For all its intellectual power and its empirical success as a creator of wealth, free-market economics rests on a fallacy, which economists have politely agreed among themselves to overlook. This is the belief that people apply rational calculations to economic decisions, ruling their lives by economic models. Of course, economists know that the world doesn't actually work this way; if it did, you wouldn't need a financial adviser to remind you to save for retirement. But until recently the anomalies were chalked up to the pernicious influence of emotions, emanations from the primitive regions of the brain, a kind of mental noise interfering with the pure, rational expression of economic self-interest.
This looks promising. Could economists be rediscovering how culture, and not only emotion, plays a role in checking economic self-interest? Alas, as reported by the article, not really:
The new paradigm sweeping the field, under the rubric of "behavioral economics," holds that studying what people actually do is at least as valuable as deriving equations for what they should do. And when you look at human behavior, you discover, as Camerer and his collaborator George Loewenstein of Carnegie Mellon have written, that "the Platonic metaphor of the mind as a charioteer driving twin horses of reason and emotion is on the right track?except that cognition is a smart pony, and emotion a big elephant." The fMRI machine enables researchers in the emerging field of neuro-economics to investigate the interplay of fear, anger, greed and altruism that are activated each time we touch that most intimate of our possessions, our wallets.
Altruism, in this case a stand-in for the virtue of charity, is lumped in with emotions and vices that are called emotions.
Economists have many ways of demonstrating the irrationality of their favorite experimental animal, Homo sapiens. One is the "ultimatum game," which involves two subjects?researchers generally recruit undergraduates, but if you're doing this at home, feel free to use your own kids. Subject A gets 10 dollar bills. He can choose to give any number of them to subject B, who can accept or reject the offer. If she accepts, they split the money as A proposed; if she rejects A's offer, both get nothing. As predicted by the theories of mathematician John Nash (subject of the movie "A Beautiful Mind"), A makes the most money by offering one dollar to B, keeping nine for himself, and B should accept it, because one dollar is better than none.
But if you ignore the equations and focus on how people actually behave, you see something different, says Jonathan D. Cohen, director of the Center for the Study of Brain, Mind and Behavior at Princeton. People playing B who receive only one or two dollars overwhelmingly reject the offer. Economists have no better explanation than simple spite over feeling shortchanged. This becomes clear when people play the same game against a computer. They tend to accept whatever they're offered, because why feel insulted by a machine? By the same token, most normal people playing A offer something close to an even split, averaging about $4. The only category of people who consistently play as game theory dictates, offering the minimum possible amount, are those who don't take into account the feelings of the other player. They are autistics.
Well, we're back to "feelings, nothing but feelings" again. Would I "feel insulted" if I were only offered a dollar when my would-be benefactor has a largesse of $10? Perhaps. I would more be concerned with the state of his soul, however, a charitable concern that emotivists will simply lump in with anger, hate, and fear. Offering the bare minimum necessary to make a buck isn't the way to habituate oneself to the charitable life. Such stinginess belies a disregard for one's fellow man, but even more, for one's own salvation.
And speaking of disregard for one's fellows, I wonder why these scientists haven't gone the Dawkins/Randian route and described every action as self-interested? By a certain definition of self-interest, it's in everyone's interest to have everyone else, strangers included, be cheerful givers. In a cultural climate of hospitality, everyone will have somebody to lean on when they need a hand. Personal habits displayed in game-theory games are likely reflective of habits in the game of life, after all, and perhaps that intuition is what provokes "insulted feelings" and a refusal to play little games with someone who will likely abandon you on the stage of the world.
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