Mark D. White
Our dear friend Deirdre McCloskey is featured in today's Cultural Conversation in the Wall Street Journal, which briskly covers some of her background, laments the separation of ethics and economics after the latter became intensely mathematical, and covers key points from her recent books, The Bourgeois Virtues: Ethics for an Age of Commerce
The current AER (December 2011) has an interesting article by Steffen Andersen, Seda Ertaç, Uri Gneezy, Moshe Hoffman, and John A. List entitled, "Stakes Matter in Ultimatum Games."
The authors set up high-stakes Ultimatum Games in eight villages in northeast India. The stakes varied from 20 to 20,000 rupees. At the time of the study, 20,000 rupees equaled about $410, or 200 days of labor at prevailing wages). That's a lot of cash!
One of the problems with determining if stakes matter to choice outcomes is that historically there are very few low-ball offers. To try to artificially manufacture more low-ball offers, the authors added this explicit bit of framing to the instructions for proposers:
Notice that if the responder's goal is to earn as much money as possible from the experiment, he/she should accept any offer that gives him/her positive earnings, no matter how low. This is because the alternative is to reject, in which case he/she will not receive any earnings. If the responder is expected to behave in this way and accept any positive offer, a proposer should offer the minimum possible amount to the responder in order to leave the experiment with as much money as possible. That is, if the responder that you are matched with aims to earn as much money as possible, he/ she should accept any offer that is greater than zero. Given this, making the offer that gives the lowest possible earnings to the responder will allow you to leave the experiment with as much money possible. (p. 3430)
The authors point out: "This frame informs proposers that the rational decision, if both parties aim to maximize earnings, is to offer the lowest possible amount" (Ibid., emphasis added).
Note that two things are going on here. The first is that a key insight of Ultimatum Games that in many cases people do NOT consider "gaining the most money" to be most important objective. We know this because they routinely chose to punish anonymous others at a cost to themselves. But including these instructions creates a not-so-subtle framing that the objective "should" be to earn as much money as possible.
The second point is that the authors suggest that people "ought" to make "rational" decisions, that is use logic to calculate gains and losses using a consequentialist ethical approach. But people may in fact use their moral sentiments or feelings to make such decisions. By framing both the method and the goal, the authors attempt to get an anomalous result and they succeed: Their main finding is that the demand curve for justice is negatively sloped—if sacrifice becomes more costly, there will be less sacrifice.
This study is important because it demonstrates that price does matter (an important criticism of virtue ethics that we need to consider) and second, because it shows the powerful effects of framing. This is a cautionary note to all econ teachers who claim they are only doing "science" when they frame the economic question and its method (see previous post on ethical principles for the classroom).
David Brooks presents an account of Newt Gingrich's flirtation with government economic policies in "The Gingrich Tragedy." Turns out Gingrich favors interventionist industrial policies, linking them in his own mind to the nationalistic achievements of Alexander Hamilton and Teddy Roosevelt.
Gingrich has an active imagination—too active if that implies thinking up new things for government to do—like setting up a lunar mining colony and building giant mirrors in space to light up the night sky. As Brooks notes, "He has no Hayekian modesty to restrain his faith in statist endeavor."
Nor does Gingrich worry too much about facts. His latest Civil War novel apparently writes out of Virginia's history the massacre of black Union soldiers at the Petersburg Battle of the Crater (see Kevin M. Levin in The Atlantic, "How Newt's New Novel Plays Politics With the Past"). If truth doesn't fit the cliché you're pitching of American exceptionalism, well… make up some new facts! [A writer of historical novels has different moral obligations than a writer of alternative history. Gingrich has apparently blended the genres.]
Newt's boyish enthusiasm and willingness to think grandly can be admired, if these qualities were tempered with other virtues. But Brooks ultimately rejects Gingrich's presidential candidacy not for its policies but for the man who represents them. Brooks concludes:
"But how you believe something is as important as what you believe. It doesn't matter if a person shares your overall philosophy. If that person doesn't have the right temperament and character, stay away."
Mark D. White
An article in the latest issue of Politics, Philosophy & Economics (10/4, November 2011), discusses the contrast between higher and lower virtues in Adam Smith's thought, in particular concerning the market, and links this to modern thinking in economics and psychology on motivation crowding out:
"Higher and Lower Virtues in Commerical Society: Adam Smith and motivation crowding out"
Lisa Herzog
Abstract: Motivation crowding out can lead to a reduction of ‘higher’ virtues, such as altruism or public spirit, in market contexts. This article discusses the role of virtue in the moral and economic theory of Adam Smith. It argues that because Smith’s account of commercial society is based on ‘lower’ virtue, ‘higher’ virtue has a precarious place in it; this phenomenon is structurally similar to motivation crowding out. The article analyzes and systematizes the ways in which Smith builds on ‘contrivances of nature’ in order to solve the problems of limited self-command and limited knowledge. As recent research has shown, a clear separation of different social spheres can help to reduce the risk of motivation crowding out and preserve a place for ‘higher virtue’ in commercial society. The conclusion reflects on the performative power of economics, arguing that the one-sided focus on models of ‘economic man’ should be embedded in a larger context.
