HOW ADAM SMITH CAN CHANGE YOUR LIFE – An Unexpected Guide To Human Nature and Happiness

“There will always be someone richer than you, more skilled than you, more famous than you. Who is rich? asks the Talmud. He who is happy with his lot. Maybe it’s easier to be happy with what you have if you know that inside you is the urge for attention that Smith identifies. Smith is showing us a better path to contentment than the world holds out to seduce us with. There is another way to be loved. Instead of pursuing attention via wealth or fame or power, pursue wisdom and goodness. There are two ways to be loved, to satisfy the desire we all have in us to be noticed and to be somebody. The first path is to be rich, famous, powerful. The second path is to be wise and virtuous.

‘Two different models, two different pictures, are held out to us, according to which we may fashion our own character and behaviour; the one more gaudy and glittering in its colouring; the other more correct and more exquisitely beautiful in its outline: the one forcing itself upon the notice of every wandering eye; the other, attracting the attention of scarce any body but the most studious and careful observer.’” – from Chapter 5. How To Be Loved


Who would ever have imagined that Adam Smith, the father of capitalism, wrote a book about morality with his deep understanding of human nature? Didn’t he discuss the workings of human’s self-interest on the market? Our logic may naturally lead us to assume that the author of ‘The Wealth of a Nation’ advocates money and materialism. What a surprise! He was such a wise old philosopher with a warm heart to humanity. When I first saw this petit book in a cute yellow cover, I knew right away that Adam Smith has something to say in a positive sense! What is his contemplation on moral sentiments interpreted in modern language by an economist Russ Roberts then?

Two Opposing Human Nature and The Role of The Impartial Spectator

Adam Smith observed that we are profoundly self-interested. But for some reason, we do not act in what appears to be our self-interest. The author, Russ Roberts, introduces this human nature that still holds true as below.

Writing in 1759, Adam Smith made the observation that we feel worse, much worse, about the prospect of losing our little finger than we do about the death of a multitude of strangers far away. That’s human nature, the same in 1759 as it is today.

‘Let us suppose that the great empire of China, with all its myriads of inhabitants, was supposedly swallowed up by an earthquake, and let us consider how a man of humanity in Europe, who had no sort of connexion with that part of the world, would be affected upon receiving intelligence of this dreadful calamity.’

‘How selfish soever man may be supposed, 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.’ – from Chapter 2. How To Know Yourself

In this contradiction of human nature, Smith contemplated that, what so called, the impartial spectator plays a role. He thought our behavior is driven by an imaginary interaction with a figure we imagine whom we converse with in some virtual sense, an impartial, objective figure who sees the morality of our actions clearly. It is this figure we answer to when we consider what is moral or right. The author adds one point about this impartial spectator: 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 as follows.

The role the impartial spectator plays is it makes us humble. We are not the center of the universe. Remembering that we are no more important than anyone else helps us play nicely with others. The impartial spectator is the voice inside our head that reminds us that pure self-interest is grotesque and that thinking of others is honorable and noble.

‘It is reason, principle, conscience, the inhabitant of the breast, the man within, the great judge and arbiter of our conduct. It is he who, whenever we are about to act so as to affect the happiness of others, calls to us, with a voice capable of astonishing the most presumptuous of our passions, that we are but one of the multitude, in no respect better than any other in it; and that when we prefer ourselves so shamefully and so blindly to others, we become the proper objects of resentment, abhorrence, and execration.’ – from Chapter 2. How To Know Yourself

How To Be Happy – Be Loved and Be Lovely

‘Man naturally desires, not only to be loved, but to be lovely.’ Adam Smith’s view of what really makes us happy is summarized in this one simple sentence. Adam Smith was not a big fan of the pursuit of fame and fortune. He believed human beings want to be loved. It means we want people to like us, respect us, and care about us and he thought it’s part of our essence. The actual spectators(not the imaginary impartial spectator that we rely on), those in our social circle and beyond actually judge us. And we’re happy when that jury of our peers loves us for what we do and who we are.

This being loved is a natural result of being lovely. But what does it mean to be lovely? Certainly, the old usage of lovely is different from modern word lovely. It can be interpreted as loveable. Adam Smith meant that we want to be seen as having integrity, honesty, good principles and we want to earn respect, praise, attention, and good reputation honestly. In short, we want to be worthy of love.

How to be loved? Public recognition in the form of money, power and fame is pleasurable but should be kept in perspective. We should not consume ourselves by the desire, by the ambition or by the passionate pursuit for it, for they will end up violating the rules of prudence or justice. Stay humble. If you can, do what you love, do what you respect, and be content if that feeds your family.

How to be lovely? How to be respected, admired and worthy of praise? Adam Smith suggests in one word: propriety. In modern terms, it means proper behavior. Behaving with propriety is the ability to conform to the expectations of those around us, and they in turn conform to our expectations. This creates trust among us and it allows us to share our emotions with each other. That’s the beginning of loveliness, of earning the respect of those around us, along with self-respect. Adam Smith, however, says this is not synonymous with being admired or celebrated. For this, we need virtue.

Adam Smith encourages us to be virtuous as a way to being loved. He suggests three qualities. Prudence, justice and beneficence.

What does Smith mean by prudence, justice, and beneficence? For Smith, prudence means, in modern terms, taking care of yourself, justice means not hurting others, and beneficence means being good to others. That’s not a bad trio for thinking about how to live the good life. Be good to yourself and be good to others. You do good to others by not hurting them and by helping them when you can. – from Chapter 5. How to Be Good


How To (and Not To) Make The World a Better Place

We want to be more than just a good person. We want to do more than simply act with virtue toward those we encounter. Extending our reach is part of our desire to be loved. As Adam Smith argued we want to earn love through being lovely, so it’s our desire to improve the world. How to make the world a better place, according to Adam Smith, depends on each individual’s choice and contribution in tiny and infinitely numerous and subtle ways. The author adds the insight of ‘aggregate’ outcome that’s used in economics in interpreting the moral quality.

