"So he sold his Pasadena mansion and most of his possessions, moved to a trailer park in north Malibu and began work on his documentary "I Am." What's "I Am" about? It's about how human beings are too competitive, about whatever is hard-wired in our brains that makes us want to work against each other rather than cooperate."
That last part, about competition and cooperation, is something that "neuroeconomics" studies.
Earlier this year, I attended a lecture by Paul Zak, a neuro-economist from Claremont Graduate University, at the Mind Science Foundation. He has studied how our behaviors are affected by the presence in our brains of a chemical called oxytocin, which can affect how generous we are. The more oxytocin you have have, the more generous and empathic (or sympathetic) you are. So he calls oxytocin "the moral molecule." It helps us identify with others and understand their feelings and situatons. Oxytocin can also increase when people trust you or are generous to you.
What does this have to do with Adam Smith? He wrote a book called The Theory of Moral Sentiments. One point he made there was that we are able to sympathize with other people by trying imagine what they are going through. This is directly related to oxytocin. In September 2009, I had a post on this called Science Proves That Adam Smith Was Right Over 200 Years Ago (sort of). That will provide you with more details.
To watch a lecture by professor Zak (very similar to the one he did here in San Antonio), go to The Moral Molecule.
Oxytocin also facilitates trust. Economies need trust because not everything can be put into a law, a contract or be monitored. Your boss can't watch you every second to make sure you don't slack off on the job. We trust banks and our pension funds not to take the money and blow it all in Vegas. We trust our government officials not to accept bribes. Yes, we have rules and regulations against these things. But if we had to have a rule for everything and if everyone was being watched constantly, it would be too costly to our economy. Trust helps quite a bit.
Here are two articles about professor Zak's lecture from the San Antonio Express-News:
Emerging field offers insight into human virtues
Humans release ‘niceness' chemical
More information about neuroeconomics can be found at:
Neuroeconomics Explained, Part One
Neuroeconomics Explained, Part Two
Click here to read the latest findings from the Center For Neuroeconomics Studies