In experiments similar to studies on altruistic punishment, people will sacrifice their economic interests in order to express their contempt at unfairness.
UCLA psychologist Golnaz Tabibnia, and colleagues Ajay Satpute and Matthew Lieberman, used a psychological test called the “ultimatum game" to explore fairness and self-interest in the laboratory. In this particular version of the test, Person A has a pot of money, say $23, which they can divide in any way they want with Person B. All Person B can do is look at the offer and accept or reject it; there is no negotiation. If Person B rejects the offer, neither of them gets any money.
Whatever Person A offers to Person B is an unearned windfall, even if it’s a miserly $5 out of $23, so a strict utilitarian would take the money and run. But that’s not exactly what happens in the laboratory. The UCLA scientists ran the experiment so sometimes $5 was stingy and other times fair, say $5 out of a total stake of $10. The idea was to make sure the subjects were responding to the fairness of the offer, not to the amount of the windfall. When they did this, and asked the subjects to rate themselves on scales of happiness and contempt, they had some interesting findings: Even when they stood to gain exactly the same dollar amount of free money, the subjects were much happier with the fair offers and much more disdainful of deals that were lopsided and self-centered.
The psychologists wanted to know if there is something inherently rewarding about being treated decently. So, they scanned several parts of the participants’ brains while they were in the act of weighing both fair and miserly offers. Consistent with previous results, the researchers found that a region previously associated with negative emotions such as moral disgust (the anterior insula) was activated during unfair treatment. However, interestingly, they also found that regions associated with reward (including the ventral striatum) were activated during fair treatment even though there was no additional money to be gained.
So people get a high off of being treated fairly. Keep that in mind when deciding how to treat others.
When you are disgusted your anterior insula buzzes.
The psychologists wanted to know if there is something inherently rewarding about being treated decently. So, they scanned several parts of the participants’ brains while they were in the act of weighing both fair and miserly offers. Consistent with previous results, the researchers found that a region previously associated with negative emotions such as moral disgust (the anterior insula) was activated during unfair treatment. However, interestingly, they also found that regions associated with reward (including the ventral striatum) were activated during fair treatment even though there was no additional money to be gained.
Your emotions rule your rational mind.
As reported in the April issue of the journal Psychological Science, a journal of the Association for Psychological Science, the brain finds self-serving behavior emotionally unpleasant, but a different bundle of neurons also finds genuine fairness uplifting. What’s more, these emotional firings occur in brain structures that are fast and automatic, so it appears that the emotional brain is overruling the more deliberate, rational mind. Faced with a conflict, the brain’s default position is to demand a fair deal.
But if you can manage to suppress feelings of pride and contempt you can make a rational calculation of what is in your best interest.
Furthermore, when the scientists scanned the brains of those who were “swallowing their pride” for the sake of cash, the brain showed a distinctive pattern of neuronal activity. It appears that the unconscious mind can temporarily damp down the brain’s contempt response, in effect allowing the rational, utilitarian brain to rule, at least momentarily.
I bet that there's genetic variability in the extent to which people feel contempt or let their rational mind rule.
In a series of experiments, Ritesh Saini (George Mason University) and Ashwani Monga (University of Texas, San Antonio) demonstrate that a qualitatively different form of decision making gains prominence when consumers work with time instead of money. Specifically, consumers thinking about expenditure of time are more likely to rely on heuristics: intuitive, quick judgments based more on prior experience than on analysis of the information presented.
For example, one experiment had participants consider the purchase of a used car. They were told that a search on a used-car website had yielded 80 cars meeting their criteria but that viewing each accident record would take either $1 or 5 minutes of time. They were then asked how many records they would like to view, with a catch: the researchers used classic experimental “anchoring” techniques to manipulate the answers.
Participants were asked whether they would view “up to 2” or “up to 40” records, before indicating the specific number of records they would view. The use of an anchor, for those thinking in terms of time expenditure, turned out to have a significant impact.
When the anchor value was high in the time condition, consumers chose to view an average of 23.7 accident reports, versus 9.1 when the anchor value was low. The number of records consumers in the money condition chose to view was statistically the same, irrespective of whether the anchor value was high or low.
“People face difficulties in accounting for time because they do not routinely transact in time as they do in money,” explain the researchers. “Although people in some professions (e.g., lawyers) do keenly monitor their time expenditures, most other people are not trained to do so.”
Does this line of reasoning sound correct to you?
Look at people in office settings. I see them waste each others' time on a daily basis. Seems that it is more easy to get people to waste time than money.