Mark D. White
The Economist published a short note recently summarizing the results of a forthcoming paper in Cognition that reports that experiment participants "who indicated greater endorsement of utilitarian solutions had higher scores on measures of Psychopathy, machiavellianism, and life meaninglessness" (from the paper abstract). The experimenters presented subjects with variants of trolley dilemmas--either watch five passengers in a runaway trolley car die, or push one bystander onto the tracks to his death to stop the car--and also asked questions to track their psychological dispositions, finding a strong link between the antisocial tendencies and willingness to kill the bystander to save the trolley passengers.
I'm not going to address the secondhand claims by the authors regarding the "characterization of non-utilitarian moral decisions as errors of judgment," which are inevitably and necessarily made from a utilitarian point-of-view; it's the same problem as with Kaplow and Shavell's Fairness versus Welfare
First, the trolley problem is too nuanced to make a quick-and-easy judgment regarding deontology and utilitarianism (as the authors acknowledge in the discussion section of the paper, albeit for different reasons). True, simple utilitarianism would demand that, all else aside, you kill the one person to save the five. But a deontological outlook--which is much less well-defined--would not necessarily forbid this, as deontology is not categorically opposed to consequentialist considerations. Rather than simply comparing one to five and making a decision based on the equally valid interests of all the person involved (as a utilitarian would), a deontologist would more likely think about the moral status of the individuals in the case, considering any factors related to responsibility or desert in that particular situation. After ruling out such concerns, a deontologist--even a Kantian--may very well kill the one to save the five (for instance, by judging the duty to save five people to have a "stronger ground of obligation" than the duty not to kill the one, according to Kant's only guidance in such cases of conflicting obligations). The brute utilitarian would regard the decision as the implication of a simple comparison (1<5), while the deontologist would more likely use judgment based on the rights of the persons involved--even if they both come to the same result.
Furthermore, the trolley dilemma also wraps up in it the relative moral status of acts and omissions (itself tied into the deontology vs. utilitarianism debate), as well as issues of identity and virtue (am I the kind of person who can take a life, even to save others?), which themselves have greater implications if taking the one life leads to a change of attitudes toward future moral dilemmas. In other words, the trolley problem should not be used as a moral barometer distinguishing between utilitarianism and deontology. This becomes particularly clear when one considers the different reactions people have to the surgeon problem, in which a surgeon considers harvesting organs from his healthy colleague to save five patients who will die without them--very few endorse this action, even those who would push the bystander in front of the trolley, but it can be difficult to parse out the salient differences in the two situations. (Several variants of these problems, including both the trolley and surgeon dilemmas, were used in the study, apparently with no distinctions made.)
As any regular readers of my work (either on this blog or in print) know, I'm no fan of utilitarianism. But I would never go as far as to say its adherents and practitioners are psychopaths. Utilitarians obviously do care about the well-being of people--my problem is that they are concerned with aggregate well-being that ignores the distinctions between persons (as Rawls said so well) and the inherent dignity and rights of each (as Kant wrote). And that is problematic: regarding persons as nothing but contributors to the collective good implies that each person has no independent, distinct value. And if so, why care about people's interests at all? To my mind, the utilitarian's disregard for the dignity of the individual is self-defeating, since it eliminates any imperative to consider persons' well-being at all (much less to consider it equally with all others').
Of course, the popular press coverage leaves out all of the nuance and qualification present in the academic article, but that is par for the course. The study's authors recognize, of course, that all the "psychopathic" respondents who chose the "utilitarian solution" are not necessarily well-read in Bentham or Mill, nor did they necessarily use utilitarian thinking at all. Nonetheless, the results are suggestive, and if it leads us to look at the differences between utilitarians and deontologists in a different way, it's all good--and right!
Mark D. White
As this New York Times article celebrates, the U.S. military's "don't ask don't tell" policy is officially over. Military personnel who are gay or lesbian no longer have to suppress their identity and compromise their cherished virtue of honesty to serve their country.
(H/T: Erica Greider.)
Jonathan B. Wight
Paul Zak, James Otteson and I participated on a panel yesterday at the first annual National Conference on Teaching Economics, sponsored by the AEA and held at Stanford. The keynote speaker was Vernon Smith talking about ... Adam Smith and ethics!
Our session built on Vernon's paper to flesh out the arguments about why economics instructors needed to treat complex human behavior rather than stereotypes of max U.
At the conference, Paul Zak discussed the physiological basis for social networking. Not coincidentally, I'm now in San Francisco with social marketing guru Darby Williams (@DarbyWill) who leverages social media to drive engagement and revenues for businesses. "People can sniff out fakes," Williams agreed, "even on line.
Transparency is the name of the game." Adam Smith would have endorsed this view. Williams continued:
If you are too positive about a product, people will think you're connected with the company. I help brands be authentic in how they communicate with customers and the world so they are believed and allowed into the "conversation." The conversation is already happening in the social world between consumers, and brands can become part of this conversation only if they are truly authentic. To be authentic is to not only be genuine it is to be willing to accept criticism and respond to it honestly.
