Tuesday, May 16, 2023

Social production of moral indifference - 8

Your assumptions are your windows on the world. Scrub them off every once in a while, or the light won’t come in. - Issac Asimov 

Take an example where the assumption of self interest is commonly used - the management of the commons. The commons is the cultural and natural resources accessible to all members of a society, including natural materials such as air, water, and a habitable earth. Unlike private property, the commons are inclusive rather than exclusive – their nature is to share ownership as widely, rather than as narrowly, as possible. For millennia, the commons constituted almost everything on earth. 

But over the past 10,000 years, much of the commons has been taken up by the market and the state. It was long unanimously held among economists that natural resources that were collectively used by their users would be over-exploited and destroyed in the long-term. The concept of the commons gained currency with a piece published in the journal Science by American biologist Garrett Hardin in 1968 called 'The Tragedy of the Commons'. Hardin used the term ‘tragedy’ in the Greek sense, to mean a regrettable but inevitable event: ‘Freedom in a commons,’ he said, ‘brings ruin to all.’

Hardin’s paper went on to become the most widely reprinted ever published in a scientific journal.  ‘[It] should be required reading for all students,’ declared an American biologist in the 1980s, ‘and, if I had my way, for all human beings.’ Hardin theorized that if each herdsman sharing a piece of common grazing land made the individually rational economic decision of increasing the number of cattle he keeps on the land, the collective effect would deplete or destroy the commons. In other words, multiple individuals, acting independently and rationally consulting their own self-interest, will ultimately deplete a shared limited resource, even when it is clear that it is not in anyone’s long-term interest for this to happen. 

Hardin was convinced that there was no way to manage communal property sustainably. At some stage it will be overgrazed and the ecosystem may fail. That risk is not borne by any individual, however, but by society as a whole. The only solution was to remove the communal aspect. Either the commons could be nationalised and managed by the state or the commons could be privatised, divided up into little parcels and handed out to individual farmers, who would then look after their own land responsibly. The idea of a communally owned resource might be appealing but it was ultimately self-defeating. 

But perhaps it was Hardin who was the one failing to think deeply enough. The logic of “The Tragedy of the Commons” worked well to frame a class of environmental problems. The problem was that Hardin generalised this model as applicable to all situations without looking at how other, similar-looking problems were being solved, again and again, by communities all over the world. This was noticed by Elinor Ostrom, an American political economist and researcher at a time when universities didn’t exactly welcome women. 

She became interested in Hardin's paper because she was convinced that it was wrong.  She  knew that there was nothing inevitable about the self-destruction of “common pool resources”, as economists call them. Hardin’s article had ignored the complexity with his assumption that all commons were in some sense the same. But they aren’t. Common pool resources could be found all over the planet, from the high meadows of Switzerland to the lobster fisheries of Maine, from forests in Sri Lanka to water in Nepal. Many of these resources had been managed sustainably without Hardin’s black-or-white solutions.

Unlike Hardin, Ostrom had little interest in theoretical models. She wanted to see how real people behave in the real world. While models do bring important insights, it is harmful to claim that models whose assumptions greatly distort the real world are adequate for real-world applications. In her book, Governing the Commons, Ostrom writes: 'The key to my argument is that some individuals have broken out of the trap inherent in the commons dilemma, whereas others continue remorsefully trapped into destroying their own resources.'

Ostrom set up a database to record examples of commons from all over the world, from shared pastures in Switzerland and cropland in Japan to communal irrigation in the Philippines and water reserves in Nepal. She conducted field studies on how people in small, local communities manage shared natural resources, such as pastures, fishing waters and forests. Vincent Ostrom, Elior’s husband, had developed the idea of “polycentricity” in political science: polycentric systems have multiple, independent and overlapping sources of power and authority. By their very nature, they are messy to describe and hard to compare with each other. 

Using this idea, Elinor Ostrom showed that the use of exhaustible resources by groups of people (communities, cooperatives, trusts, trade unions) can be rational and prevent depletion of the resource without government intervention. The problem with Hardin’s logic was the assumption that communally owned land was a free-for-all. It wasn’t. The commons were owned by a community. They were managed by a community. These people were neighbours. They lived next door to each other. In time, rules are established for how these are to be cared for and used in a way that is both economically and ecologically sustainable. 

Ostrom was able to show that the diverse solutions reflected a smaller number of design principles.  She argued that these arrangements were rarely designed or imposed from the top down; they usually evolved from the bottom up. Some of these principles were that, a community must have a minimum level of autonomy, an effective monitoring system, graduated sanctions for those who break rules; and cheap access to conflict-resolution mechanisms.  But she stressed that there’s no blueprint for success, because the characteristics of a commons are ultimately shaped by the local context.

Modern economics is founded on the assumption that self-interest automatically leads to collective wellbeing. But Ostrom's work showed that neither central planning nor laizzez fair would work in effectively managing common pool resources.  Self-interest often leads to the overexploitation of resources and other problems that make life worse for everyone, not better. When everyone acted as they pleased, there was no invisible hand to rescue the situation.  In 2009, Ostrom became the first woman to receive the Nobel Memorial Prize in Economic Sciences. 

 ‘Social Capital’ refers to the wealth of trust and reciprocity that is created within social groups as a result of their networks of relationships. Through these groups, we build norms, rules and relations that enable us to cooperate with and depend upon one another. These connections build social cohesion and help to meet our fundamental human needs such as for participation, leisure, protection and belonging. An economy’s vibrancy depends upon the trust, norms and sense of reciprocity nurtured within society. 