Thinking clearly about the complex interaction of individual actions that lead to unintended patterns of predictable and orderly outcome is, I believe, the single deepest contribution of economics to understanding how the world works. Ironically, Smith’s most eloquent description of this phenomenon is not in The Wealth of Nations, his “economics” book, but in The Theory of Moral Sentiments, his “philosophy” book. And the example he uses is not a monetary phenomenon but a moral one. In The Theory of Moral Sentiments, Smith describes how individual choices can lead to important social outcomes. He’s talking about something more important than the price of apples. He’s describing the role each of us plays in creating a moral society. … Smith argues that each of us acts in such a way that together we create morality, trust, civilization. None of us intends that outcome. In fact, he argues, it comes about naturally. It’s part of who we are. No one plans by his or her actions to improve the world. Yet we do so without having to think about it. – from Chapter 8. How To Make The World a Better Place

Despite the positive feedback loops that help create the moral society, however, we are living in a very imperfect system and we’re tempted to use and impose our wills into the system, making the world not a better place as a result. Adam Smith warns of what so called ‘the man of system,’ the leader with a scheme to remake the society according to some master plan or vision. He warns of politicians let alone totalitarians who impose legislation that goes against the natural impulses of human desire and claims it will lead to the “highest degree of disorder.” He says that even when we’re right, even if we think we know what’s best for others, sometimes it’s best to leave them alone.



A modern economist’s introduction of an old economist’s philosophy book on morality. If we can say every book has a dominant sentiment, this book’s dominant sentiment is lovely, loving, warm, wits and fun. What a lovely experience to get to know the great mind’s contemplation on human nature and morality. And what a fun time I had with the author’s witty and light-hearted disposition. This book gave me two cakes at one go!

Adam Smith certainly had a deep understanding of human nature. He saw how individual’s behavior motivated by self-interest plays out in the market place in economic sense. And he saw how human nature plays out in our moral behavior and creating moral society. I have appreciated four aspects of human nature that Adam Smith contemplated.

First, the Impartial Spectator who is watching us above our shoulder that is not attached to a religion or value system is indeed a universal explanation. When Madoff reportedly expressed relief when he was arrested for his ponzi scheme, it’s because he knew in his own eyes or in the impartial spectator’s eyes that he was already caught. There was a disconnect between his reputation and the reality and the impartial spectator already knew.

Second, Smith’s insights into our self-deception and why we need to be always humble was a very good point. We tend to see those around us as blind to their own faults and overconfident while being unaware of our own. You are the easiest people to fool. We can fool ourselves into thinking we are lovely when we are not.

Third, being prudent as one quality of being virtuous reminded me of being a class act of a confident person.

For Smith, prudence covers everything in your personal bearing, the “wise and judicious care” of your health, your money, and your reputation. He’s physically active and keeps his weight under control. He works hard and avoids debt. … The prudent man, says Smith, is sincere and honest. At the same time, he doesn’t volunteer everything he knows; he is reserved and cautious in his speech and his action. He doesn’t stick his opinion into every discussion. His friendships are a “faithful attachment to a few well-tried and well-chosen companions”; he chooses his friends not because they’re cool or have an impressive list of accomplishments, but because they have the “sober esteem of modesty, discretion, and good conduct.” – from Chapter 7. How To Be Good

Lastly, the “great exactness” that we have to adhere to when we keep the general rules of justice. As the author says it’s much easier to give up potato chips than to eat just one. Or a few. A few often leads to a few more. And a few more. How difficult it is to keep integrity and reputation. They say building your reputation takes years but ruining takes just a few seconds. I couldn’t agree more on the importance of the great exactness in keeping our commitment. Only by constantly reminding ourselves of our self-deception and discipline will we be able to become a virtuous person.

Smith’s emphasis on the importance of not deviating from the rules related to justice-always pay your debts, never steal, never betray your spouse-is a crucial aspect of confronting our self-deception. Once we decide that these rules can be relaxed in special circumstances, we’re on the road to finding ways to convince ourselves that what is good for me is good for you. Then there will be “no enormity so gross of which we may not be capable.” That’s not a mild warning; it’s a blaring siren. – from Chapter 7. How To Be Good


Witty and fun but insightful at the same time, Russ Roberts did a meaningful job in introducing one of great minds’ philosophical contemplation on human nature and morality in easy terms. Reading this book will help readers build themselves into a better version as a human being and make the world a better moral society as Adam Smith intended long time ago. It is a lovely book!


Economist. Philosopher. Leaders. Also, recommend to anyone who wants to make him/herself a better person and to make a better world.

RATING: 4 out of 5


Business, Philosophy, Self-Help, Economics


Author(s): Russ Roberts

Published: 2015, USA

Publisher: Portfolio / Penguin

Paperback, 239 pages


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2 responses to “HOW ADAM SMITH CAN CHANGE YOUR LIFE – An Unexpected Guide To Human Nature and Happiness”

  1. mecenatpictures Avatar

    For today…ah yesterday.. I was glad to meet you.
    I will read your posts and arrange with my own thoughts.
    Your thought that we have to comprehend the meanings about 1st~4th industrial revolutions was very impressive for me.
    I didn’t think about that kind of things.
    I have to learn and read more and more..
    Anyway, thank you so much for listening to me and sharing your insights and thoughts.
    I hope that I can listen to your thoughts.
    Thank you.


    1. Jay Avatar

      My pleasure! Thank you for your comments. Your futuristic mind impressed me. Keep up your meaningful projects!


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