Great article but ...
... I'm still on the lookout for a replacement phrase for "chicken and egg", as this particular conundrum hasn't been one since about 1859 :-) Any suggestions?
Having the Daily Mail as a starting point to the edges of human knowledge doesn't sound all that likely, I know, not unless we're talking about approaching human knowledge from the outside of a story about "foreign" pomegranates causing cancers and damaging house prices. But that is how this little journey started, with this …
What you're describing takes place *within* a social group, and is social interaction. I don't see anything in it that would indicate altruism towards the wider world.
Which is no doubt why many of the biggest and nastiest crooks can also be pillars of their communities.
And it puts me in mind of the Paradox of Selfishness. Whereas the act of procreating in an overcrowded world is the ultimate act of selfishness, the subsequent behaviour of (normal) parents towards their children is the ultimate altruism. Though it may involve extreme selfishness towards ones own community: the "in group" where altruism exists collapses right down.
"Whereas the act of procreating in an overcrowded world is the ultimate act of selfishness"
So, living for yourself and letting other peoples' kids support you when you're old is "selfishness"? Interesting. Seems more like knowing how to work the system. And quite canny in being able to apply a veneer of sanctimony to it.
Does the potential recipient of the $1/$20/$40 know the game setup? i.e donor has been given $100 to split. Or is it an out of the blue - "I have some spare money,would you like $1"? And is this all done with real money? How does it work with $1000 or $10000? Do rich merkins still turn down 20% of $10K?
Makes one think...anyone willing to give me $1 million to try the experiment with some Peruvian llama-farmer? I'm sure he'd be happy with $1000!
There's probably a clue to the answer in the article.
If you are poor $1 is $1 and a free one is free, etc. If you are better off you are further up Maslow's hierarchy of needs, so you can afford to tell people to stuff their $1. On the other hand you might not be able to afford a Porsche and $100,000 is $100,000
"You are right. As reported, the basis of the experiment is fatally flawed. It is critically important to work with a figure that each person considers to be minor..."
If the poorer participants were offered 1c out of $1, then they might exhibit the same behaviour.
My in-laws are always trying to give us money (of the £10-100 variety) and since they are pensioners they don't realise that the amount of money isn't significant enough to us to help much, but is of vastly more use to them. We don't want to refuse because they are so generous and we don't want to hurt their feelings, but I have told them that if they do want to show appreciation for something we do by giving us money, then nothing worth more than a tenner (otherwise we will just buy something they need that they haven't bought with the money and give it right back to them :) )
Similarly, a millionaire associate started having money troubles because most of it was tied up in assets - there was no amount I could raise that would make a dent in his economic commitments, we are just on different levels.
How much would you get out of bed and clean a filthy toilet for (say it takes an hour)?
Some people would do that for £10, others wouldn't do it if you paid them £1000. It all depends where your expectations are on the economic spectrum.
Strangely enough when you ask economics students (who know the "correct" answer) to play imaginary economics games with imaginary money in economics lectures in front of their prof - you get a different behavior than with real money and real people.
How much would you bet on a game of roulette that paid out 1:39 ?
In economics theory you would pay an infinite amount to play the game - in reality would you sell your house and borrow all you could from loan sharks to play ?
If you make about US$50 per minute anything less is hardly worth walking across a room to fetch. If you earn about US$1 per week, even US$1 (a week's money) has to be worth considerable efforts.
Also add in the envy factor; the rich students will almost certainly know that the other person is making a relative killing if they are only offered a few dollars. As things even out the envy factor might be considerably less of an issue, thus the reward will slide up the scale.
... but not in a good way.
Funnily enough I was having this tenor of conservation with a group of friends over Christmas, and we came up with some interesting conclusions.
The behaviour of most individuals varies quite considerably (obviously!) and is driven by nature and nurture in differing amounts. The outcome of this is, generally, to make societies varied, and in the main interesting places.
But, there is a (very) small minority of individuals whose actions have a huge impact on society. This comes from their totally focussed sense of self-importance to the exclusion of everything else. Call them psychopaths or sociopaths (I prefer the more old-fashioned, but descriptive "evil") but it is these individuals that shape societies, and not for the better.
