What if one of the biggest problems with conventional economics is that it misunderstands human beings?<\/p>\n
Mainstream economic theory frequently starts from the assumption that people pursue their own self-interest. But that is not how most of us actually live. We care for our families, our friends and our communities. We also recognise obligations towards people we will never meet.<\/p>\n
I call this economic empathy.<\/p>\n
In this video in my Understanding Economics<\/em> series, I explain why empathy should be considered an economic issue. I look at how our willingness to care for each other helped underpin social security, universal healthcare, free education and social housing, particularly in the decades after 1945.<\/p>\n I also consider how economists including Friedrich Hayek and Milton Friedman promoted a very different view of society, one that placed markets, individual responsibility and self-interest at its centre.<\/p>\n That change in thinking mattered. When hardship is treated as individual failure rather than something society has a responsibility to address, the consequences extend far beyond those directly affected.<\/p>\n Economic empathy is not simply about kindness. Ensuring that everyone can participate in society supports spending, economic activity, opportunity and democracy.<\/p>\n A successful economy depends upon recognising that human beings depend upon each other. Economics needs to recognise that reality too.<\/p>\n This is what Understanding Economics <\/em>is all about.<\/p>\n