Economics Is the Study of Life

Economics helps you understand that money isn’t the only thing that matters in life. Economics teaches you that making a choice means giving up something. And economics can help you appreciate complexity and how seemingly unrelated actions and people can become entangled. A student once told me that a professor of hers said that economics is the study of how to get the most out of life. That may strike some of you… as an absurd claim. But life is all about choices. And making choices—being aware of how choosing one road means not taking another, being aware of how my choices interact with the choices of others—that’s the essence of economics. (Page 13)

We Have An “Impartial Spectator” In Our Head

Smith’s answer is that our behavior is driven by an imaginary interaction with what he calls the impartial spectator—a figure we imagine whom we converse with, in some virtual sense, an impartial, objective figure who sees the morality of our actions clearly. Smith is saying that we imagine being judged not by God, and not by our principles, but by a fellow human being who is looking over our shoulder. (Page 25)

We Do Good To Satisfy This “Impartial Spectator”

What spurs us to take care of our neighbor is the desire to act honorably and nobly in order to satisfy what we imagine is the standard that would be set by an impartial spectator…I was once talking with a friend about God and morality. Does believing in God reduce your chance of committing a crime or a sin? What if you knew there was no chance of being caught—you’re going to get away with a misdeed with certainty? My friend smiled and said that the whole idea of God is that He’s always watching. Smith’s point is that you are always watching! Even if you’re alone with no chance of being caught, even if no one knows what you’re stealing, you know. And as you contemplate committing the act, you imagine how an outsider, an impartial spectator of your crime, would react to your moral failure. You step outside yourself and view your actions through the eyes of another. (Page 29)

We Want to Be “Lovely”, Not “Loved”

Here is the fullest expression of Smith’s statement about being loved and lovely: Man naturally desires, not only to be loved, but to be lovely, or to be that thing which is the natural and proper object of love. He naturally dreads, not only to be hated, but to be hateful, or to be that thing which is the natural and proper object of hatred. He desires, not only praise, but praiseworthiness, or to be the thing which, though it should be praised by nobody, is, however, the natural and proper object of praise. He dreads, not only blame, but blameworthiness, or to be that thing which, though it should be blamed by nobody, is, however, the natural and proper object of blame. When we earn the admiration of others honestly by being respectable, honorable, blameless, generous, and kind, the end result is true happiness. (Page 42)

Undeserved Praise Is A Reprimand

So if I get praise I don’t deserve, says Smith, it should bother me. The praise feels good. But knowing it is undeserved makes it impossible to enjoy, he says. Why? It’s as if someone else is being complimented instead of you. 'Undeserved praise is a reprimand—a reminder of what I could be.’ (Page 46)

Virtue-Signaling Can Be Self-Deception

I used to think the reason people use selfless-sounding language to describe what are in fact selfish actions is to make others think they’re selfless. It’s a form of advertising. We want to be loved, so we couch our desires in a selfless form. But Smith presents another possibility: we say these things not only to convince other but also to convince ourselves. We do what’s best for ourselves but convince ourselves that our motivation is for others. (Page 65)

People Are More Myopic Than Evil

If you have water in your basement… the guy who sells sump pumps will recommend a sump pump. The gutter guy will tell you to replace your gutters. When you have a hammer, everything looks like a nail… They aren’t malicious, mustache-twirling exploiters of your naiveté. They actually think they’re helping you by swinging their hammer. (Page 72)

We Love Who Others Love

Something inside us reveres those who are revered. We idolize those who are idolized. We love those who are loved. A great heart surgeon would seem to be more admirable. But no heart surgeon reaches the reach of LeBron James. Somehow, being near people who are loved is exhilarating. (Page 99)

Empathy is Naturally Calibrated

Despite the transitory nature of our sympathy with the suffering of others, Smith concludes that we have just the right amount of concern for others. If we had more, we would find life difficult to bear. Less, and we would be unable to comfort our friends in hard times. Nature, it seems, when she loaded us with our own sorrows, thought that they were enough, and therefore did not command us to take any further share in those of others, than what was necessary to prompt us to relieve them. (Page 139)

You Belong To A System of Norms

You are part of a system of norms and informal values that is much bigger than yourself. When you behave with virtue, you are helping to sustain that system. Every time someone hears you say "google" when you're talking about searching for something on the internet, you reinforce and spread the use of the word as something more than a brand name. Every time you reward someone's trust or go the extra mile, you are encouraging others to do the same. And when you honor honorable behavior by others, you are sending out a reward for being honorable. By refusing to laugh at the joke that comes at someone's expense, you are sparing someone pain and refusing to reward the cruelty of the joke teller. (Page 196)

We’re All Equal In Ability To Experience The Human Condition

Smith says, "When Providence divided the earth among a few lordly masters, it neither forgot nor abandoned those who seemed to have been left out in the partition. These last too enjoy their share of all that it produces. In what constitutes the real happiness of human life, they are in no respect inferior to those who would seem so much above them. In ease of body and peace of mind, all the different ranks of life are nearly upon a level, and the beggar, who suns himself by the side of the highway, possesses that which kings are fighting for.” (Page 219)

Impartial Exchange Is a Prerequisite for Modernity

Our economic system has to be an impersonal system if it is to continue to deliver the life-transforming and life-affirming gifts of better health, better music, and opportunities to interact with people all over the world. But in a world of specialization, strangers have to play a big role in our lives. And that's OK. Fortunately, I don't have to love the CEO of the company that makes a heart valve or the car that gets 40 miles to the gallon or my iPhone... Looking for love? Look locally. Love locally, trade globally. (Page 236)