The economics of nice folks

A basic tenet of economics is that people always behave selfishly, or
as the 18th century philosopher economist David Hume put it, "every
man ought to be supposed to be a knave."

But what if some people aren't always knaves?

Sam Bowles argues in Science June 20 that economics will get it wrong
then, sometimes badly so. He points to new experimental evidence that
people do often act against their own personal self-interest in favor
of the common good, and they do so in predictable, understandable
ways. Poorly-designed economic institutions fail to take advantage of
intrinsic moral behavior and often undermine it. .

Take this example: Six day care centers imposed a fine on parents who
picked their children up late. The effect? Tardiness doubled, and it
stayed high even when the fine was removed. Parents, it seems, stopped
seeing lateness as an imposition on teachers, and instead saw it as
something that could be purchased with no moral failing.

Another example is a study this year which showed that women donated
blood less frequently when they were paid for it than when it was an
act of charity.

These examples show that economists ignore human altruism at their
peril. Standard economic theory assumes that incentives that appeal to
self-interest won't affect any natural altruism that may exist, but
that assumption is clearly wrong. Bowles discusses the research to
date that helps to explain when and why that assumption breaks down.

As the world becomes more interconnected and the resulting challenges
to humanity increase, learning to harness these altruistic impulses
becomes even more important, Bowles says. So the economists' "holy
grail," to learn to design institutions and policies to direct the
selfish impulses of individuals to public ends, "will be necessary but
insufficient," Bowles says. "The moral nature of humans must also be
recognized, cultivated, and empowered."

Source: Santa Fe Institute
http://www.physorg.com/news133107666.html

On 21 Jun, 15:44, Lance  wrote:
> The economics of nice folks
>
> A basic tenet of economics is that people always behave selfishly, or
> as the 18th century philosopher economist David Hume put it, "every
> man ought to be supposed to be a knave."
>
> But what if some people aren't always knaves?
>
> Sam Bowles argues in Science June 20 that economics will get it wrong
> then, sometimes badly so. He points to new experimental evidence that
> people do often act against their own personal self-interest in favor
> of the common good, and they do so in predictable, understandable
> ways. Poorly-designed economic institutions fail to take advantage of
> intrinsic moral behavior and often undermine it. .
>
> Take this example: Six day care centers imposed a fine on parents who
> picked their children up late. The effect? Tardiness doubled, and it
> stayed high even when the fine was removed. Parents, it seems, stopped
> seeing lateness as an imposition on teachers, and instead saw it as
> something that could be purchased with no moral failing.
>
> Another example is a study this year which showed that women donated
> blood less frequently when they were paid for it than when it was an
> act of charity.
>
> These examples show that economists ignore human altruism at their
> peril. Standard economic theory assumes that incentives that appeal to
> self-interest won't affect any natural altruism that may exist, but
> that assumption is clearly wrong. Bowles discusses the research to
> date that helps to explain when and why that assumption breaks down.
>
> As the world becomes more interconnected and the resulting challenges
> to humanity increase, learning to harness these altruistic impulses
> becomes even more important, Bowles says. So the economists' "holy
> grail," to learn to design institutions and policies to direct the
> selfish impulses of individuals to public ends, "will be necessary but
> insufficient," Bowles says. "The moral nature of humans must also be
> recognized, cultivated, and empowered."
>
> Source: Santa Fe Institutehttp://www.physorg.com/news133107666.html


Other examples might be drawn from choice of occupation.  I think
teachers and medical personnel, for instance, gain job satisfaction
from helping others and not only from the size of their pay packets.

Dave Smith

Dave Smith wrote:
>
> Other examples might be drawn from choice of occupation.  I think
> teachers and medical personnel, for instance, gain job satisfaction
> from helping others and not only from the size of their pay packets.
>
> Dave Smith

Yes - of course you are right.

I had a sense of deja vu reading the article above. About thirty years
ago there was a great fuss about the distinction between intrinsic and
extrinsic motivation. Researchers showed, for example, that children
would spontaneously colour and draw, but if you started to "reward"
them for doing this they would start to lose interest if the reward
was discontinued. Other examples were things like children helping
with home chores, and gradually reducing their help to only those
things for which they got paid if the household had a system of
rewarding the doing of chores. The suggestion was made that some
things are intrinsically motivated, and that supplying extrinsic
motivators can destroy intrinsic motivators. There is still quite a
bit of literature dealing with the subject, for example:

http://www.blackwell-synergy.com/doi/abs/10.1111/1467-937X.00253
http://www.beswick.info/psychres/management.htm

At any rate the above article seemed to me to be clearly related to
this old debate, but no mention was made of it. Unfortunately this
kind of cycle in which particular ideas are rediscovered and then
forgotten again seems all to characteristic of much of the social
sciences and psychology.

Lance