An example of microeconomics and social interest, a study of Facebook. -, Learning Economics... Solved!


An example of microeconomics and social interest, a study of Facebook.

Within economics we try to establish the difference between self and social interest.  Facebook gives us a prime example of the two working together.  In fact, any real business model that can blend these two interests together will probably be very successful.  First, consider your own self interest in visiting a facebook page, you want to keep in touch with your friends, share photos, let people know what's going on.  At the same time, the creators of facebook are trying to find some where they can invest their money hoping to receive a good return on it.  These creators are also acting in their own self interest. 

In order to get people to use something like facebook, they have to make a decision to use it.  They may way other factors into the decision such as the cost of using it, in terms of money and time, the alternatives available, maybe myspace or blogs, and the potential benefits they are going to receive.  All of these concepts are referring to you, or the individual's self interest because you are only considering the costs and benefits to yourself in the process.

Likewise, the owners of facebook strive to keep you the customer happy by intergrating new features, inviting new people to join, and keeping the costs of use surprisingly low (free in price, but still costs us A LOT in time :) ).  They are motivated to do this because they can earn money from operating the website through data mining and advertising.  Think about it, a lot of people complain that adwords has a monopoly in the advertising market online, but facebook is rapidly approaching them.  Through the use of facebook ads, you can target an extremely fine niche (for example, I might target 18-20 year olds who chose business or economics as their major) and only pay when the ad shows to them!  This is an exteremely profitable business practice for facebook.

However, both of these entities acting together in their self-interest also promote the greater social-interest.  This means that society benefits from the actions undertaken.  Society gains when people can stay in touch and communicate quickly and efficiently.  Society benefits when ads are targeted and not thrown around half haphazardly.  Society benefits groups of like minded people can meet and share ideas and accomplish great things.

Other examples of self-interest:
  • Going to work (to get paid)
  • Buying food (to feed your family)
  • Using facebook (to stay in touch with friends)
  • Investing in the savings bonds (to earn interest)
  • Starting a business (to make money)
  • Anything you do to benefit yourself...
examples of social-interest:
  • Volunteering (with no recognition or monetary compensation)
  • Teaching or sharing ideas
  • Buying food (keeping the grocer in business)
  • Investing in savings bonds (helping the government fund schools)
  • Anything you do that benefits another, or society at large...
So as you can see self vs. social interest has a lot of grey area, is probably more appropriately place in a Venn-diagram format.