Knowledge will come only if economics can be reoriented to the study of man as he is and the economic system as it actually exists.
There is a line of economic research on altruism that get only little attention in the media, which is why I want to report on it here. There is by now solid evidence that humans can behave altruistically towards strangers. This is surprising because a naive version of evolutionary theory would expect that altruism is only possible among kin. It also goes against the basic assumptions of economics, game theory and public choice theory, which all assume that humans only have an eye for their self-interest. These assumptions are often defended referring to evolution by stating that you need to be an unapologetic egoist for optimal reproduction. I mention this, because non-academics may think it is natural to assume humans can be altruistic and wonder why one would research something that trivial.
It is not controversial science. There are hundreds of scientists working on it. Almost every month Nature or Science publishes an article on altruism. And at the University of Bonn, where I work, Reinhard Selten is emeritus professor and got his Nobel price for experimental research on the ultimatum game. That is also how I heard about it, our University Magazine had an article on Selten and this beautiful experiments.
In a social setting, where there is an opportunity to build up a reputation, altruism can be explained. In this case, altruism may lead to future benefits and one may even argue that it is thus not real altruism. However, this type of altruism is expected to break down when a group is under pressure and may soon dissolve, but humans also collaborate under such difficult circumstances. Furthermore, reputation-building naturally does not work under conditions of anonymity, while experiments show that humans also collaborate with strangers they will never see again. Our ability to collaborate with non-kin is an important innovation that contributes much to our success as dominant animals.
Ultimatum gameA very simple and pure economic game, which thus shows the problem very clearly, is the ultimatum game (Güth et al., 1982). In the ultimatum game, two players must divide a sum of money. The first player has to propose a certain division. The second player (responder) can accept this division or reject it; in the latter case both players do not receive any money. In its purest form, the experiment is played only once and anonymously with players that do not know each other.
When the article described the experiment, I wondered what was interesting about that. Naturally people offer 50% and the responder accepts this. Not? That only showed my lack of economic training.
Economic and game theory predict that the responder will accept any non-zero amount, because for a rational person obtaining something is better than nothing. Knowing this, the proposer is expected to give the responder only the smallest amount possible.
The experiment, however, shows that fair split are common and that low offers are regularly rejected (Güth et al., 1982). This result is found across many different cultural groups (Henrich et al., 2005) and although the fraction offered varies, giving the responder a fair share seems to be universal.
Many variations of the ultimatum game and experiments with similar economic games have led to the conclusion that a sense of fairness or the willingness to costly (altruistically) punish unfair behavior is innate to humans (Fehr et al., 2002). Neurological studies show that people feel disgust if treated unfair (Sanfey et al., 2003) and contrary feel good when able to punish unfair behavior (Singer et al., 2006). One should not confuse altruism with always playing nice. Without people that punish egoistic behavior, bad behavior will spread.
Maybe it sounds like a rather artificial laboratory experiment to you. That argument is used by many economists not to take the experiment seriously. However, similar situation happen regularly.
If you take a taxis (in another town), you typically pay for the ride. Why not run away? Economic theory would predict that the driver would not run after you. That is risky and all the hassle with the police would take hours and in that time the driver could have earned money. Going after a non-paying customer is pure altruism. There is no way to build up a reputation and it is completely anonymously; in the best case the chase would help a colleague taxi driver getting paid next time. Irrespective of economic theory, you can be sure that the taxi driver will try to catch you.
Basically, fairness is central to almost every economic interaction with a stranger. Once you have an eye for it, you notice how important altruism, fairness, and trust are in a modern society. Had we really been the ruthless egoists, the elites preach us to be, we would not have accomplished much.
ExplanationsIt has been argued that altruism is evolutionary not possible (Fehr and Fischerbacher, 2003). A "rational person" willing to accept any offer, a free rider of the ultimatum game, would be richer and able to produce more offspring as an altruistic individual. Consequently altruism would be expected to die out in such a naive evolutionary framework.
