Abstract
The present paper delineates an explanatory framework for the defining factors of incentives, both financial and nonfinancial, through the theory of human economic action and that of personality traits, which shape human goals and, ultimately, social identity. It is ascertained that three types of variables affect incentives: basic conditions (cultural change, etc.), basic values and needs (tradition, external values, etc.) and the dynamism of social identity, which includes the goals that are set. More specifically, the two basic variables that shape the incentives for human action and imbue dynamism in behavior relate to megalothymia—i.e., the need for acknowledgement of a person’s integrity along with the predisposition to be thought superior to others as well as the aspiration to a certain level of quality in life.
Highlights
Incentives shape a person’s method of action
When speaking of basic human incentives in the field of economics, we refer to personal financial decisions, to the assessment of the future in relation to the present, business decisions and issues to do with collective courses of action, taxation and the role of the state
In approaching the nature of human incentives, we could start by saying that cultural dimensions shape the values of life which in turn affect the formation of those incentives
Summary
Incentives shape a person’s method of action. when speaking of basic human incentives in the field of economics, we refer to personal financial decisions, to the assessment of the future in relation to the present (savings vs. investment), business decisions (investment, budgeting, financing, allocation of dividends) and issues to do with collective courses of action, taxation and the role of the state. The paper’s aim, initially, is to examine what the basic forces that affect human economic action are, what constitutes the individual’s behavioral identity—and, by extension, their social identity—and how these relate to human incentives. In this context, social identity includes a range of aspects such as the person’s perception about environmental security, the basic elements of social identity (megalothymia, religion, altruism, etc.), demographics and financial behavior. The main conclusion is that particular traits of social identity do shape human incentives This finding raises questions regarding policymaking that could be put in place in order to influence the operation of the economy and financial decision-making. Competition and signaling in circulation in the markets and in society can create so much confusion that the forces of restoration to a state of balance may not be in a position to operate, or not within the requisite time period
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