There Are Free Lunches

Behavioral clues to a happy life.

Telling the Truth, Repeating a Lie

How does learning economics influences the way we behave?

Over the last few years, by chance and on different occasions, I had the opportunity to meet several people who shared a common characteristic: having a mentally retarded brother or syster. Some of these people became my friends, and since the first moments of making their acquaintance, I recognized in all of them a distinctive feature: their willingness to help others. I started wondering why that trait seemed so evident in this group of people, and the most plausible explanation I found was that the permanent exposure to a mentally retarded sibling led to the emergence of unusually frequent patterns of altruistic behavior. According to this explanation I gave myself, these patterns of behavior were probably due to a strong belief, developed during infancy and adolescence, that there are members of the group that are weaker than us, and because of that, it is important to help them, in order to guarantee the whole family's welfare. Later in life, this belief determined the way these people interact with society, and their unusual levels of willingness to cooperate with others.

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Unfortunately, the beliefs about economic motivations taught at business schools, and later disseminated throughout the corporate world, are not as solidary as the ones shared by my new friends. Borrowing from classical economic theory, business schools teach the future business leaders of the world that the economic agent is rational and selfish, and has tastes that never change. Fortunately, although we don't seem to be so consistently logical as economic theory predicts, it seems we can also be much more generous than the models taught to business and economics students expect us to be.

The self-interest model of economic agents has been empirically challenged by several studies. Hornstein et al. (1968) verified that half of the people who found a lost wallet with money in a New York sidewalk decided to return it to the owner. Studies using MRI machines to examine the brain showed that people who observe episodes of unfairness between two strangers were willing to punish the offender, and even more remarkably, that "altruistic punishment" was accompanied by an increased activity of the "pleasure centers" of the brain (Quervain et al., 2004). Self-interest as a main motivation for human behavior is also clearly denied by the studies of intrinsic motivation (Bandura, 1977), which show that paying someone to perform an activity for which the person is intrinsically motivated can diminish the motivation for the task.

Despite the abundant contrary evidence emerging from different disciplines, the self-interest model continues to be the mindframe adopted by the majority of economists to explain economic phenomena. Of course, the self-interest model allows us to explain certain phenomena, such as the increase in demand for a certain good, when the price of a substitute good increases. At the same time it also leaves out the explanatory equation: moral feelings such as sympathy and sense of duty, or emotions such as disappointment and regret. These are factors that, in many cases, can be more powerful than self-interest to predict economic actors' decisions. But, are there other consequences of looking at the world with the personal interest vest-of-forces? It seems so, and they are more perverse and serious than the ones previously mentioned.

Two of the most acclaimed and best-selling books of all time in the management discipline are called Winning and The Art of War. I never read them, but based on their titles, I would guess someone who does is not going to become a more cooperative person; we must not to forget that winning implies losers and war implies losses. Evidences show that believing we live in a world of competitions and wars encourages us to expect the worst of others, and consequently, it will often bring to the surface the worst in us. In a pioneering study, Marwell and Ames (1981) found that graduate students in economics are much more likely to free ride (i.e., not giving private contributions to a public good) than students from other areas. Other studies (Frank, 2009) conclude that the repeated exposure to the self-interest model increases the emergence of egoistic behavior. In a particular experiment, the frequency of cooperation of students with a specialization in economics was lower than the remaining participants, with the difference increasing according to the years of specialization.

Early when I started my career, I worked during three years as a behavioral trainer, giving training sessions to people working in commercial functions in a financial sector. I had to teach selling techniques based on the Neuro-linguistic paradigm, a set of techniques I had never used before. During the first year I felt uncomfortable with what I was doing, mainly because I did not believe in the techniques I was selling. In the second year things got better; the more I learned about those techniques, the more I started seeing them as something useful and practical. In the third year those techniques were heaven on earth; I absolutely worshipped them. Today, almost 10 years later, I still use them and believe their functionality.

People that teach and study economics, are no different than me. What we learn influences our beliefs, and our beliefs determine how we act, and as Daniel Gilbert (1991) pointed out, disbelieving is hard work. Believing in an exclusively self-interested humanity can not only be partial and incomplete, but, even more disturbing, it can also bring to surface the worst in us, contributing to a more selfish social environment. If that is the case, classical economics owes to a society in constant construction, bricks of cooperation and altruism that have been stolen by its biased model of the world. It will never be too late to refund them. Maybe then, we will finally witness an increase in the frequency of streets named after economists.

References
Bandura, A. (1977). Social Learning Theory. New York: General Learning Press.
Gilbert, D. T. (1991). "How mental systems believe." American Psychologist, 46, 107- 119.
Frank, R. (2009). The Economic Naturalist's Field Guide. New York: Basic Books.
Hornstein, H. A., Fisch, E. & Holmes, M. (1968). "Influence of a model's feeling about his behavior and his relevance as a comparison other on observers' helping behavior." Journal of Personality and Social Psychology, 10(3), 222-226.
Marwell, G. & Ames, R. E. (1981). "Economists free ride, does anyone else?" Journal of Public Economics, 15, 295-310.
Quervain, D., Fischbacher, U., Treyer, V., Schellhammer, M., Schnyder, U., Buck, A. & Fehr, E. (2004). "The Neural Basis of Altruistic Punishment." Science, 305, 1254-1258.

Diogo Gonçalves is a Ph.D. candidate in Economic Psychology, Judgment and Decision Making at the Tilburg Institute for Behavioral Economics Research at Tilburg University.

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