Thursday, May 4, 2023

Social production of moral indifference - 7b

Economics 101 is increasingly shaping people’s behaviour and the structure of organizations. Some research has suggested that the study of Econ 101 tends to encourage self-interested behaviour. The model of the economic agent as a self-interested, rational, autonomous individual utility-maximizer can make “looking out for number one” seem reasonable. In economics classes, it is found that  increasingly students were willing to behave opportunistically, on the reasoning that if they don’t take advantage of a situation, someone else will. They are quite unapologetic about it, believing that this is simply the way the world works, and that to do otherwise would be foolish.

In a study where subjects played a one-shot public-goods game, subjects were given differing lengths of time to decide how much money they would contribute to a common pot (versus keeping it for themselves, to everyone else’s detriment). And the faster the decision required, the more cooperative people were. If subjects are told  to “carefully consider” their decision, or prime them to value reflection over intuition, they’d be more selfish. The more time to think, the more time for rationalising their actions - what the authors called “calculated greed.”

When facing moral dilemmas of resisting selfishness, our rapid intuitions are good, honed by evolutionary selection for cooperation in small groups. Regulating and formalizing the behaviour (i.e., moving it from the realm of intuition to that of careful thought) can be counterproductive. Nothing shows this better than the study of economics. Beyond attracting self-interested people, studying economics can alter us too, reshaping who we think we are and how we should behave. By encouraging us to expect the worst in others, it brings out the worst in us.

Learning that cooperation is irrational in some situations is making students less cooperative. The economist Robert Frank says, 'We become what we teach.' In experiments using Prisoner's Dilemma games, first year economics students, and students doing disciplines other than economics, overwhelmingly chose to cooperate. But 4th year students in economics tended to not cooperate. Ideological differences between lower-level economics students and upper-level economics students are found to be similar in kind to the measured differences between the ideology of economics students as a whole and their peers. 

Upper-level students are even less likely to support egalitarian solutions to distribution problems than lower-level students, suggesting that time spent studying economics does have an indoctrination effect. When comparing students in political economics and business economics, economists found that “the willingness to contribute decreases dramatically for business students.” The late Stanford professor Hal Leavitt lamented that business education distorts students into “critters with lopsided brains, icy hearts, and shrunken souls.”

In Israel, third-year economics majors rated altruistic values – such as helpfulness, honesty and loyalty – as far less important in life than did their freshman equivalents. After taking a course in economic game theory (a study of strategy which assumes individual self-interest in its models), US college students behaved more selfishly, and expected others to do so as well. Economics majors and students who had taken at least three economics courses were more likely than their peers to rate greed as “generally good,” “correct,” and “moral.” In one experiment, the researchers wrote that the “meaning of ‘fairness’… was somewhat alien for this group.”

Exposure to economic words might be enough to inhibit compassion and concern for others, even among experienced executives. In one experiment, the researchers recruited presidents, CEOs, partners, VPs, directors, and managers who supervised an average of 140 employees. They randomly assigned them to unscramble 30 sentences, with either neutral words like [green, tree, was] or economic words like [economy, growing, our]. Then, the executives wrote letters conveying bad news to an employee who was transferred to an undesirable city and disciplining a highly competent employee for being late to meetings because she lacked a car. 

Their letters were then rated for compassion. Executives who unscrambled sentences with economic words expressed significantly less compassion. After thinking about economics, executives felt less empathy — and even when they did empathize, they worried that expressing concern and offering help would be inappropriate. In real-world environments, honesty, integrity, intrinsic job satisfaction, and peer recognition are powerful motivators, leading to better results for the financial bottom line than reliance on material incentives alone but economic theory ignores them. 

Economists believe that without a penalty or a reward system there is no motivation to commit anonymous acts of altruism. But that this is not how people in Japan behaved after the Fukushima Daiichi nuclear power plant disaster in 2011 led to a sudden fall in the electricity base-load. When called upon to make a personal sacrifice to avoid brownouts, people willingly sweltered in indoor temperatures of over eighty degrees Fahrenheit. Without duress or reward, people willingly turned down the air-conditioning in their homes even when no one could see them doing so.

So people’s tendency to avoid costs and act only in their self interest - often considered major obstacles to action on climate change — can be overruled by a sufficiently strong appeal to group identity and a visible social norm. The energy crisis in Japan was given visibility with posters and reminders on all media, and even large billboards above major crossings flashed daily rates of power consumption and the likelihood of a blackout. People were actively seeking ways to make a personal contribution, just as they do in wartime when they are brought together in the face of a common enemy.

Along with directly learning about self-interest in the classroom, because selfish people are attracted to economics, students end up surrounded by people who believe in and act on the principle of self-interest. Extensive research shows that when people gather in groups, they develop even more extreme beliefs than where they started. Social psychologists call this group polarization. By spending time with like-minded people, economics students may become convinced that selfishness is widespread and rational or at least that giving is rare and foolish.

Experimental research in Germany found that economics students were more likely than other students to be corruptible – willing to give a biased answer – if it led to a personal payout. Research in the US likewise found that economics majors were more approving of their own and others’ self-serving behaviour. Another study found that economics students are less likely to consider a vendor who increases the price of bottled water on a hot day to be acting “unfairly.”  Moreover, economics students valued personal achievement and power more than their peers while attributing less importance to social justice and equality. 

Our prosocial impulses depend largely on external social cues. When the social cues favour prosociality, behavioural scientists can elicit universal or near-universal unselfishness. Conversely, when subjects are told to act selfishly, believe others would act selfishly, and believe selfishness is not too costly to others, they exhibit near-universal selfishness. Economics promotes the idea that much of the time, cooperation and consideration of other's perspective are irrational and thus are best avoided. Institutions pass on to a new generation the ideas of a minority which they accept as  something “given”, “unalterable” and “self-evident”.