The Invisible Hand Theory suggests that when entities make economic decisions in a free market economy based on their own self-interest and rational self-interests it manifests unintended, positive benefits for the economy at large.

The basic definition of social exchange theory is that people make decisions by consciously or unconsciously measuring the costs and rewards of a relationship or action, ultimately seeking to maximize their reward.

Naturally selfish creatures who are programmed to pursue their own interests. Self-interest generally refers to a focus on the needs or desires (interests) of the self. A number of philosophical, psychological, and economic theories examine the role of self-interest in motivating human action.

1 : a concern for one’s own advantage and well-being acted out of self-interest and fear. 2 : one’s own interest or advantage self-interest requires that we be generous in foreign aid.

Factor payments. The income people receive for supplying factors of production, such as land, labor, or capital. Patriotism. The love of one’s country; the passion that inspires a person to serve his or her country.

They are broadly divided in the three factors of production: land, labor, and capital. Land is the primary factor of production. Labor is the specific factor of production and payment is made in the form of wage.

The difference between the two is whether or not the income (payment) received is for rendering productive service. Payment received in exchange for rendering productive service is factor income whereas the one received without providing any service (or good) in return is transfer income.

Government transfer payments include Social Security benefits, unemployment insurance benefits, and welfare payments. Taxes are considered transfer payments. Governments also receive transfer payments in the form of fees, fines, and donations from businesses and persons. (See also National Income and Product Accounts.)