Most people never meet more than one or two of these people in a lifetime (I'm not talking about your arrogant boss!) but their actions shape people's lives, profoundly.
All other behavioural considerations are probably "in the noise".
"This comes from their totally focussed sense of self-importance to the exclusion of everything else. Call them psychopaths or sociopaths (I prefer the more old-fashioned, but descriptive "evil") but it is these individuals that shape societies, and not for the better."
First of all the self importance thing is narcissism which may or may not be a part of a psychopaths make-up just as it may or may not be part of a non psychopath. Second you seem to conflate psychopath with evil. This is not only a mistake but betrays a complete lack of knowledge. We are all on a scale between psychopath and highly emotional. That is all it is. How badly does emotion cloud your ability to think? In a situation requiring thought, reason or action you will likely want someone more psychopathic (someone who is not a blubbering mess or paralysed by overwhelming emotion).
Oddly enough from doctor to soldier to the many careers and general interactions in life there are plenty of instances where the psychopath has been a positive contribution to society. Maybe you attribute evil to what you do not understand. Maybe because they are a little different to you. Maybe your emotions are making you hostile to society.
"Second you seem to conflate psychopath with evil. "
To clarify; I'm referring to the use of the terms in common parlance, rather than the outcome of psychometric testing. I think we know evil when we see it. Was Pol Pot evil or psychopathic? Probably both.
What's the problem with changing 2? It's the interpretation of the results that matter - this demonstrates that the results coming from the rich kids of America are not generalisable in other situations. If you then want to discover if it's the poor or the non-market bit that is important, you need to do further investigation.
First off, they're not changing two: level of income, market type, yes, but also cultural environment, etc.
Second, perhaps the authors of the paper conclude nothing more than that the results are non-generalizable, but that's certainly not Worstall's conclusion:
So it turns out that the inhabitants of poor and non-market economies are much more like that entirely rational homo economicus than we luxuriating in the riches of a capitalist and free marketish one may be – which was a bit of a shock to be quite frank.
Note that Worstall here is concluding not that they are simply more likely to accept because of some unknown factor (such as, possibly, the relative economic value of $1), but specifically because they are more economically rational.
I'm not surprising that it was a bit of a shock, as it doesn't follow from the limited nature of the study. The study only shows that the threshold of "fairness" varies by environment, which should only come as a shock to someone who has no concept of social variety.
... A split that's worse than 70/30 tends to get rejected. People will give up $30 of free money in order to punish someone they believe is treating them unfairly....We've discovered altruism in humans, not economic rationality...
What you've discovered is a hatred of UNFAIRNESS.
The experiment simply presents an unfair division to a subject, and asks them if they want to accept it. Unsurprisingly, people say no when the advantage to them is small, but can be persuaded if the advantage is high enough.
If, for instance I was offered £1m under similar circumstances, I wouldn't turn it down, even if the offerer was going to get £99m. I would rationalise my unhappiness away.
You see the same sort of thing going on when dictators make people into concentration camp guards and mass murders by threatening them with death if they don't agree. Effectively, they are being offered their life as part of an unfair bargain...
this brings to mind one of the most unfair bargaining techniques ever invented . . . "i'll trade you time 'outside' for information (bogus or not) regarding other people's criminal activities"
i can't think of anything more valuable to anyone, with the exception of life itself, than a reduced sentence for a crime based on getting the conviction of another person for a worse crime . . . seems like it just might lead to some prevarication on the part of the accused.
[not particularly altruistic behavior on the part of either party involved in the transaction]
There's one feature you see in poor societies that this, otherwise very interesting piece, doesn't explain. That is the extreme hospitality shown to passing strangers in poor societies, often in circumstances where the chances of reciprocality are very limited. This kindness is seldom or never matched among westerners, but is a happy memory from travels in the Middle East, Iran and the Indian subcontinent.
Interesting, but could it be explained by the somewhat rare but relative worth of the reciprocity? I mean, as a Westerner I may be unlikely statistically to offer anything in return but should I do so then it is likely to be of relatively high worth. Especially on the subcontinent - a dollar to me being nothing but a days wage to the recipient.
