Why do you want money? Nowadays, everyone has a distinct answer to this question. Yet, the classical economic model seems to stop before this question, assuming that we make decisions by logically calculating costs to maximize utility: homo-economicus. But it seems that our desire for money, or maximization of utility, serves a preceding purpose. The answer to the question, “Why do you want money?” ranges from fear of poverty, love for worldly pleasures, hope for future generations, or pride in one's accomplishments and wealth. As concluded by 18th century philosopher David Hume, our homo-economicus model of human behavior is subservient to separate desires  – ‘the passions.’

"Reason is, and ought only to be the slave of the passions, and can never pretend to any other office than to serve and obey them”. Human beings, according to Hume, are motivated by their emotions, desires, and heuristics, merely using reason as a tool to pursue these motivations. This idea clashes with the classical economic assumption that individuals solely act in self-interest as profit-maximizers. However, we can see Hume’s model of human behavior supported empirically through the branching field of behavioral economics. 

An example of this we can see is the phenomenon of loss aversion and risk-averse behavior. As established by Kahneman and Tversky, most people tend to exhibit loss averse behavior: preferring to avoid losses over acquiring the equivalent gains. This behavior is contradictory to the predictions of classical economics, where agents acting logically would value gains and losses equally if they were of the same size. In this case, Hume would likely argue that this phenomenon originates from the emotional response of fear. When faced with the possibility of loss, the fear of negative consequences outweigh anything else, causing irrational actions.

Overall, the field of behavioral economics may take inspiration, and can take further understanding of human behavior from Hume’s model.



References:

Kahneman, Daniel, and Amos Tversky. “Prospect Theory: An Analysis of Decision under Risk.” Econometrica, vol. 47, no. 2, 1979, pp. 263–91. JSTOR, https://doi.org/10.2307/1914185. Accessed 13 Oct. 2024.

Tversky, A., Kahneman, D. Advances in prospect theory: Cumulative representation of uncertainty. J Risk Uncertainty 5, 297–323 (1992). https://doi.org/10.1007/BF00122574

A Treatise of Human Nature by David Hume, reprinted from the Original Edition in three volumes and edited, with an analytical index, by L.A. Selby-Bigge, M.A. (Oxford: Clarendon Press, 1896).