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deciding whether and how to reduce a particular risk
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- If morality represents the way we would like the world to work and economics represents how it actually does work, then the story of Feldman's bagel business lies at the very intersection of morality and economics. Yes, a lot of people steal from him, but the vast majority, even though no one is watching over them, do not. This outcome may surprise some people — including Feldman's economist friends, who counseled him twenty years ago that his honor-system scheme would never work. But it would not have surprised Adam Smith. In fact, the theme of Smith's first book, The Theory of Moral Sentiments, was the innate honesty of mankind. "How selfish soever man may be supposed," Smith wrote, "there are evidently some principles in his nature which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it."—Freakonomics, Levitt and DubnerWhat final conclusion do the authors arrive at through the bagel example?The majority of people are corrupt.The majority of people are honest.Adam Smith was wrong.Feldman's economist friends were right.