In other words, it is to cultivate a moral conscience and the self control to live it through.
Mark D. White
I was very excited today to receive the new book from Julia Annas (and Oxford University Press), Intelligent Virtue, in the mail:
Intelligent Virtue presents a distinctive new account of virtue and happiness as central ethical ideas. Annas argues that exercising a virtue involves practical reasoning of a kind which can illuminatingly be compared to the kind of reasoning we find in someone exercising a practical skill. Rather than asking at the start how virtues relate to rules, principles, maximizing, or a final end, we should look at the way in which the acquisition and exercise of virtue can be seen to be in many ways like the acquisition and exercise of more mundane activities, such as farming, building or playing the piano. This helps us to see virtue as part of an agent's happiness or flourishing, and as constituting (wholly, or in part) that happiness. We are offered a better understanding of the relation between virtue as an ideal and virtue in everyday life, and the relation between being virtuous and doing the right thing.
The argument that economic development is captive to culture is well-known, made famous by Max Weber in The Protestant Ethic and the Spirit of Capitalism (1904) and in modern times by Lawrence E. Harrison in Underdevelopment Is a State of Mind: The Latin American Case (1985) and also by Lawrence E. Harrison and Samuel P. Huntington in Culture Matters: How Values Shape Human Progress (2001).
These arguments have been debated and often ridiculed by other economists, who argue that people merely respond to incentives, and that institutions create incentives. Can people choose some of their cultural institutions? Native language, for example, is instinctively absorbed at such an early age that there is nothing conscious or chosen about it.
Oscar Arias, the two-time former President of Costa Rica and winner of the Nobel Peace Prize in 1987, now enters the fray in the Jan/Feb issue of Foreign Affairs 90 (1)(2011) with an article, “Culture Matters: The Real Obstacles to Latin American Development.”
The fault, dear citizens, is ourselves according to Arias. Using the first person, he addresses the key issues that he feels hold back Latin development: (a) a conservative mindset that protects the status quo of power and wealth; (b) a fundamental lack of trust in others; and (c) a fragile commitment to democracy.
For those who may not know, Arias’ Costa Rica has achieved an admirable record of democracy for reasons that may have more to do with culture than enlightenment musings (see Harrison’s first book above). Arias argues:
No development project can prosper in a place where suspicion reigns, the success of others is viewed with misgiving, and creativity and drive are met with wariness. (p. 4)
Latins are primarily wary of their own governments that represent entrenched interests. People flagrantly abuse the laws, with no repercussions. Arias cites The World Values Survey, which finds that only 16 percent of those people surveyed in Latin America say that “most people can be trusted” – and this number is just three percent in Brazil. The impact on entrepreneurship is predictable but tragic. Consequently, Arias notes:
Latin Americans doubt the true intentions of all those who cross their paths, from politicians to friends.
For economic development to succeed, Latin Americans must be able to trust their states to act reasonably and predictably. They must be able to anticipate the legal consequences of their actions. And they must be able to trust that others, too, will act in accordance with the rules of the game. (p. 5)
Colleges have been pushing students to study abroad as a way to broaden their parochial horizons. While there is an academic purpose (to understand the world) there is also a heavy dose of moral idealism lurking in the background. Someone who has traveled the world is less likely to be morally absolute, more likely to take the view “When in Rome, do as the Romans…."
Thanks to Brent Butgereit, a student attending a recent APEE conference, I received this lovely quote from The Wealth of Nations (V.1.164). Smith takes the view that sending young people off – unsupervised – during highly formative years will generally result in disaster:
In England it becomes every day more and more the custom to send young people to travel in foreign countries immediately upon their leaving school, and without sending them to any university. Our young people, it is said, generally return home much improved by their travels. A young man who goes abroad at seventeen or eighteen, and returns home at one and twenty, returns three or four years older than he was when he went abroad; and at that age it is very difficult not to improve a good deal in three or four years. In the course of his travels he generally acquires some knowledge of one or two foreign languages; a knowledge, however, which is seldom sufficient to enable him either to speak or write them with propriety. In other respects he commonly returns home more conceited, more unprincipled, more dissipated, and more incapable of any serious application either to study or to business than he could well have become in so short a time had he lived at home. By travelling so very young, by spending in the most frivolous dissipation the most precious years of his life, at a distance from the inspection and control of his parents and relations, every useful habit which the earlier parts of his education might have had some tendency to form in him, instead of being riveted and confirmed, is almost necessarily either weakened or effaced. Nothing but the discredit into which the universities are allowing themselves to fall could ever have brought into repute so very absurd a practice as that of travelling at this early period of life. By sending his son abroad, a father delivers himself at least for some time, from so disagreeable an object as that of a son unemployed, neglected, and going to ruin before his eyes. (Wealth of Nations V.1.164)
My experience is that many students who study abroad do come back with positive life-changing experiences; study abroad achieves its objectives on many levels. Of course, there are exceptions. But for those exceptions – students seeking unsupervised mayhem overseas – wouldn’t the outcome be the same if they had stayed behind? Students are also largely unsupervised these days when they stay at the home university, so Smith would likely be equally critical of that.
Any thoughts?