[I.A.S.K.]

Originally Posted by KSig RC

I understand precisely these definitions - they're common to every Econ class ever. What I'm getting at is that you're applying a macroeconomic definition to a phenomenon that either does not exist in economic terms (as we've shown the situation already violates the definition) or works on a more microeconomic scale and that we should not assume rational self-interest.

It's a very minor nitpick - I like where you're going, but I disagree with using the "rational self-interest" assumption (or test) in this instance.

This situation is completely microeconomic. It is individualized. How is it incorrect to assume rational self-interest? Rational self-interest is both micro and macro economic.

1. Humans act in a rational self-interest and as such do what is most satisfying.
2. Person A is human and thus acts in RSI (if they didnt why would they even apply for welfare in the first place?)
3. Person A realizes that they get more (thus incresased utility) on welfare than they do when working (and that they must do one or the other)
4. Person A acting in RSI quits working in favor of welfare