as related to the question of the best balance in corn & wildlife-production, without presuming which way is best. Lynne et al (2016) points to how balance in self&other-interest, ego&empathy, market&government has resulted in farmers adoption of soil and water conservation practices, as well as providing solid empirical support for Metaeconomics.  For the Mathematical Metaeconomics of jointness represented in overlapping isoquants, see Lynne (1988; 2006b; 2020, in the Appendix).

Dual Interest in Consumption and Demand:  Joint Indifference Curves

As suggested in Inspired (also see Lynne, 2020), the work by Frisch (1965) stirred the imagination about how jointness in production arising from the reality of nonallocable inputs could also perhaps exist in consumption as arising from the real possibility of nonallocable goods.  Lynne (1995) demonstrates, for the first time, and fully developed in Kalinowski, Lynne, and Johnson (2006), how this might work, with two sets of overlapping indifference curves.  The set of indifference curves IG representing the self-interest are shown as overlapping with the set of indifference curves IM representing the other(shared with others, and internalized within the own-self)-interest (Figure 1).  The set IG evolves out of the egoistic-hedonistic tendency in humans.  The set IM evolves out of the empathy-sympathy-sentiments and perhaps even compassion tendency in humans.

So, think of it, in simple terms, as an ego-set IG around path 0G and an empathy-set IM around path 0M, representing the dual nature of the Human, reflected in the way the brain evolved. Ego & empathy evolved, and became jointly intertwined within the brain.  And, it is not just in Humans: The research in which empathy was discovered as a structural and functional part of the brain, the mirror neurons research, was in the study of the macaque monkey.  The family dog, too, has the capacity for being in empathy-with family members.  Ego & empathy is in play in all the mammals, in varying degrees, and, perhaps even in other creatures. Yet, the reptiles seem to have mainly what we would call ego in the mammals: No empathy-based nurturing is generally found in the reptiles.  Research continues.


Also, the set IM, then, reflects the moral dimension, the moral community arising out of the larger ethical system. Also, in terms of attaching these ideas to the notion of an ethical system, the virtues, the set IG represents the virtue of prudence; the set IM represents especially the virtue of temperance, but also includes the other virtues represented in courage, justice, faith, hope and love. The set IM, then, evolves out of a continually evolving moral community reflecting these virtues, which also evolve in content over time. Empathy is the starting point:  The moral community embedded within an empathy based ethical system is the outcome.


The notion of an empathy-set IM also means there could be many sets IM, many different sets of other-interest, more than one community, competing for  individual attention and consideration.  In fact, there could easily be dozens of set IM indifference curves in this space, e.g., the sets associated with immediate family, extended family, work associates, club memberships, religious affiliations, political party, state, nation, all travelers on spaceship Earth, to list a few.  Dual Interest Theory --- self&other-interest jointly intertwined in the own-interest --- sees the individual charged with rationally considering how to respond to each such set while seeking balance on some path 0Z.


Just like in microeconomics with only set IG, metaeconomics also posits that individuals maximize their own-interest. This theory is still about the individual seeking their outcomes for themselves, not for others, just as in microeconomics. The difference is the own-interest now involves not only self-interest represented in set IG but also the interest one shares with others as reflected in set IM.  This set IM is still entirely within the own-self, internal to the individual.  This has nothing to do with other-regarding preferences, or interdependent utility, notions that have been offered as "fixes" to the microeconomics focus on only IG. The own-interest is just now broadened to reflect both tendencies in human nature; like Angyal (1965) pointed out,  humans have the tendency to want autonomy (i.e. ego driven self-interest) and homonomy (i.e. empathy driven other-interest, connectivity with something outside the self-interest).  Angyal also adds that we often face heteronomy, too, when outside control is asserted (especially arising when self-discipline, self-command fails, like in releasing way too much greenhouse gas, burn to much carbon fuel, which damages the Spaceship), working  to limit our freedom and liberty to choose our own balance in autonomy&homonomy, self&other-interest. 


To help understand the workings of two sets of joint indifference curves, for purposes of understanding how maximizing self&other-interest --- a broader version of own-interest --- might work, think of a good q1  having recycle content and good q2 as being produced only from new resources (this case was examined in Kalinowski, Lynne, and Johnson, 2006, and highlighted again in Lynne, 2020).  Each good gives payoff in both the domain of self-interest IG and other-interest IM.  For example, at the Microeconomics based solution to this choice, given income level R0R0, the consumer maximizes self-interest only at point A (Figure 1). This is usually best achieved without buying much in the way of recycle content goods,  due to p1/p2 being relatively lower;  at point A, the consumer enjoys level IG3 of payoff in the self-interest, but also receiving some payoff in the other-interest represented by IM1.   


