From Alex Tabarrok of The Marginal Revolution blog.
"Montesquieu famously noted that
Commerce is a cure for the most destructive prejudices; for it is almost a general rule, that wherever we find agreeable manners, there commerce flourishes; and that wherever there is commerce, there we meet with agreeable manners.
and Voltaire said of the London Stock Exchange:
Go into the London Stock Exchange – a more respectable place than many a court – and you will see representatives from all nations gathered together for the utility of men. Here Jew, Mohammedan and Christian deal with each other as though they were all of the same faith, and only apply the word infidel to people who go bankrupt. Here the Presbyterian trusts the Anabaptist and the Anglican accepts a promise from the Quaker. On leaving these peaceful and free assemblies some go to the Synagogue and others for a drink, this one goes to be baptized in a great bath in the name of Father, Son and Holy Ghost, that one has his son’s foreskin cut and has some Hebrew words he doesn’t understand mumbled over the child, others go to heir church and await the inspiration of God with their hats on, and everybody is happy.
Commerce makes people traders and by and large traders must be benevolent, agreeable and willing to bargain and compromise with people of different sects, religions and beliefs. Contrary to what one naively might expect, people with more exposure to markets behave more cooperatively and in less nakedly self-interested ways. Similarly, in a letter-return experiment in Italy, Baldassarri finds that market integration increases pro-social behavior towards in and outgroups:
In areas where market exchange is dominant, letter-return rates are high. Moreover, prosocial behavior toward ingroup and outgroup members moves hand in hand, thus suggesting that norms of solidarity extend beyond group boundaries.
Also, contrary to what you may have read about the mythical Wall Street game versus Community game, priming people in the lab with phrases evocative of markets and trade, increases trust.
In a new paper, Gustav Agneman and Esther Chevrot-Bianco test the idea that markets generate more universal behavior. They run their tests in villages in Greenland where some people buy and sell in markets for their primary living while others in the same village still rely for a substantial part of their subsistence on hunting, fishing and personal exchange. They use a dice game in which players report the number of a roll with higher numbers being better for the player. Only the player knows their true roll and there is no way to detect cheaters on an individual basis. In some variants, other people (in-group or out-group) benefit when players report lower numbers. The upshot is that people exposed to market institutions are honest while traditional people cheat. Cheating is only ameliorated in the traditional group when cheating comes at the expense of an in-group (fellow-villager) but not when it comes at the expense of an out-grou member. More generally the authors summarize:
…We conduct rule-breaking experiments in 13 villages across Greenland (N=543), where stark contrasts in market participation within villages allow us to examine the relationship between market participation and moral decision-making holding village-level factors constant. First, we document a robust positive association between market participation and moral behaviour towards anonymous others. Second, market-integrated participants display universalism in moral decision-making, whereas non-market participants make more moral decisions towards co-villagers. A battery of robustness tests confirms that the behavioural differences between market and non-market participants are not driven by socioeconomic variables, childhood background, cultural identities, kinship structure, global connectedness, and exposure to religious and political institutions.
Markets and trade increase trust, cooperation and universal moral action–it is hard to think of a more important finding for the world today."
by Delia Baldassarri of the Department of Sociology, New York University. Excerpts:
"Why do communities vary in their levels of prosocial behavior? And are members of the ingroup and outgroup treated differently? According to the generalized altruism hypothesis, the more people engage in market-exchange dynamics, the more they are forced to interact with unknown others, thus creating the premises for the extension of prosocial behavior beyond close-knit circles to include outgroup members. This paper uses a large-scale, nationwide lost-letter experiment in a sample of Italian communities and finds a positive relationship between market integration and prosociality: In areas where market exchange is dominant, letter-return rates are high. Moreover, prosocial behavior toward ingroup and outgroup members moves hand in hand, thus suggesting that norms of solidarity extend beyond group boundaries.
Is it a retailer’s job to keep shoppers from their vices? (or Adam Smith vs. CVS pharmacy)
Can You Find Virtue by Investing in Vice?
Conspicuous Consumption, Conspicuous Virtue, Thorstein Veblen (and Adam Smith, too!)
Is altruism a result of selfishness?
Do you have to be selfish to make more money?
Does collective self-deception mask selfish behavior?
Why Doing Good Makes It Easier to Be Bad
The Dalai Lama Says It Is Sometimes OK To Be Selfish
Why being kind to others is good for your health (and that can include donating money)
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