How easily one can be influenced to spend money depends on whether one is a tightwad or a spendthrift. Surprisingly the tightwad's spending habits are more easy to influence.
Whether one is a spendthrift or a tightwad also predicts a wide range of spending behavior, the researchers found. Spendthrifts are no more likely than tightwads to use credit cards, but spendthrifts who use credit cards are three times more likely to carry debt than tightwads who use credit cards.
Annual income differs little between tightwads and spendthrifts, suggesting that the observed differences in debt are largely driven by differences in spending habits.
Interestingly, the researchers also found that tightwads are also most sensitive to marketing ploys designed to reduce the pain of paying. In one experiment, participants were asked whether they would be willing to pay $5 to have DVDs shipped overnight. The cost was either framed as a “$5 fee” or a “small $5 fee.” Spendthrifts were completely insensitive to the manipulation, but tightwads were 20 percent more likely to pay the fee when it was less painfully presented as “small.”
When offspring genetic engineering becomes possible will more people genetically engineer their kids to be tightwads or spendthrifts? Will they make their kids less likely to waste time?
Researchers at MIT, UCSD, and the Karolinska Institutet in Stockholm Sweden conducted two sets of studies on twins and found that part of human trust and trustworthiness seem due to genetic influences (PDF at PNAS site). (and thanks to one of the researchers, MIT's David Cesarini, for the heads up)
To investigate whether humans are endowed with genetic variation that could help account for individual differences in trust game behavior, two separate teams of researchers independently conceived and executed a very similar experiment on twins [see supporting information (SI) for experimental procedures]. These teams became aware of each other for the first time after all data had been collected. One team recruited 658 subjects from the population-based Swedish Twin Registry, and the other team recruited 706 subjects from the 2006 and 2007 Twins Days Festivals in Twinsburg, OH. Both teams administered the trust game to (identical) monozygotic (MZ) and (nonidentical) dizygotic (DZ) same-sex twin pairs. The game was played with real monetary payoffs and between anonymous partners.
They looked at both how much trust people had in strangers and also how much people lived up to the expectations of those who trusted them.
The results of our mixed-effects Bayesian ACE analysis suggest that variation in how subjects play the trust game is partially accounted for by genetic differences (Tables 2 and 3 and Fig. 2). In the ACE model of trust, the heritability estimate is 20% (C.I. 3–38%) in the Swedish experiment and 10% (C.I. 4–21%) in the U.S. experiment. The ACE model of trust also demonstrates that environmental variation plays a role. In particular, unshared environmental variation is a much more significant source of phenotypic variation than genetic variation (e2 = 68% vs. c2 = 12% in Sweden and e2 = 82% vs. c2 = 8% in the U.S.; P < 0.0001 in both samples). In the ACE model of trustworthiness, heritability (h2) generates 18% (C.I. 8–30%) of the variance in the Swedish experiment and 17% (C.I. 5–32%) in the U.S. experiment. Once again, environmental differences play a role (e2 = 66% vs. c2 = 17% in Sweden and e2 = 71% vs. c2 = 12% in the U.S.; P < 0.0001 in both samples).
The researchers found more trust in their Swedish participants (which is what I'd expect from such a high trust society). They also found a higher heritability of trust in their Swedish participants. See figure 2.
Heritability (h2) of trust is estimated to be (a) 20% in Sweden and (b) 10% in the U.S. Heritability of trustworthiness is estimated to be (a) 18% in Sweden and (b) 17% in the U.S.
That difference in trust between US and Swedish participants might be due to genetic differences.
They suspect their results understate extent of heritability for a couple of reasons including the very plausible idea that people are more likely to mate with people who have similar levels of trust. So the DZ twins and MZ twins are not as different in their genetic sequences which influence trust as would be the case if matings were more random.
Moreover, we believe that the reported estimates indicate a lower bound on heritability and shared environment for two reasons. First, the estimate of the variance explained by the unshared environmental differences includes all idiosyncratic error, including measurement error. If our subjects had each played several rounds of the trust game with different individuals, our measures of trust and trustworthiness may have been more precise, which would have yielded higher estimates of heritability and common environmental influences. Second, one assumption of the ACE model is that there is no assortative mating with respect to the trait of interest. If preferences for cooperation are indeed heritable, and if people who cooperate tend to mate with other cooperative individuals, then this will increase the similarity in cooperative behavior in their children. This inflates the correlation of the genotypes of DZ siblings, making it harder to detect differences in MZ and DZ twins. As a result, the more assortativity, the more it biases downward the estimate of heritability.
