Economists believe that people act and respond to a situation as per their self-interest. Here, self-interest cannot be same as selfish decision but the major benefit from decisions taken by them majorly benefits themselves. Considering any set of people: politicians, consumers, public servants and even producers consider their self-interest at a prior list in terms of developing a business and personal affairs.
Therefore, economists’ prior work is to predict the choices of people that are based on their self-interest. It is generally a decision based on the incentives they can enjoy.
The economic explanation of the same is that people seek an opportunity where the marginal benefit is better than marginal costs and decline those decisions where marginal costs is comparatively more than marginal benefits.
Economist majorly works on developing and examining self-benefit and social interests of the common people contributing to economic development. But one of the major issues faced by tem is to analyze the incentive figure that leads to a self-interest category of individuals that are key elements in social interests. As a matter of fact, there are major contributions by institutions that influence the decision of incentive rate for the individuals. One will learn about these institutions under the detailed study of economics and where do they really exists.
