In a recent post, I provided a link to Ode Magazine and an article by Jeremy Mercer entitled 'The Altruism in Economics'
http://www.odemagazine.com/doc/63/altruism-vs-economics/3 that challenges the foundation of classical economic theory. Much research has been done in cross-disciplinary pursuits in the last 30 years that seriously challenges the presumption that people make rational choices and that they always operate out of self-interest. In this article, Mercer makes the claim that our focus on self-interest in economic theory 'crowds out' altruism. Since altruism and cooperation are not rational in classical economic theory, material incentives are usually proposed when moral incentives would work better. A system that incorporates cooperation, altruism, and a conception of fairness would make people more altruistic.
Particularly interesting is his citation of the book, Moral Sentiments and Material Interests: The Foundations of Cooperation in Economic Life (Economic Learning and Social Evolution). In this collection of essays, a professor at the University of Massachusetts Herbert Gintis proposes what Mercer calls 'a more nuanced economic theory' based on strong reciprocity. Mercer writes: "Under this model, on meeting a stranger, the initial gesture should be conciliatory (a smile or a handshake are human demonstrations of goodwill). But from that point on, one should act as the stranger acts: hostile if hostile, cooperative if cooperative. In short, do unto others as they do unto you." For a Christian, this is not ideal since our mandate is 'do unto others as you would have them do unto you' but this is still better than neo-classical economics in which people act out of self-interest ALL the time. As the author writes: “Altruism isn’t irrational because if it were, the only rational people would be sociopaths.” A new economic theory must also incorporate the need for humans to perceive that things are 'fair'. Mercer cites many experiments done over the last 30 years that demonstrate, across cultures, the need for humans to act fairly.
I have included one book review from Amazon that is a mini-lesson in this new economic theory and I hope to purchase the book soon.
33 of 36 people found the following review helpful:
5.0 out of 5 stars Fairness and Sociability, May 8, 2006
By E. N. Anderson (Riverside, CA USA) - See all my reviews
(REAL NAME)
This review is from: Moral Sentiments and Material Interests: The Foundations of Cooperation in Economic Life (Economic Learning and Social Evolution) (Hardcover)
For several years now, a group of social scientists has been studying the human tendency to be socially fair rather than narrowly selfish. The editors of this volume--Herbert Gintis, Samuel Bowles, Robert Boyd, and Ernst Fehr--are among the stalwarts; others are found among the authors of the book's chapters.
The core of this long-running effort is Fehr's experiments with the ultimatum game, in which two people must share a sum of money (say, $10); Person A gets to propose a split, Person B can only accept or decline. Economists and politicians would expect every game to wind up with a $9.99/$0.01 split (or actually a 9-1 split, since bills are used), but in fact typical splits are more like 5-5 or 6-4, and in one place (Lamalera, Indonesia) people actually split something like 4-6, few A's ever claiming even half the money. This long-running set of experiments around the world adds to a vast, rapidly accumulating set of data showing that people are sociable, not "rational" in the folk-economic sense (i.e., dedicated solely to narrow material self-interest). The present book discusses the implications for economics and politics. If people are naturally concerned with fairness, narrowly economistic policies can be counterproductive; we all know cases of "crowding out," in which a material incentive actually makes people act worse, by crowding out moral incentives. If you reward people for being good, they will think it's all a cynical game, and will act worse. Punitive legislation to make people do what they do anyway (for moral reasons) is also counterproductive. Imagine what these realizations would do to American social policy.
The problem with this book is that it is too optimistic and upbeat. The downside of human sociability is confined to one page, late in the book (p. 388), where racism, honor killing, and the like get a quick mention. Alas, the morning radio brings a stream of accounts not only of such things but also of religious butchery all over the world--Christians, Muslims, Hindus, and even Buddhists (theoretically prohibited from killing but busily genocidal). This brings us back to Adam Smith's suggestion that greed may not be lovable but may be better than the noble, virtuous alternatives. I hope Gintis et al work on how to decouple fairness and interpersonal concern from the desire to exterminate everybody who is not in one's immediate social set. Until this is done, the hope purveyed in this work will remain thin.
The authors note that humans seem genetically programmed to have at least some sense of fairness and of self-sacrifice for the common good, but they wisely refrain from trying to unpack "hereditary" and "environmental" or "cultural" aspects. Heredity makes us do this, and learn it easily, and heredity gives us the ability to learn and develop cultures. No way to unpack. Still, more needs to be done on just how flexible these inborn moralities are. The range from Lamalera to certain parts of South America is pretty great. So is the range of murderousness in religious and ethnic settings. We need to know how to modify human behavior in these regards, and how much we can hope for.
