Many free market economists are criticized for placing excessive weight on incentives. A couple of examples come to mind. If an actor finds a wallet with $1000, do they keep the money or try to return the wallet? The utility maximizing objective suggests keeping the money. Perhaps true if the actor is an individual devoid of human contact. The keeping the money answer omits that the actor is part of a community, and has an interest in promoting and participating in a group which returns lost items. Some people would call this morality. I see it as practical. The group incentive encourages action which retains capital within the community in the form of future gestures of similar goodwill.
Another example given is the story of the drowning child. Saving the child would result in the loss of an expensive suit. Does utility maximization deter the actor from saving the child? The answer that the actor bypasses the impulse to save his suit, and saves the child in order to be a better, or noble, person is an individualistic way to look at it. But what about the practicality of being the one in the group who is available for a just-in-time activity, who sets a precedent for the next person to carry out similar duties when the need arises. An insurance towards future savings of life. This seems like a a reasonable justification for the behavior. One that is also in sync with responding to incentives, group incentives that is.
But where do we see the $1000 or the reimbursement for the expensive suit? Where do we see the money? Where do we see the returns for the work of stay at home moms or senior volunteers? Where are the lifetime earnings of (est) $1mil-$2mil that a family foregoes when one partner works in the community? Are they suckers? Is it just fairy dust? I think not. But it will take me a bit to prove it to you.
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