Week 6 Wall
Is economic behaviour universal? Do all people pursue their material self-interest all the time? Put another way, can you think of situations where a “backward sloping supply curve” would explain your behaviour?
Is economic behaviour universal? Do all people pursue their material self-interest all the time? Put another way, can you think of situations where a “backward sloping supply curve” would explain your behaviour?
You must be logged in to post a comment.
geenalee, 
lindseyaw, and 3 others are discussing.
Nadir Surani 9:46 am on October 8, 2013 Permalink | Log in to Reply
Economists define money as a measure of value since it is used universally as a medium of exchange. People value money for various value-added reasons: sometimes it is to make their life better, and other times it is to help others. So, I believe people pursue their material self-interest all the time for different reasons.
Basically, what a person values influences their behavior. The same applies to the ‘backward sloping supply curve’ since people value their money and their free time just as much. So, if they are making more money, they may choose to reduce their work hours to do the leisurely things they value. From my own personal experience, I was a barista at Starbucks. Let’s say for argument sake, I made $10 per hour at ten hours a week, so I made $100 per week. If my wage increased to $20 per hour, I would only have to work five hours a week, resulting in the same $100 per week with a lessened amount of effort on my part. This way, I could spend the other five hours doing leisurely things that I value.
If we apply the same to what we’ve learnt, we know that the interests of the Europeans and the Indigenous clashed violently throughout the 16th and 17th centuries. The fur trade was so profitable that it significantly expanded from about 17 fur trade posts across Canada in 1774 (directly before the American Revolution), to about 430 fur trade posts across Canada in 1804 (directly after the American Revolution). As a result of this expansion and material self-interest, the Europeans decided to increase the price of the furs whilst exploiting Indigenous efforts. Just like how an employee reduces hours if they are paid more, the same can be applied here. Even though the Indigenous were not employees in the formal sense, they reduced their efforts in response to higher fur prices as a form of retaliation against the Europeans. This is how the ‘backward sloping’ applies to the fur trade: an increase in prices (fur prices set by Europeans), caused a decrease in supply (Indigenous effort).
Susanna Chan 11:37 pm on October 10, 2013 Permalink | Log in to Reply
Economics means money, and money means power, value, and importance. Look at our world today, we are driven by economic strategies and ways to increase revenue. This was the same for the fur trade. For example, the Indigenous people demanded that HBC make the furs HBC match or exceed the quality of items to risk the loss of their trade to the French. This led to more profit. Strategies in economic behaviour has always played a role in our intentions. As for the First Nation’s, it was to improve the terms of trade to get economic rewards.
People do pursue self interest most of the time. Sometimes, it may be in the interest of someone else (ie: as a good deed) but the question is always why do they do it? Creating strong relations with another country may either be for self interest and/or an attempt to create a more peaceful world. Everyone has different interpretations of doing things based on their life, what they’ve been taught, and been exposed to etc. It is also different in other nations/states/cultures.
An example of a “backward sloping supply curve” in my life: When I was employed to work for a company, I valued leisure over money a bit more. Even though the wage was $25-40/hour, I worked everyday/12h shifts, which reduced my leisure time drastically (sleep, too). So what did I value more? At the time i began, money, as I needed it, but at the same time, my personal life was going down the hole. In the end, i chose leisure; with very high pay, i was able to enjoy more leisure time
Pierre-Marie B. 4:07 pm on October 11, 2013 Permalink | Log in to Reply
It is true that most people have interests in money because it is the crux of our everyday modern life. Even politics has to manage with the economic will of powerful international firms. We all have heard of statements like “Time is money” or “Money is power”. Of course a man with money is probably more influential but the key point is to determine what he would do with his influence: “With great power comes great responsibility”. Some people who do have money are trapped in a vicious circle, the more they have the more they want. Eventually they don’t even see what money is for – to be spent – and pointlessly accumulate for the sake of it, when they could actually use this money in a more realistic way. For example, the Natives at the time of fur trade did not have this material interest, they were very mobile and therefore could not accumulate material goods. They spent their money in immediate required goods to make their living easier and not to brag and expose their social status. This situation leads me to think that a distinction must be made between self-interest as a reflex to insure personal basic needs for life, and self-interest which turns into vanity and selfishness.
Indeed, the Natives were everything but selfish towards Europeans with the practise of gift-giving and the elaboration of treaty trades to insure mutual benefits to both sides. These two elements are proofs that economic behaviour depends heavily on culture. Europeans think that indigenous people were exploited and cheated in the fur trade but they don’t take into account the perception of trade of the Natives back then. They were not much interested in profit but more in establishing peaceful relationships with Europeans. Nevertheless, some customs reveal that the Formalists are not wrong concerning the reason of indigenous people’s participation in fur trade: they used the rivalry between the Hudson Bay Company and the Northwest Company as a mean of pressure to get products of better quality, by threatening one to go do business with the other if their expectations were not met.
