Journal of Economic Perspectives—Volume 19, Number 3—Summer 2005—Pages 131–145
Adam Smith, Behavioral Economist
Nava Ashraf, Colin F. Camerer and George Loewenstein
Introduction：In The Wealth of Nations, published in 1776, Adam Smith famously argued that economic behavior was motivated by self-interest. But 17 years earlier in 1759,Smith had proposed a theory of human behavior that looks anything but selfinterested.In his first book, The Theory of Moral Sentiments, Smith argued that behaviorwas determined by the struggle between what Smith termed the “passions” and the“impartial spectator.” The passions included drives such as hunger and sex, emotions such as fear and anger, and motivational feeling states such as pain. Smith viewed behavior as under the direct control of the passions, but believed that people could override passion-driven behavior by viewing their own behavior from the perspective of an outsider—the impartial spectator—a “moral hector who, looking over the shoulder of the economic man, scrutinizes every move he makes” (Grampp, 1948). Conclusion：Adam Smith’s actors in The Theory of Moral Sentiments are driven by an internal struggle between their impulsive, fickle and indispensable passions, and the impartial spectator. They weigh out-of-pocket costs more than opportunity costs, have self-control problems and are overconfident. They display erratic patterns of sympathy,but are consistently concerned about fairness and justice. They are motivated more by ego than by any kind of direct pleasure from consumption and, though they don’t anticipate it, ultimately derive little pleasure from either. In short, Adam Smith’s world is not inhabited by dispassionate rational purely self-interested agents, but rather by multidimensional and realistic human beings.