One way out is a multilevel selection framework (which is similar to what used to be called "group selection", which has become a derogatory term; Wilson and Wilson, 2007). The idea is that if a group benefits strongly, this might compensate for individual disadvantages of altruistic behavior. In such a framework altruism can develop if the competitive disadvantage of altruistic behavior within the group is compensated by strong advantages for the group. This framework thus needs to assume very little intra-group competition, very strong extra-group competition and group stability. Most scientists find the assumed numbers not realistic (Williams, 1966).
Another explanation for collaboration among non-kin could be joint investments, especially joint investments in building a nest and defenses for it. Like reputation, this does not work in an anonymous setting, however.
An explanation I could imagine could work, but for which I have not seen any study yet, would be microbes. If we live in a group with non-kin, we may not share genes, but we do share microbes. If altruism is beneficial for the group and thus for the size of the niche of the microbe, it could be a strategy of the microbe to make us more altruistic.
Microbes changing human behavior is less far fetched as one may think. The parasitic protozoan called Toxoplasma gondii can influence the behavior of rodents to increase the likelihood that they are eaten by cats, which the protozoan needs for sexual reproduction. Infected rodents are less repelled by cat odors, they become more curious and less anxious and they move around more. There is even some indication that Toxoplasma gondii also influences humans and can increase dopamine production and makes men more study and women more promiscuous.
Whatever the mechanism behind human altruism towards strangers will turn out to be, we know that evolution somehow found a trick and in this way improved the reproductive chances of people demanding fairness in general and specifically of the responders in the ultimatum game. It would be important to understand how it works, however. That would make it much harder for the economists to ignore these findings. And only then we can understand how prevalent altruism and fairness is and where we have to look for deviations from the simplistic homo economicus assumption.
The Guardian published a review of the book: "I Spend, Therefore I Am" by Philip Roscoe. One sentence made very clear why it is important to improve economics and make sure everyone knows it view of humanity if flawed: "Not only does economics embody a false image of man...it remakes him according to that false image."
Milena Tsvetkova and Michael Macy found that observing and receiving generosity makes one more generous. That is why the neo-liberal propaganda that humans are egoists is so dangerous for society.
Go ahead and gossip. It’s good for society.
Article in the Washington Post on research showing that when people know others may talk about their reputation, and when it is possible to remove people from participation, they tend to behave more generously.
The article by Robert Gampfer (Do individuals care about fairness in burden sharing for climate change mitigation? Evidence from a lab experiment. Climatic Change, doi: 10.1007/s10584-014-1091-6, 2014) is explained very well Andy Extance at SimpleClimate.
ReferencesFehr, E., U. Fischbacher, S. Gächter. Strong reciprocity, human cooperation and the enforcement of social norms. Human Nature, 13, pp.1-25, 2002.
Fehr, E., U. Fischbacher. The nature of human altruism. Nature, 425, pp. 785-791, 2003.
Güth, W., R. Schmittberger, and B. Schwarze. An experimental analysis of ultimatum bargaining. Journal of Economic Behavior and Organization, 3, pp. 367–388, 1982.
Henrich, J., R. Boyd, S. Bowles, C. Camerer, E. Fehr, H. Gintis, et al. “Economic man” in cross-cultural perspective: Behavioral experiments in 15 small-scale societies. Behavioral and Brain Sciences, 28, pp. 795-815, 2005.
Sanfey, A.G., J.K. Rilling, J.A. Aronson, L.E. Nystrom, J.D. Cohen. The neural basis of economic decision-making in the ultimatum game. Science, 300, pp. 1755-1758, 2003.
Singer, T., B. Seymour, J.P. O’Doherty, K.E. Stephan, R.J. Dolan, C.D. Frith. Empathic neural responses are modulated by the perceived fairness of others. Nature, 439, 2006.
Williams, G. C. (1966). Adaptation and natural selection: A critique of some current evolutionary thought. Princeton, NJ: Princeton University Press.
Wilson, D.S. and E.O. Wilson. Rethinking the Theoretical Foundation of Sociobiology. The Quarterly Review of Biology, 82, pp. 327-348, 2007.
* Photo at the top, Be Human, is by ModernDope and has a creative commons CC BY-SA 2.0 license.