That being said, this book is the best yet in the long list of books that devastate the selfish-individualist model of human behavior. People desperately want to be sociable, and be good members of their society. This may lead them to fairness and generosity, or to body-piercing, or to suicide bombing. This book offers hope for building new societies through use of innate human decency. At this point in time, any book seriously offering such hope is desirable.
http://www.odemagazine.com/doc/63/altruism-vs-economics/3 that challenges the foundation of classical economic theory. Much research has been done in cross-disciplinary pursuits in the last 30 years that seriously challenges the presumption that people make rational choices and that they always operate out of self-interest. In this article, Mercer makes the claim that our focus on self-interest in economic theory 'crowds out' altruism. Since altruism and cooperation are not rational in classical economic theory, material incentives are usually proposed when moral incentives would work better. A system that incorporates cooperation, altruism, and a conception of fairness would make people more altruistic.
Particularly interesting is his citation of the book, Moral Sentiments and Material Interests: The Foundations of Cooperation in Economic Life (Economic Learning and Social Evolution). In this collection of essays, a professor at the University of Massachusetts Herbert Gintis proposes what Mercer calls 'a more nuanced economic theory' based on strong reciprocity. Mercer writes: "Under this model, on meeting a stranger, the initial gesture should be conciliatory (a smile or a handshake are human demonstrations of goodwill). But from that point on, one should act as the stranger acts: hostile if hostile, cooperative if cooperative. In short, do unto others as they do unto you." For a Christian, this is not ideal since our mandate is 'do unto others as you would have them do unto you' but this is still better than neo-classical economics in which people act out of self-interest ALL the time. As the author writes: “Altruism isn’t irrational because if it were, the only rational people would be sociopaths.” A new economic theory must also incorporate the need for humans to perceive that things are 'fair'. Mercer cites many experiments done over the last 30 years that demonstrate, across cultures, the need for humans to act fairly.
I have included one book review from Amazon that is a mini-lesson in this new economic theory and I hope to purchase the book soon.
33 of 36 people found the following review helpful:
5.0 out of 5 stars Fairness and Sociability, May 8, 2006
By E. N. Anderson (Riverside, CA USA) - See all my reviews
(REAL NAME)
This review is from: Moral Sentiments and Material Interests: The Foundations of Cooperation in Economic Life (Economic Learning and Social Evolution) (Hardcover)
For several years now, a group of social scientists has been studying the human tendency to be socially fair rather than narrowly selfish. The editors of this volume--Herbert Gintis, Samuel Bowles, Robert Boyd, and Ernst Fehr--are among the stalwarts; others are found among the authors of the book's chapters.
The core of this long-running effort is Fehr's experiments with the ultimatum game, in which two people must share a sum of money (say, $10); Person A gets to propose a split, Person B can only accept or decline. Economists and politicians would expect every game to wind up with a $9.99/$0.01 split (or actually a 9-1 split, since bills are used), but in fact typical splits are more like 5-5 or 6-4, and in one place (Lamalera, Indonesia) people actually split something like 4-6, few A's ever claiming even half the money. This long-running set of experiments around the world adds to a vast, rapidly accumulating set of data showing that people are sociable, not "rational" in the folk-economic sense (i.e., dedicated solely to narrow material self-interest). The present book discusses the implications for economics and politics. If people are naturally concerned with fairness, narrowly economistic policies can be counterproductive; we all know cases of "crowding out," in which a material incentive actually makes people act worse, by crowding out moral incentives. If you reward people for being good, they will think it's all a cynical game, and will act worse. Punitive legislation to make people do what they do anyway (for moral reasons) is also counterproductive. Imagine what these realizations would do to American social policy.
The problem with this book is that it is too optimistic and upbeat. The downside of human sociability is confined to one page, late in the book (p. 388), where racism, honor killing, and the like get a quick mention. Alas, the morning radio brings a stream of accounts not only of such things but also of religious butchery all over the world--Christians, Muslims, Hindus, and even Buddhists (theoretically prohibited from killing but busily genocidal). This brings us back to Adam Smith's suggestion that greed may not be lovable but may be better than the noble, virtuous alternatives. I hope Gintis et al work on how to decouple fairness and interpersonal concern from the desire to exterminate everybody who is not in one's immediate social set. Until this is done, the hope purveyed in this work will remain thin.
The authors note that humans seem genetically programmed to have at least some sense of fairness and of self-sacrifice for the common good, but they wisely refrain from trying to unpack "hereditary" and "environmental" or "cultural" aspects. Heredity makes us do this, and learn it easily, and heredity gives us the ability to learn and develop cultures. No way to unpack. Still, more needs to be done on just how flexible these inborn moralities are. The range from Lamalera to certain parts of South America is pretty great. So is the range of murderousness in religious and ethnic settings. We need to know how to modify human behavior in these regards, and how much we can hope for.
That being said, this book is the best yet in the long list of books that devastate the selfish-individualist model of human behavior. People desperately want to be sociable, and be good members of their society. This may lead them to fairness and generosity, or to body-piercing, or to suicide bombing. This book offers hope for building new societies through use of innate human decency. At this point in time, any book seriously offering such hope is desirable.
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