The problem is that it is easier to compare twins than to compare any two random individuals to tease out genetic influences. We don't know how much two random individuals differ in their genetic sequences. Using twins studies researchers can detect the presence of genetic influences on behavior. That's important because that detection is the first step toward finding the actual genetic variations that cause people to behave differently from each other.
In the last couple of years the rate of detection of the meaning of genetic differences greatly sped up. The rapid decline in DNA testing costs and the development of more extensive maps of genetic differences (e.g. as done in the International Haplotype Map project) has made this task much easier. Within 10 years at most studies such as this one will routinely include genetic testing information on all test subjects.
Cheap DNA sequencing will probably increase the optimal size of trust studies and other behavioral studies of twins. Much larger groups of participants are needed to better control for all the genetic variations in order to identify which genetic variations contribute to behavioral differences.
Studies of this sort demonstrate that natural selection played a major role in shaping human behavior. Economic behavior is not simply the result of rational calculations by humans. The extent of willingness to engage in exchanges and enter into business deals is influenced by our evolutionary past. That notion doesn't sit well with people who imagine they have total free will and control over their decisions.
The results of this study understate the extent to which genetic sequences control our economic behavior. The study tried to measure differences in behavior. Many genetic sequences identical in all study participants didn't cause differences and yet did influence behavior of all the study participants.
Cesarini and Swedish researchers have previously published work in this area. See my previous post Large Genetic Component To How People Play Economic Game.
What I most want to know: once all the genetic alleles which influence trust and trustworthiness are identified and offspring genetic engineering becomes possible will people choose genes that make their offspring more or less trusting and more or less trustworthy?
People don't expect cheap drugs to help them much. No wonder the price of drugs has risen. People want more effective results.
DURHAM, N.C. -- A 10-cent pill doesn't kill pain as well as a $2.50 pill, even when they are identical placebos, according to a provocative study by Dan Ariely, a behavioral economist at Duke University.
"Physicians want to think it's the medicine and not their enthusiasm about a particular drug that makes a drug more therapeutically effective, but now we really have to worry about the nuances of interaction between patients and physicians," said Ariely, whose findings appear as a letter in the March 5 edition of the Journal of the American Medical Association.
Ariely and a team of collaborators at the Massachusetts Institute of Technology used a standard protocol for administering light electric shock to participants’ wrists to measure their subjective rating of pain. The 82 study subjects were tested before getting the placebo and after. Half the participants were given a brochure describing the pill as a newly-approved pain-killer which cost $2.50 per dose and half were given a brochure describing it as marked down to 10 cents, without saying why.
In the full-price group, 85 percent of subjects experienced a reduction in pain after taking the placebo. In the low-price group, 61 percent said the pain was less.
The conclusion here is obvious: Medical professionals need to go to greater lengths to deceive patients into believing that ineffective treatments really will work. At least for chronic pain this might help. I'm at least half serious.
If you compare something you might do with either something you enjoyed or disliked in the past you'll underestimate or overestimate how much you like it. Comparisons can make you less able to predict enjoyment of an experience.
CAMBRIDGE, Mass. – Researchers have identified a key reason why people make mistakes when they try to predict what they will like. When predicting how much we will enjoy a future experience, people tend to compare it to its alternatives—that is, to the experiences they had before, might have later, or could have been having now. But when people actually have the experience, they tend not to think about these alternatives and their experience is relatively unaffected by them.
In new research funded by the National Science Foundation and presented at the annual meeting of the American Association for the Advancement of Science, Daniel Gilbert, professor of psychology in the Faculty of Arts and Sciences at Harvard University, shares the findings in a presentation titled, “Why People Misimagine the Future: The Problem of Attentional Collapse.” The research was done with Carey Morewedge of Carnegie Mellon University, Karim Kassam of Harvard, Kristian Myrseth of the University of Chicago, and Timothy Wilson of the University of Virginia.
The actual experience distracts you from the alternatives you could have done.
Gilbert presents the results of four experiments, all involving predicted versus actual enjoyment of a very simple experience—eating potato chips. In three of the experiments, participants predicted how much they would like eating potato chips before, after, or instead of eating a much better food (chocolate) or a much worse food (sardines). They then ate the chips and reported how much they liked them. The results showed that the chocolate and the sardines had a large impact on participants’ predictions, but no impact whatsoever on their actual experiences. Those participants who compared the chips to sardines overestimated how much they’d enjoy eating the chips, and those who compared them to chocolate underestimated how much they’d enjoy eating the chips.