Hey Martin. My take on this is that the perceived value of that altruism is higher over there.
I've lived in India for a little while now, and because I'm white a lot of people are super-concerned to make sure I'm safe when doing things that would be routine in the western world (booking a cab, for eg.). Those things really aren't that scary (though often frustrating) but those people (including strangers) perceive that if they don't help there's a high risk of some grave ill coming upon me and so, if we're using the brutally selfish assumption about altruism, it feels better to help me and worse not to.
Community relationships here are absurdly important for the same reason. Where the state is perceived to be unreliable people are much more generous to those they feel empathy toward because the possible consequences of not helping feel much graver.
Tim, you may have this one the wrong way around.
Many poorer societies (e.g. African, Latin American) are relationship- and group-oriented rather than task-oriented and individualistic.
In that kind of society there is an expectation that those who have an income will share it with less fortunate family or group members. That is surely a higher degree of altruism than in the "developed" world!
If the concept of "cutting off one's nose to spite your own face" is alient to the culture, it becomes perfectly acceptable to accept $1, because then another person is benefiting - and if you fall on hard times you know where to find someone who has a bit of money!
Something I've observed but don't have the background to draw any conclusions from, is that these "warm south" cultures are quite enterpreneurial - lots of people making or selling things on a small scale. Not efficient, but if you live somewhere with plenty of sunshine you don't need to be efficient...
Back to the point - the $99/$1 split makes perfect sense in a "we" culture where it is not acceptable in a "me" culture. Perhaps the comparison is telling us more about negotiation styles than economics?
Whilst I agree with 90% of what Mark Honman has written, he needs to be a little more cautious with his idea that plenty of sunshine means that one does not have to be efficient. If you live in a desert you are overburdened with sunshine and you need to be very efficient to survive. I have visited many deserts and in every case I have been told how lucky I am to live in a country that has lots of rain (the UK).
My experience, gained from visiting the Altoplano in Peru and Bolivia, and visiting Botswana and Namibia is that different cultures value different things. We westerners measure our wealth in momentary terms. Poor peoples measure their wealth in the richness of their social connections.
Wealthy western people flaunt their high status by 'Conspicuous Consumption. Other cultures flaunt their social wealth by 'Conspicuous Welcomeness'.
The idea that you are unable to reciprocate is down to lack of planning and foresight on your part. When you travel you should make provision for bringing home souvenirs that you purchase from local people. Well, before you leave buy stuff that they might value. Badges, postcards, pencils, notebooks, whatever. Particularly get stuff for children and perhaps visit a local school.
> If you live in a desert you are overburdened with sunshine and you need to be very efficient to survive.
Pierre - you are right! I'm from Zululand, so associate sunshine with greenery and abundant tropical fruit - didn't think of deserts at all.
That said, the Sudanese are also very hospitable...
That's kind of true, but not exactly. Conspicuous consumption is if anything worse in the developing world. Gated communities with armed guards surrounded by slums are not at all uncommon (Antilla, the 27 storey tower block that a family of 5 and their 600 servants live in in prime Mumbai is anecdotal, but there are many lesser examples).
Asian countries with huge wealth disparities are the big growth markets for most super-luxury retaillers.
Those people are the opposite of generous (they undertake philanthropy, but very much in forms that maximise the 'look at me, look at me, look at me' value per dollar), and they funnel money into a political status quo that maintains their elite status.
The rest, from the medium wealthy downwards to the very poorest are exceptionally generous to outsiders (and often unduly worried for your safety just by being there) but there's a social hierarchy that is very strict and often much less generous to locals who fall through the gaps (and particularly women and children). There's a tolerance for abject poverty that just wouldn't exist in the west simply because there's a sense of futility that anything can be done about it.
"Two students .. are given $100.
The first is allowed to split the money any way they wish and offer, say, $40 to the second. The second student then decides whether to accept the offer. If it's rejected, then neither student gets anything, if it's accepted, they get to keep the $60 and $40"
So what happens to the $100 given to the 2nd student?
There is $100 up for grabs
One student decides on the split
The other accepts or declines
If acceptance then both walk away with some money
If decline then both get nothing
It appears that 70/30 in favour of the decider is a deal breaker,
60/40 in favour of the decider is a deal maker.
