Biz Tip of The Day: Insight from Adam Smith, Behavioral Economist

Biz tip of the day: "Every individual necessarily labors to render the annual revenue of the society as great as he can. He generally indeed neither intends to promote the public interest, nor knows how much he is promoting it. He intends tonly his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention."  This insight is From Adam Smith.

Adam Smith's The Wealth of Nations, first published in 1776, helped create the discipline of economics with its conjuring of the invisible hand, self-interest, and other explanations of market forces that have influenced academics, governments, and business leaders ever since. But it's the insights from one of Smith's earlier works, The Theory of Moral Sentiments, that caught the attention of Harvard Business School professor Nava Ashraf and coauthors Colin Camerer and George Loewenstein.
In "Adam Smith, Behavioral Economist," published in the summer 2005 edition of The Journal of Economic Perspectives, the authors find that Smith's insights from 1759 can contribute to modern thinking on everything from our fascination with celebrity to the theory of loss aversion. In fact, says Ashraf, Moral Sentiments presages the emerging field of behavioral economics.

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