Friday, March 26, 2010

Wal-Mart Moral Lessons

John Tierney describes cross cultural studies of sharing and fairness (comparing, for example, hunter-gatherers with midwestern Wal-Mart shoppers) that found:
...the strongest predictor of fairness was the community’s level of “market integration,” - measured by the percentage of the diet that was purchased. The people who got all or most of their food by hunting, fishing, foraging or growing it themselves were less inclined to share a prize equally....Markets don’t work very efficiently if everyone acts selfishly and believes everyone else will do the same...You end up with high transaction costs because you have to have all these protections to cover every loophole. But if you develop norms to be fair and trusting with people beyond your social sphere, that provides enormous economic advantages and allows a society to grow.
The work he is summarizing is by Henrich et al. Their abstract:
Large-scale societies in which strangers regularly engage in mutually beneficial transactions are puzzling. The evolutionary mechanisms associated with kinship and reciprocity, which underpin much of primate sociality, do not readily extend to large unrelated groups. Theory suggests that the evolution of such societies may have required norms and institutions that sustain fairness in ephemeral exchanges. If that is true, then engagement in larger-scale institutions, such as markets and world religions, should be associated with greater fairness, and larger communities should punish unfairness more. Using three behavioral experiments administered across 15 diverse populations, we show that market integration (measured as the percentage of purchased calories) positively covaries with fairness while community size positively covaries with punishment. Participation in a world religion is associated with fairness, although not across all measures. These results suggest that modern prosociality is not solely the product of an innate psychology, but also reflects norms and institutions that have emerged over the course of human history.


  1. So this study implies that more experienced traders (like stock traders compared to house wives) will leave more money on the table because it's fair? This seems like a strange and counterintuitive result for the development of markets.

  2. SP: The study does not imply what you suggest. Norms emerge amongst interacting people not within acting people. So its not the individual stock traders that develop norms but the societies that practice trade. Norms are population variables. There might also be some confounds when financial trade is introduced.

  3. Heribert Bürger11:46 AM

    Reading the whole article I associated actual experience in the countryside of Frankfurt, Germany.
    Only 20 to 30 km away from the financial center of Frankfurt there are still villages with a quite tradtional farming structure:
    These families often are quite wealthy, but still put a very high value on type of autarc living
    (home grown vegetables, home breaded pigs etc).
    Amonth themselves you find a very rigid type of social control.
    But not beeing part of the group (which you may only become by birth or marriage) you will be treated much differently.
    This even if you share the type of living.
    My friend for instance runs a horsestable, grows corn etc, but is not part of the group.

    Even after 15 years in the context, every deal he does with them is treated "less fair" than they treat among themselves.