Physicist, Startup Founder, Blogger, Dad

Wednesday, January 25, 2012

The Moral Foundation of Economic Behavior

I found this econtalk podcast very interesting. The comments are also good.

We Americans are very lucky to have inherited a high trust society from our forebears. How much longer will it last?

Econtalk: David Rose of the University of Missouri, St. Louis and the author of The Moral Foundation of Economic Behavior talks with EconTalk host Russ Roberts about the book and the role morality plays in prosperity. Rose argues that morality plays a crucial role in prosperity and economic development. Knowing that the people you trade with have a principled aversion to exploiting opportunities for cheating in dealing with others allows economic actors to trust one another. That in turn allows for the widespread specialization and interaction through markets with strangers that creates prosperity. In this conversation, Rose explores the nature of the principles that work best to engender trust. The conversation closes with a discussion of the current trend in morality in America and the implications for trust and prosperity.

See also this Wired article: The Neurobiology of Integrity.

In short, when people didn’t sell out their principles, it wasn’t because the price wasn’t right. It just seemed wrong. “There’s one bucket of things that are utilitarian, and another bucket of categorical things,” Berns said. “If it’s a sacred value to you, then you can’t even conceive of it in a cost-benefit framework.” ...

Whether sacred principles offer utilitarian benefits over long periods of time — many years, perhaps many generations, and at population-wide as well as individual scales — is beyond the current study design, but Berns suspects that one of their benefits is simplicity.

“My hypothesis about the Ten Commandments is that they exist because they’re too hard to think about on a cost-benefit basis,” he said. “It’s far easier to have a rule saying, ‘Thou shalt not commit adultery.’ It simplifies decisionmaking.”


Ju Hyung Ahn said...

This seems to affirm my stance that religion, moral codes, media, etc. exist to better control the masses rather than for intellectuals.  Cognitive elites are better fit to form their own guidelines in life than following age-old maxims.  Many historical figures, such as Napoleon I, were affiliated with church to rule rather than to follow it.  I wonder how many politicians today practice the same behavior.

Greg Bothun said...

Well there is a very very large issue here.  I teach about it when I do Environmental Stuff.  I will be brief here.
The concept of the "Sacred" is quite important and its a very old concept.  In principle, sacred is orthogonal to
economics.  The moral dimension of economics may be an attempt to merge these two but my feeling is that
the typical person/culture is not wise enough or patient enough to see the value of this.   I believe our coming
resource scarcity is a direct result of the failure to embrace the concept of the sacred on a planet wide scale.

silkop said...

Trust is all about sacrificing short term for longer term profits. Cooperative, honest behaviors are thus dictated by common sense in expectation of reciprocity. And no, you don't need any "commandments" and "sacred books" to realize that.

David Cohlton Harold Eaton said...

Hey Steve,

Are you still looking for American volunteers for the BGI intelligence study? I have several friends who I think will qualify.

steve hsu said...

Yes. Tell them to volunteer here: https://www.cog-genomics.org/volunteer/

steve hsu said...

This kind of (self-interested) trust is discussed specifically in the podcast. Rose claims more is necessary for the most sophisticated forms of economic organization (e.g., highly efficient complex firms).

botti said...

Peter Frost had some posts in March last year about the importance of trust for market economies. He mentions some of the work of Francis Fukuyama and Greg Clark (I see Pinker was quite skeptical of Clark's arguments in "The Better Angels of Our Nature").


"To varying degrees, State societies eventually reversed the original intent of law—by creating universal rules that apply equally to everyone. This process began with the earliest law codes. The very act of putting a social norm into writing entailed some simplification. Ancient legal systems accepted that laws should vary on a “who whom” basis, but the different categories of “who” and “whom” were necessarily limited.This process advanced further with certain empires, notably the Roman Empire, which sought not merely to conquer other peoples but also to assimilate them, eventually giving them citizenship. But it was the rise of Christianity, and its establishment as a State religion, that fundamentally changed things. The law was no longer the prerogative of a founding group whose claim to power ultimately rested on “might is right.” It became a moral principle that applied equally to everyone, even the Emperor."


Steve Sailer said...

Good point. 

LondonYoung said...

Beware the issue of "coming resource scarcity".  Those of us who went to grade school in the 1970's were endlessly told how the world's oil supplies would be exhausted by the year 2000.  I'm not trying to say it is incorrect to warn or advocate action, just beware of burn-out from the boy who cried wolf. 

MrJones said...

Interesting. The older people i grew up with said the Kant thing "what if everyone did that?"

steve hsu said...

I teach my kids the Golden Rule ...

MrJones said...

Yeah, it's strange thinking back why they said that instead of the golden rule.

ohwilleke said...

Case studies of developing world environmental protection have found that places preserved because they are "sacred" (e.g. sacred groves) are more successfully protected environmentally than those that are protected for utilitarian reasons (e.g. wilderness preservation areas).

BernardBrandt said...

In the Carboniferous Epoch, they promised abundance for all,
By robbing selected Peter to pay for collective Paul.
But though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said, "If you don't work, you will die."

In short, the story was old when Kipling told it: there is a natural and moral law that undergirds our lives, and we ignore that law at our peril.

Blog Archive