Thursday, October 3, 2013

Markets Bring Fairness

It is deeply revealing that when free market libertarians are challenged to explain (absent the government) who would take care of the poor, who would find justice for a homeless person that was assaulted, who would provide roads, schools, or parks – they have answers. No one says, “Who cares?” We all care. We all want a fair outcome. For most of the people in most of the world over most of the ages, that is not true.
The Foundations of Human Sociality:
Economic Experiments and Ethnographic
Evidence from Fifteen Small-Scale Societies

edited by Joseph Henrich, Robert Boyd, et al.,
Oxford University Press, 2004.
Anthropologists from UCLA and other schools set out to apply Game Theory exercises in fifteen so-called “primitive” (small-scale) societies. Unusually heavy rains and other exigencies prevented a couple of successful reports. These eleven completed papers and the over-arching explanations reveal first and deepest a long axis of outcomes.  Nothing typifies the non-industrialized peoples of the world.  Some are overly generous by our standards; others stingy. Some hunters follow meticulous rules of status for sharing, others hide their kills until after dark and sneak them in.  

Market societies depend on fairness. Trademarks build reputations. We Americans, in particular, and Westerners in general, are socialized to internalize norms of reciprocity and fairness that are unusual among other peoples.  Few other peoples – especially not those who live “close to the land” or in small-scale societies – would be so generous as to anonymously toss money into the Red Kettle at Christmas time.  More to the point both our egoism and our altruism hallmark us: each is an expression of the other.  

“One of the curiosities of the relationship between Market Integration and fairness is that we have much ethnographic evidence from the least market oriented societies (especially hunters and gatherers/horticulturalists) that emphasizes a tremendous amount of sharing. The fact that such societies show up in this cross-cultural study as often the least generous in the Ultimatum Game appears superficially to be inconsistent with real life. One explanation for this anomaly is that the high degree of sharing we observe in many of these societies is the result of precise rules specifying behaviors such as meat sharing, and the considerable monitoring that occurs naturally in close-knit and small-scale societies. In other words, despite the apparent presence of sharing, it may not be the case that a ‘norm’ of generalized sharing has been internalized that can be applied to new opportunities and circumstances. Self-enforcement need not develop when second party enforcements is ever-present. In market societies, however, where social monitoring is less efficient and rigid rules mandating sharing do not exist, cooperation may require the internalization of basic norms such as fairness that may have their origins in reputation building.”  [Jean Ensminger, “Market Integration and Fairness” ibid., page 359]

When playing the Ultimatum Game, Americans tend to skew toward "fair" sharing and to rejecting "unfair" offers. Around the world, some other people figure that the entire lot is theirs and sharing is not necessary. Yet others feel compelled to give it all away.  The same arrays of outcomes were found for the Public Goods Game and the Dictator Game.  
“Indeed, it is striking that among those less integrated in the market there is no clear normative tendency whatever, nor do we find the bimodal pattern so typical in developed societies where both pure selfishness and pure altruism compete to form two modes.” [Ensminger, page 379]

Differences among people have more to do with cultural norms than with economic modes. Hunters, gatherers, or horticulturalists from around the world, in seemingly similar circumstances played these games differently.  Relative social or personal wealth was not a predictor.  And all played differently from UCLA undergraduates.  It may not be really surprising that hunter-gatherers in different parts of the world have different values. However, university students across the world do seem to share the same ethos. Students from UCLA and the University of Michigan produced nearly identical data.

Marie Curie and Democritus
“Compared with the Mapuche and Machiguenga, Americans seem obsessed with fairness – which includes punishing people who act unfairly.” [Henrich and Smith, “Comparative Experimental Evidence,” ibid., page 143-143]

Several works by this team were cited in the bibliography of The Weirdest People in the World: How representative are experimental findings from American university students? What do we really know about human psychology? by Joseph Henrich, Steven J. Heine, and Ara Norenzayan.  Drawing on these reports, Henrich, et al., underscored many ways that psychology departments completely misunderstood "human nature" by only taking their own undergraduates (or the infants of those people) for their studies.

The only warning here is that the professors all assume that altruism is “fair” and that egoism is explained as a lack of altruism. Conversely, when discussing Americans, they are clear that we are altruistic because each of us feels that this is in our own best interests. The professors are generally perplexed that other people around the world act altruistically only because they are forced to by family, society, or tradition.  And they generally resent having to share. Conversely, they may not feel resentment toward those who do not distribute largess fairly, but just call that their own bad luck.

Finally, perhaps the most subtle point: "As mentioned earlier, Machiguenga say little during debriefing because they lack the cultural training to produce post-hoc rationalizations of their behavioral choices. The most frequent response to the question why a subject withdrew the amount that he did was that it was the amount he wanted to withdraw. ...  In contrast to the Machinguenga, the American university subjects had plenty to say ..."

Previously on Necessary Facts

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