Adam Smith claimed that economic demand is based on rational self-interest; but I don’t find that to be the case. It appears that economic demand is a function of two things: values and psychology.
If you value art, you will be more likely to buy art than if you don’t value art. If you are an environmentalist, you will be more likely to buy fuel-efficient vehicles than if you’re not an environmentalist. If you value health, you will be more likely to buy healthy food than if you don’t value health.
Also important is psychology. A vast chunk of people’s consumption decisions are done for psychological reasons. They are done for self-esteem; they are done for status and competition; they are done for the ego or insecurity. In many cases this motivation is a vast one. People buy expensive houses and vehicles because they are status symbols and spend their whole lives working to pay for them. The driving force there is not rational self-interest. It is psychology.
I haven’t seen enough work done to address this, and there needs to be. Most economic demand is not based on rational self-interest; it is based on values and psychology. Once that is understood it then becomes possible to see which of these motivations are right ones and which ones aren’t. And then economics can in fact be targeted to achieve actual good.