Rent Seeking Theory

In the readings assigned, I learned all about rent seeking and what exactly it is. The idea of rent seeking was discovered by Gordon Tullock in 1967 and in 1974 the expression “rent” was invented by Anne Krueger. Rent seeking is when an entity tries to get some type of income by making full use of a certain resource, of some sort, without giving anything back to society or the resource they got the income from. When speaking in these terms, the word “rent” does not have its usual meaning of paying rent to a landlord. The word, rent, was produced from Adam Smith’s concept of dividing different parts of revenue into profit, wage, and rent. The point of rent seeking, overall, is to get financial gains in the economics industry mostly by manipulation
It ends with financial gain from the resource that they generated the income from for only the entity and no one else. This is seen as a negative in the economic world because, again, this is being done through manipulation and/or alteration. Psychological egoism plays a role in rent seeking. Physiological egoism is the theory that every human does everything in self-interest. If someone helps someone, they are only doing so for the benefit of themselves; they will feel good about helping someone else out. Rent seeking is a process where using someone else is only beneficial to the one doing the rent seeking in the end. Although the rent seeker is the only one getting any physical benefits the resource that they got it from will experience some psychological benefit. The fact that they are doing someone a favor, for example, by loaning them money, they feel good about themselves. The resource that was being used, as well as society, does not benefit in any way, shape or form physically but they do psychologically. This falls into the theory of psychological egoism which factors in why rent seeking is done by manipulation and persuasion and ends in only self-interest