God and mammon both teach fairness

Michael Giberson

In a study encompassing several distinct populations, Joseph Henrich and collaborators conclude that both participation in markets and belief in a world religion promote fairness norms that facilitate emergence of large-scale societies.  The study was described in a recent issue of The Economist:

For the evolutionarily minded, the existence of fairness is a puzzle. What biological advantage accrues to those who behave in a trusting and co-operative way with unrelated individuals? And when those encounters are one-off events with strangers it is even harder to explain why humans do not choose to behave selfishly. The standard answer is that people are born with an innate social psychology that is calibrated to the lives of their ancestors in the small-scale societies of the Palaeolithic. Fairness, in other words, is an evolutionary hangover from a time when most human relationships were with relatives with whom one shared a genetic interest and who it was generally, therefore, pointless to cheat.

The problem with this idea is that the concept of fairness varies a lot, depending on which society it happens to come from—something that does not sit well with the idea that it is an evolved psychological tool. Another suggestion, then, is that fairness is a social construct that emerged recently in response to cultural changes such as the development of trade. It may also, some suggest, be bound up with the rise of organised religion.

Joseph Henrich at the University of British Columbia and his colleagues wanted to test these conflicting hypotheses. They reasoned that if notions of fairness are, indeed, calibrated to the Palaeolithic, then any variation from place to place should be random. If such notions are cultural artefacts, though, they will vary systematically with some aspect of society….

The results back a cultural explanation of fairness—or, at least, of the variable levels of fairness found in different societies. … People living in communities that lack market integration display relatively little concern with fairness or with punishing unfairness in transactions. Notions of fairness increase steadily as societies achieve greater market integration. People from better-integrated societies are also more likely to punish those who do not play fair, even when this is costly to themselves….

Dr Henrich also, however, found that the sense of fairness in a society was linked to the degree of its participation in a world religion. Participation in such religion led to offers in the dictator game that were up to 10 percentage points higher than those of non-participants.

World religions such as Christianity, with their moral codes, their omniscient, judgmental gods and their beliefs in heaven and hell, might indeed be expected to enforce notions of fairness on their participants, so this observation makes sense. From an economic point of view, therefore, such judgmental religions are actually a progressive force. That might explain why many societies that have embraced them have been so successful, and thus why such beliefs become world religions in the first place.

So there you have it: both belief in world religions and participation in markets seem to be associated with fairness.

The Henrich et al. study was published as “Markets, Religion, Community Size, and the Evolution of Fairness and Punishment,” Science (March 19, 2010).  As summarized in the 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.

If you have questions about how the study was conducted, how they measured market integration and fairness, etc., check out the extensive supplemental information also posted at the Science website.

Unfair prices and moral progress

Michael Giberson

Unfair Prices

Daniel Little, at Understanding Society, asks about “Fair Prices?”  In exploring the topic he draws some upon E.P. Thompson’s studies of the English working class:

E. P. Thompson’s work on early modern Britain reminds us that there was a “moral economy of the crowd” that profoundly challenged the legitimacy of the market; that these popular moral ideas specifically and deeply challenged the idea of market-defined prices for life’s necessities; and that the crowd demanded “fair prices” for food and housing (Customs in Common: Studies in Traditional Popular Culture). The moral economy of the crowd focused on the poor — it assumed a minimum standard of living and demanded that the millers, merchants, and officials respect this standard by charging prices the poor could afford. And the rioting that took place in Poland in 1988 over meat prices or rice riots in Indonesia in 2008 are reminders that this kind of moral reasoning isn’t merely part of a pre-modern sensibility.

This kind of fairness reasoning addresses only outcomes.  But in the case of $4/gallon gasoline last year in the United States, he found other kinds of moral reasoning involved:

And what about that other necessity of life — gasoline? Public complaints about $4/gallon gas were certainly loud a year ago. But they seem to have been grounded in something different — the suspicion that the oil companies were manipulating prices and taking predatory profits — rather than an assumption of a fair price determined by the needs of the poor.

Reasoning about unfair prices

Sarah Maxwell sums up a great deal of work from marketing, psychology, and economics about fairness in pricing in her book The Price is Wrong.  Generally speaking, she observes that when people are faced with a price that violates expectations in a way disadvantageous to them (a consumer faced with an unexpectedly high price, a producer faced with an unexpectedly low price), they feel distress which motivates inquiry into the reasons for the unexpected price.

In Maxwell’s telling, this inquiry leads to evaluation of the social fairness of the price, first to consider the fairness of the outcome and if that isn’t satisfying then to consider the process which lead to the outcome.  This two-step process then considers issues of distributional fairness then procedural fairness.

Returning to Little’s comments, the first quoted cases seem directed at distributional issues, while the gasoline example draws attention to procedural issues.  That is to say, gasoline consumers confronted with $4 gasoline reacted by suspecting that somehow someone cheated – violated fair procedures – and that the cheating resulted in an unfair price.  Little mentions oil companies as targets of suspicion but speculators and other investors also got prominent mention at the time.

Little observes that contemporary Americans seem willing to accept a relatively broad range of prices and wages despite the varying distributional outcomes.  For many Americans, for example, so long as wages seem somewhat connected to market-based reasoning – for example, what companies need to pay to attract top talent – then the wage is at least tolerated even when very high.

[Admittedly the compilation of evidence is not systematic, and bears examination, but it comports with my prior beliefs.  I’d welcome pointers to systematic inquiry on this topic.]

Moral Progress?

So, and here I know I’m trampling over a host of problematic issues that ought to be examined carefully, I wonder whether this recourse to procedural rather than distributive reasoning in reaction to distressing prices is evidence of moral progress.

I realize the concept of moral progress itself is problematic.  For my own thinking on the issue, I find Jesse Prinz’s discussion of the concept in his book The Emotional Construction of Morals to be reasonably satisfying.  To quote just one line out of his final chapter (Ch. 8, “Moral Progress”), “We can assess moral systems by asking how well they are suited to providing lives that we would find desirable.”  (p. 299)  This isn’t a knock-down argument in favor of  the idea of moral progress, just one line out of a chapter summing up a book-length examination of morality.  The point is only that moral beliefs can by examined and judged, determined to be better or worse, and therefore moral progress can be assessed.

My question, then, is this: “Does recourse to procedural rather than distributional reasoning when confronted by distressing prices signal moral progress?”

(HT to Mark Thoma for the link to Little.)