Metaeconomics suggests, however, that many consumers would not be happy at point A, having not paid attention to their conscience, their impartial spectator as Adam Smith describes it.  That is, other value V on a higher plane is at work, as depicted by Vo in Figure 2.  That is, moving along RoRo in Figure 1, we can generate the RoRo consumption possibilities frontier RoRo in Figure 2. The impartial spectator within the consumer, the conscience concerned with  recycling, would be represented by the value Vo isocurve, which suggests that not only p1/p2 (and the absolute prices of both) is relevant to the choice. Indeed, using the Adam Smith notion, after having being in the state of the impartial spectator (basically empathizing with the need to recycle), the consumer chooses instead to move to point B (in both Figures 1 and 2).  A bit of self-interest is sacrificed, as is the other-interest (as it is not maximized, either), now enjoying IG2 and IM2.  In effect, Metaeconomics points to maximizing the joint self&other-interest, the broadend own-interest, while sacrificing a bit of each interest (new meaning of altruism, which is now more than just sacrifice in self-interest) at point B.  Substantively more good q1 with recycle content is  purchased, even though the p1/p2 ratio (and absolute levels of each of p1 and p2) suggests buying very little to none. This kind of choice was empirically documented in Kalinowski, Lynne, and Johnson (2006, see especially Table 1; also see Chapter 4 in Lynne, 2020), with this tendency increasing as consumers identified more fully with the shared (with others) interest in recycling. For the Mathematical Metaeconomics of jointness represented in overlapping indifference curves see Lynne (2006a). 

Intriguingly, it is also possible, as the quote at the beginning suggests, that the virtues represented on path 0M could be "swallowed" by the new, more virtuous self-interest on path 0Z.  In effect, as a person works to do the right thing, set IG and set IM converge into a new set, lying completely on top of each other.  It would appear, like in Microeconomics, that the consumer has just one set of indifference curves.  It would be very misleading, however, as the underlying Moral Dimension, the underlying empathy-based ethical system, that moved the old (ego-based) self-interest to the new set of indifference curves associated with path 0Z would be hidden from view.  In effect, the Moral Dimension, and the Community that would produce it, would be hidden in the analytical system.  Hiding the Moral Dimension which represents the larger Ethical System, leads to the rightful claim that Microeconomics is at best Amoral. 

While Mathematical Metaeconomics in Consumption was first fully developed in Lynne (2006a), McCloskey (2022) stirred  further development and refinement of the matter of Mathematical Humanomics.  McCloskey (2022) speaks to the frame of the Profane and the Sacred: Metaeconomics as a Humanomics with DIT at the core of it, clarifies the Profane is ongoing in the Market Forum represented in Figure 1 while the Sacred is ongoing in the Other Forum of Figure.  See Balancing the Profane & Sacred, with Some Help from Law, with the Details accessible in a 10-page paper using mathematics to demonstrate the balancing. 

Notion of Altruism Now Broadened 


Also notice that path 0Z --- the path of peace, economic efficiency, and overall happiness) --- points to the essential need for a bit of sacrifice in the payoff in both domains of interest.  Altruism is dual sacrifice, and, sacrifice in both domains is essential to peace and economic efficiency, and the resulting happiness.

Resolve the Old Debate about Incommensurability

We can also address the matter of commensurability, and the real possibility that the dual interests are incommensurable, in the old debate about "pushpins and poetry."  Microeconomics based in Neoclassical Economics, which in turn rests in Utilitarian Philosophy, sees the material world (pushpins) no different from the less tangible world (poetry), and thus an individual can simply do the tradeoff along some possibility frontier R0R0, arriving at whatever point A, B or C that emerges from the tradeoff analysis.  If we put goods q1 and q2 on the axes, the tradeoff is strictly decided in the market by the p1/p2 ratio; in the Utilitarian view, the problem is solved, which also leads to claiming that Price is Value, and Value is Price, with everything completely commensurable. 

Other philosophies see this quite differently, seeing generally a hierarchy of incommensurable value, with value V of poetry  not on the same plane as  price P of pushpins.  In fact, higher order value V might work to in effect override the price P evolved in the Market Forum, with the value V coming out of higher order, Other Forums, in Community, and, at a larger scale, like that represented in the US Administrative, Legislative and Judicial branches of Government, as in Community:Government (i.e., Community represented in the inclusive Government).  In this kind of philosophy, value V in the Other Forums works to temper and condition the price P in the Market. We might suppose, too, that price P in the Market Forum could influence the value V in the Other Forum(s), but price P and value V (albeit could be translated, represented in tax T) would not be commensurable, measurable on the same terms.


For more discussion of said matters, as well as the resolution of many other puzzles and paradoxes left behind by SIT, see Lynne (2020) as well as the last few pages in Lynne and Czap (2023). The Metaeconomics Blog, too, points at many contemporary problems and issues, giving new insights not possible using SIT.

Mathematical Metaeconomics

Also, while the figures are useful, some may prefer the formal Mathematical Metaeconomics. For  the mathematics, see Lynne, 2006a,b  (and the Appendix in Lynne, 2020). 


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