Tina Loo 12:13 pm on October 13, 2013 Permalink | Log in to Reply
What about the backwards sloping supply curve part of my question? Does it apply to you?
lindseyaw 4:22 pm on October 11, 2013 Permalink | Log in to Reply
Economic behaviour is universal, but the reasoning behind the behaviour is not. As mentioned in the lectures, there are different theories as to why Indigenous peoples participated in the Fur trade, and the reasons were not always in line with the European reasoning. Indigenous peoples, as seen from the readings, traded for goods they needed for the time being, and the Europeans traded more for wealth and status. I think that this contrast in reasoning shows that material self-interest played a part in trade for both the Europeans and the Indigenous peoples, but their self-interest came from different places. Knowing that self-interest plays a key role in economic behaviour makes it easier for groups of people with such cultural differences, to trade with each other, and come to some kind of solid ground.
I think that this backward sloping supply curve gives people the chance to cut their hours, while still making the same amount of money they previously did. I did this when I worked at a job and received a raise. I got to take off a couple of hours, and make the same amount of money that I did before I got the raise. In terms of a backward sloping supply curve during the time of the fur trade, the amount of goods traded would probably be affected, depending on the kind of supply and demand of the time, and the amount of wealth and status that the Europeans were aiming for. If there was more of a need for a certain good, the Indigenous peoples would probably make more of an effort to trade to get the goods they needed, and when there was less of a need, the quality or quantity of the items that they were trading would probably go down.
Tina Loo 12:14 pm on October 13, 2013 Permalink | Log in to Reply
I think you’re getting at something important by trying to understand how “economic behaviour” is different in different cultures!
geenalee 4:40 pm on October 11, 2013 Permalink | Log in to Reply
I think that determining a universal nature of economic behaviour is quite difficult, given the vast existing differences in the measures and ideals of success. That is, the fact that North America is capitalist in nature and depends on the free market leads to great biases in their respective views to what success is. On the other hand, other nations may tend to include leisure and the fine arts to be within the scope of their best self-interests. In other words, different cultures will demand and pursue different ideals.
This relates to Arthur Ray’s article which we discussed in the tutorials this week, based on his finding that whereas European settlers were predominantly driven by the desire to accumulate profit and wealth from trade, the indigenous traders did not appear to take advantage of situations in the same way that might have increased their potential profits. Clearly, there was a discrepancy between the two groups’ ideas of what embodied their best self-interests. Seemingly, whether or not material self-interest is a priority for people depends largely on the culture of the society in which they live. Typically, given that North America is so deeply engrossed in a culture revolving around economic wealth and material pleasures as the defining characteristics of success, that is, “the good life,” there is a great tendency to project this perception as a universal norm.
Situations where a backward sloping supply curve may explain my behaviour would be instances where I prioritized gaining valuable experiences and/or leisure as opposed to being paid. Of course, this would be based on the assumption that the opportunity cost of being paid would be less than the potential value I would gain from leisure time/non-paid work. For example, while unpaid internships and volunteering opportunities tend to be unpaid, they still have a significant amount of value to offer in terms of a rich learning experience, or an opportunity to seek other interests besides academics/work. Relating this back to the indigenous people in Canada during the fur trade, while the European settlers may have judged the indigenous traders for employing what they viewed as economically unsound behaviour, rather, the indigenous peoples simply found priority in investing their efforts in furthering a different self-interest which was still equally as economical in terms of supporting their societies.
Tina Loo 12:15 pm on October 13, 2013 Permalink | Log in to Reply
Great answer Geena!
Tina Loo 12:16 pm on October 13, 2013 Permalink | Log in to Reply
General Comments on Week 6:
Where is everyone else???? A lot of people didn’t respond this week. Bad, bad, bad!!!
What struck me about your blogs this week is that many people said economic behaviour is universal; i.e. all humans all the time in all places pursue their material self interest (=economic behaviour, = rational behaviour). BUT then you all went on to give me an example of how your behaviour matched the backwards sloping supply curve – so clearly there were moments in your lives where you didn’t pursue the bottom line, when you didn’t keep going after the $$. So…is economic behaviour really universal?
Also, a couple of you talked about other instances of seemingly non-economic behaviour; namely altruism (though some of you said we “get” something out of being altruistic!) and art. One of you talked about how many musicians, and I’d add, other artists often labour for years and years without making any money – in fact, they continue to do so knowing they won’t make a living from it. if they were really motivated out of economic self interest wouldn’t they give up and do something that paid better?
Bottom line (ha ha, pardon the economic pun): Historians are always suspicious when people make an argument about universal behaviour. After all, historians are in the business of looking for change over time and space….