Smith's interests were philosophical, not economical. His biggest contribution was the observation that self interest is a force for net social gain, because every person pursuing their own interests leads to greater prosperity for all. Hence his famous quote:
"It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages."
Well, I mean, they are key to the well-established-as-false rational actor model that for a long-time ruled the social sciences (well, with the notable exception of psychology, which had it's own different challenges) as the one overarching model of human behavior.
It does provide a convenient framework for useful first-order approximations in some (especially mass aggregate) situations, with some supporting assumptions, still.
If you want examples, they are legion. Addicts, for example, clearly don't act in their own rational self interest. Whether it's substances (e.g., alcohol and other drugs) or experiences (like gambling and gaming), whole industries are built around exploiting people's inability to act in their self interest.
Another example is advertising. In economic theory, advertising and PR are about informing people, giving them new facts. But when you look at actual advertising, it's about giving them new feelings, about manipulating their decidedly non-rational behavior.
And there are plenty more. If you look the kinds of things consumer protection agencies get up to, you'll find plenty of examples.
[1] https://en.wikipedia.org/wiki/Behavioral_economics
[2] https://en.wikipedia.org/wiki/Bounded_rationality
[3] https://en.wikipedia.org/wiki/Cognitive_bias
[4] e.g., https://hbr.org/2009/07/the-end-of-rational-economics
An alcoholic who buys liquor is acting rationally according to his interest of getting drunk. Being an alcoholic may not be rational (to us). But I'd rather operate in an economic framework that doesn't judge the rationality of my interest, but that I have self interest and act rationally.
What does this mean?
Your point about self-interest is similarly tautological. If people against their conscious choice do things they know are bad for them, which is what addicts do, then it seems absurd to me to define that as "self interest".
I'd say "rational" should instead mean what it commonly does: "in accordance with reason or logic". And "self interest" should mean something like "to the actor's long-term benefit".
In which case, people frequently act irrationally and against their self interest. Which is certainly what the field of behavioral economics has been demonstrating.
In the case of banks, you have execs acting in their personal self interest and not in the long-term interest of the bank. Their long and short-term interests were not in alignment. This could be addressed by compensating execs with shares that are locked up for a period.
To blame failure on irrationality is to not understand the motivations of the actors involved. Perhaps the risk of going out of business was mitigated by knowing they're "too big to fail". Perhaps it's not the banks that are irrational but the incentives given to them.
https://en.wikipedia.org/wiki/Self-interest
https://en.wikipedia.org/wiki/Ethical_egoism (your use)
https://en.wikipedia.org/wiki/Psychological_egoism (my use)
In the normative sense, any action that is "bad" is irrational. In the descriptive sense, there is no such thing as wrong self interest, therefore it can't be irrational. In that sense "rational self-interest" is tautological. Which is why in my original question I asked for "an example of someone not acting in their (voluntary) self interest".
We can also reason in principle that markets don't require that people have their long-term best interest in mind. The market for cigarettes and fast-food is operating just fine. Sure customers might suffer for it, but the market aspect worked just fine.
Given that you apparently understand that people mean different things here, your intervention in this conversation is especially irritating. Rather than just recognizing that jrs235 is using a different definition of self interest, the one that Smith was using, you post an faux-naive question, wasting at least his and my time, and likely that of others.
> Ethical egoism is not my position; I'm not making a moral claim
Hmm..
> Rather than just recognizing that jrs235 is using a different definition of self interest, the one that Smith was using
No, Smith was not using your (unprovided) definition. That's the whole point. Jrs235 slam dunk of a comment is a straw man. Read bmmayer1's comment.
> you post an faux-naive question, wasting at least his and my time
Yet nothing of value was lost.