Adam Smith, the father of modern economics, is best known for the idea in his 1776 The Wealth of Nations that self-interested behavior leads to the best outcome for society as if through the working of an invisible hand. But Smith was an intellectual rock star before The Wealth of Nations. His 1759 book The Theory of Moral Sentiments catapulted him to fame by presenting what philosophers and theologians had always wanted: An explanation of good and evil.

Morality, Smith said, came from "fellow feeling" or our sympathy for others. We are, Smith argued, discomfited by seeing others in distress. This motivates us to engage in costly but socially beneficial acts like helping those in need. He called this the "healing consolation of mutual sympathy." You know this yourself: it is uncomfortable to see someone suffer physically or emotionally. And we ourselves suffer if our actions have led to another's suffering. Today we would call this empathy (a word coined in 1858 by German philosopher Rudolf Lotze (1817-1881) and therefore unavailable to Smith). We are undeniably emotionally connected to others. But why?

Recent research at the Center for Neuroeconomics Studies (CNS) has not only found that moral sentiments are real and measurable, but we have been able to manipulate these mechanisms in human brains to cause people to be moral in the lab. To understand how moral sentiments operate, I developed the Empathy-Generosity-Punishment (EGP) mathematical model. Based on principles in the Theory of Moral Sentiments, the model shows that empathy varies according to the distress one observes in others and this can motivate costly helping behaviors, including generosity with resources. The model predicts that generosity is more likely when we take another's perspective, and when our offer of help to another can be rejected as insufficient.

A body of evidence developed at CNS has demonstrated that the neuroactive hormone oxytocin is the brain basis for empathy and helps us understand another's emotional state. For example, a recent CNS study with graduate student Jorge Barraza found a direct relationship between oxytocin released in blood and the subjective experience of empathy when participants watched an emotionally charged video about a four year old boy with terminal brain cancer (see movie here). Those who were more empathically engaged were more generous when asked to share resources they controlled with a stranger in the lab. Infusing synthetic oxytocin into people caused them (relative to those given a placebo), to be 80% more generous towards a stranger.

While oxytocin amplifies the empathy response in the EGP model, studies at CNS have shown another hormone, testosterone inhibits empathy by blocking the action of oxytocin. When we administered synthetic testosterone to men, we made them less generous when they were asked to split money with a stranger. We also found that these "alpha males" were more likely to punish those who were ungenerous towards them (!). While oxytocin increases empathy, testosterone inhibits it, making men stingy and selfish. By changing participants' neurologic states using oxytocin and testosterone, we showed that we can directly cause them to be virtuous--in these studies, to be more generous.

So which Adam Smith is correct: unbridled self-interest or fellow-feeling? Just as individuals are not fully rational or irrational, neither are we purely other-regarding nor entirely self-interested. We can be both empathic and insensitive, and we constantly seek a balance between these two extremes in responding to different social, economic and institutional contexts we find ourselves in. As much as we say otherwise, our behavior is also influenced by the perceptions of others around us.

Our studies and the EGP model show that the brain circuit that produces moral behaviors depends critically on sufficient childhood nurturing, a stable the legal-political environment, and the social support we receive. Without these, moral behaviors recede. When these elements are present, morality is high and we have shown also shown that happiness increases. This is big news: oxytocin not only connects us to others by increasing our empathy, it also makes us happier! Read the original research here.

Adam Smith was right: we are moral creatures because we are empathic. Research at CNS reveals the science behind Smith's insights: we are virtuous because of the moral molecule, oxytocin. Adam Smith said it best, "Whatever appears to be the proper object of gratitude, appears to deserve reward; and that, in the same manner, whatever appears to be the proper object of resentment, appears to deserve punishment."

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