People seek to improve their lives

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2. People seek to improve their lives.

People express preferences and make choices, generally to achieve something they value more at the expense of something they value less. They make a purchase or a trade to upgrade value. They choose the alternatives they prefer. There are many ways in which people could use their time and resources, and they generally choose those which they think will produce a preferable outcome. They decide on the cinema rather than the bar because on this occasion they think the experience will be more rewarding. On another night they might choose otherwise.

The added value resulting from a choice need not be expressed in monetary terms. What Adam Smith called "the uniform, constant and uninterrupted effort of every man to better his condition" need not be limited to material improvement. People might choose aesthetic, artistic or emotional value over material reward if they can thereby improve their lives.

People sometimes make choices which in practice diminish, rather than enhance, value for them. This is not because they are acting irrationally, but because humans are not perfect or in possession of perfect information. Sometimes people lack sufficient information to plan for an improved outcome. Sometimes the information they lack might even be about themselves, and about what it might take to improve their lives. They usually know more about their own lives and values, however, than any outsiders can know, and in practice the imperfect decisions people make about their lives are usually better than the imperfect decisions made by governments and bureaucrats.

The value which people place on things is subjective, varying from individual to individual, and it changes over time. It cannot be assumed that the choices they make at one time will be repeated in the future, though they can provide clues to someone's general scale of values. The choices are often public and visible, but the values that give rise to them are internal and can only be surmised.

People express themselves and the values they hold though their choices. An economic system that gives people the opportunity to improve their lives through their choices will thereby allow its citizens to seek and gain improvement, and to lead more fulfilled lives in consequence.

This is part of Dr Pirie's ongoing series: Philosophical Observations on Economics.