[Paleopsych] NYT: Robert Frank: The Theory That Self-Interest Is the Sole Motivator Is Self-Fulfilling

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The New York Times > Business > Economic Scene: The Theory That
Self-Interest Is the Sole Motivator Is Self-Fulfilling
http://www.nytimes.com/2005/02/17/business/17scene.html

    By ROBERT H. FRANK

    A NEW YORKER cartoon depicts a well-heeled, elderly gentleman taking
    his grandson for a walk in the woods. "It's good to know about trees,"
    he tells the boy, before adding, "Just remember, nobody ever made big
    money knowing about trees."

    If the man's advice was not inspired directly by the economist's
    rational-actor model, it could have been. This model assumes that
    people are selfish in the narrow sense. It may be nice to know about
    trees, it acknowledges, but it goes on to caution that the world out
    there is bitterly competitive, and that those who do not pursue their
    own interests ruthlessly are likely to be swept aside by others who
    do.

    To be sure, self-interest is an important human motive, and the
    self-interest model has well-established explanatory power. When
    energy prices rise, for example, people are more likely to buy hybrid
    vehicles and add extra insulation in their attics.

    But some economists go so far as to say that self-interest explains
    virtually all behavior. As Gordon Tullock of the University of Arizona
    has written, for example, "the average human being is about 95 percent
    selfish in the narrow sense of the term." Is he right? Or do we often
    heed social and cultural norms that urge us to set aside self-interest
    in the name of some greater good?

    If the search is for examples that contradict the predictions of
    standard economic models, a good rule of thumb is to start in France.
    During my recent sabbatical in Paris, I encountered many such
    examples, but one in particular stands out. One mid-November
    afternoon, I asked my neighborhood wine merchant if he could recommend
    a good Champagne. It was the week before Thanksgiving, and my wife and
    I had invited a few American friends to our apartment for a turkey
    dinner.

    He just happened to have an excellent one on sale for only 18 euros.
    (Normal price, 24 euros.) Fine, I said, and then asked if he could
    also recommend a bottle of cassis, since I knew some of our guests
    would want a kir royale - a cocktail of cassis and Champagne. In that
    case, he said, I would have no need for the high-quality Champagne,
    because no one would be able to tell the difference once it was mixed
    with cassis. Well, then, what should I buy? He brought back a bottle
    that he said would be just right for the purpose.

    That particular Champagne, however, was not on sale. When he told me
    it was 20 euros per bottle - 2 euros more than the better one - an
    awkward pause ensued. Though I thought I knew the answer, I felt I had
    to ask whether a kir royale would taste worse if made with the better
    Champagne. He assured me it would not. And because I knew that some of
    us would be drinking our Champagne straight, I bought several bottles
    of the better one. He did not protest, but I could feel him reclassify
    me as yet another American barbarian.

    For many French, the logic of the self-interest model is trumped by an
    aesthetic principle about what Champagnes are right for specific
    applications. This particular principle leads to a better outcome over
    all, because it directs the best Champagne to the uses in which
    quality matters most. So even though I personally was better off for
    having ignored the merchant's advice (because I got to drink a better
    Champagne and spent less), at least some of the better Champagne I
    bought was wasted.

    France is, of course, not the only place in which the self-interest
    model's predictions fall short.

    Most Americans, for example, leave tips even after dining in
    restaurants they will never visit again. We take the trouble to vote
    in presidential elections, even though no single individual's vote has
    ever changed the outcome in any state. We make anonymous donations to
    charity. From society's perspective, our willingness to forgo
    self-interest in such instances leads to better outcomes than when we
    all act in a purely selfish manner.

    Does what we believe about human motivation matter? In an experimental
    study of private contributions to a common project, two sociologists
    from the University of Wisconsin, Gerald Marwell and Ruth Ames, found
    that first-year graduate students in economics contributed an average
    of less than half the amount contributed by students from other
    disciplines.

    Other studies have found that repeated exposure to the self-interest
    model makes selfish behavior more likely. In one experiment, for
    example, the cooperation rates of economics majors fell short of those
    of nonmajors, and the difference grew the longer the students had been
    in their respective majors.

    My point is not that my fellow economists are wrong to stress the
    importance of self-interest. But those who insist that it is the only
    important human motive are missing something important. Even more
    troubling, the narrow self-interest model, which encourages us to
    expect the worst in others, often brings out the worst in us as well.

    Perhaps the theories of human behavior embraced by other disciplines
    influence their practitioners in similar ways. A core principle of
    behavioral biology, for example, is that males are far more likely
    than females to engage in "extra-pair copulations." Does teaching this
    model year after year make male biologists more likely to stray?

    Several years ago, I attended a dinner with a group of biologists that
    included a married couple. After describing the research about how
    economics training appears to inhibit cooperation, I asked whether
    anyone had ever done a study of whether males in biology were more
    likely than scholars from other disciplines to be unfaithful to their
    partners. The uncomfortable silence that greeted my question made me
    wonder whether I had stumbled onto a data point relevant for such a
    study.

    But if biologists are like economists in being influenced by their own
    theories, they are different from us in another respect: Their most
    cherished hypothesis is much less likely than ours to be contradicted
    by the French.

    Robert H. Frank is an economist at the Johnson School of Management at
    Cornell University and the author, most recently, of "What Price the
    Moral High Ground?"