The question appears to be 'Why?'
This has nothing to do with Altruism but percieved risk/reward ratios (this is nurtured/learned behaviour)
Because the experiment is a little more complex.
Charles has paid $100,000 to go to Harvard to do economics and in front of all his class mates who he will be working with for the rest of his career and in front of the prof who is grading his assignments and writing the reference letters to the merchant bank who will hire him ...... is offered $100 (of imaginary pretend money) .
Wouldn't you need to adjust the amounts to fit the economic condition of the subjects? If the total pot is one fifth of my yearly earnings (50 working days, since those of us in rich countries don't work 7 days a week) I might be more willing to accept a 90/10 split than I would if the pot is only $100. I'll happily give up $10 or $20 to say a big F U to the other guy who got too greedy.
I'd still be pissed at the guy grabbing 90%, but getting the equivalent of a week's pay for taking part in a little experiment is nothing to sneeze at. Especially if it is in cash so I won't have to pay taxes on it :) I'd probably offer the other guy less with that large a pot than I would if it was only $100, because I know like me he'd be more willing to take it. Not sure I'd do 90%, but I could see 75/25.
It's an interesting point, as it affects both sides of the equation.
I'm a pretty fair person, I usually (but not always) repress my selfish impulses - even when no-one's looking.
So in the standard experiment with £100, I'd offer a 50/50 split. It's "fair" (and so the right thing to do), we'll almost certainly both get paid this way, and people are watching. All good reasons to play nice. And the offer of an extra £10-£20 isn't very much incentive to risk getting nothing, or to look bad in front of other people. As well as the possible twinge of conscience for being "bad".
However if I'm given £1 million to split, it's rather different. Now a 60/40 split is giving me an extra £100,000! That buys a house (in some places), and is 4 years UK median wage. Much more of a dilemma about being "nice". But then there's also a much higher risk if the other person sees themselves being treated unfairly, and rejects the deal. Although they too have more incentive to say yes.
"in poor, pretty much non-market societies, a $99 to $1 split would be accepted."
Can you offer a citation for this? Because I'm not finding one. In fact, running slightly in the opposite direction, offerers in Mongolia tend to offer a more even split.
I wonder whether the difference between the 70/30 "no-go" and the 60/40 "grudging acceptance" is that if the non-decider is given more less than 1/3 of the pot, the decider is getting (from their point of view) "more than twice what I'm getting!" That's the kind of mental arithmetic that's easy to do on the spot, whereas in the 60/40 split, the mental shorthand might be more like "a bit more than what I'm getting", with "a bit more" prompting a much lower feeling of unfairness than "more than twice what I get", even though the difference between the two amounts is actually quite small.
"Punishment [n] the infliction or imposition of a penalty as retribution for an offence"
How about changing the parameters of the experiment so that, instead of just saying "If person 2 rejects the split neither of you get anything", you say "If person 2 rejects the split, neither of you gets anything and you *BOTH* have the amount of money you would have got taken away from you"?
That *would* be a punishment and, I think, would rather change the results since the split would probably be much closer to 50/50 (If person 2 says "give me more or I reject it", person 1 says "fine, you'll be losing more than me...")
This a bit of a bugbear of mine - the suggestion that nature 'makes you fast/slow, bright/dumb, altruistic/selfish' - or nurture does the trick instead.
But all that nature (genetics, basically) can do is offer a set of capacities to the organism. It can't guarantee that those capacities will be fulfilled. Someone might have the genes to give Bolt a run for his money, but if he grows up in a sedentary, car-driving, sport-averse society, that capacity will be 'nurtured' out of him. On the other hand, someone who shares a habitat with hungry cheetahs, is likely to fulfil every ounce of capacity (if he survives).
Altruism is a social interaction - so it's likely to follow social rules, dependent on the society in question.
A definition of "fair" that always seems to work is a cake that is divided between two people. The rule is that the cutter picks their piece of cake after the second person has chosen.
In a non 50:50 split there may be altruism shown by the first picker, so that the cutter benefits if they have not been "fair", but not in most cases (unless the chooser is on on a diet, or doesn't really like cake).
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