Why does this happen? “Experience typically demands our attention,” says Gilbert, “leaving us little time to think about the alternatives to it.”
But if you slow down and think about the alternatives while having the experience the alternatives will affect how much you enjoy the experience. So slow down and think about lousy alternatives.
To demonstrate this, participants in a fourth experiment were asked to eat the potato chips to the beat of a metronome. Those participants who ate the chips at a normal pace made the same mistake as did participants in the previous experiments. But participants who ate the chips at an unusually slow pace did not. Specifically, participants who ate slowly actually did enjoy the chips more when the alternative was sardines than when the alternative was chocolate—just as they had predicted.
Gilbert argues that slowing down the experience of eating gave participants the opportunity to think about the chocolates or the sardines.
“A very slow family reunion may well be worse if the alternative was Bermuda than if the alternative was working an extra shift,” says Gilbert. “When experiences don’t demand our attention, our minds are free to wander to all the other things we might have been doing instead. If those things are better, we feel worse, and if they are worse, we feel better.”
Should ice cream parlours and candy stores heighten the customer experience by putting pictures of asparagus and broccoli on their walls? Should resort hotels show pictures of traffic jams and pollution on their walls to remind people of worse places they are escaping from? But what sorts of pictures do you want to see on the wall at your mother-in-law's?
Some scientists have come up an interesting way of measuring whether people tend to overestimate or underestimate desired goods. They give the experimental subjects some reason to desire one or another of two things. Then they show an equal mix of those two things and then ask the subjects which did they see more of: What they desired or what they didn't desire. People always think they see less of what they really desire even if they are viewing equal amounts of two things.
Xianchi Dai, Klaus Wertenbroch and Miguel Brendl from INSEAD, the international business school with campuses in France and Singapore, have been studying what they call the “value heuristic.” A heuristic is a sort of cognitive short cut or “rule of thumb” that we use when we are unable to make a truly informed decision. The psychologists’ research suggests that many mate-seekers are unwittingly subbing something clear and simple -- their yearning for a potential mate -- for a complicated and unknowable statistic (i.e., how many of the relationship-worthy bachelors and bachelorettes are still available).
The connection between scarcity and value is something we all know; for example, gold is considered precious because it is rare, not because it makes for a poor construction material. The psychologists’ research suggests that this link has become deep-wired into our neurons, so that even its inverse is unconsciously called upon for life decisions -- what’s valuable must be scarce.
To test their value heuristic theory, the researchers had a group of young people view nearly one hundred pictures, half of birds and half of flowers, in random order. They then told participants that they would get paid a few cents either for each bird picture or for each flower picture they had seen. To determine whether a participant would be paid for bird or for flower pictures, the researchers let each participant flip a coin. Before being paid accordingly, all participants were asked to estimate the total number of bird pictures and the total number of flower pictures they had seen.
The results were unambiguous. As described in the January issue of Psychological Science, a journal of the Association for Psychological Science, people who were paid for spotting flower pictures thought there were fewer flowers than birds, and likewise, those who were made to value birds determined they were scarcer than flowers. Nobody knew that in fact there were exactly the same number of flowers and birds.
So in effect, their experimentally-induced yearning caused them to wrongly perceive scarcity.
So if you really want something that'll tend to make you think you can't get enough of it. Learn how to enjoy what you don't want? Do people who want the most feel the most sense of scarcity?
People viewing pictures of men and women also tended to believe there were fewer of the opposite sex even when there were equal numbers of each sex.
To increase the validity of their findings, the scientists ran several other experiments. In one, participants of both sexes viewed portraits of men and women, some attractive and some not. When questioned later, both men and women believed that there were fewer attractive people of the opposite sex than there were of the same sex.
If the portraits were unattractive, they tended not to perceive a sense of scarcity. As in the first experiment, the participants appeared to be substituting their emotional desire for calculation, and ended up believing that what they wanted was less likely to be found.
I hear Dwight Yockum singing "I ain't ever satisfied".
Optimism is more adaptive than pessimism. But too much optimism is destructive.
Optimists, the Duke finance scholars discovered, worked longer hours every week, expected to retire later in life, were less likely to smoke and, when they divorced, were more likely to remarry. They also saved more, had more of their wealth in liquid assets, invested more in individual stocks and paid credit-card bills more promptly.
Yet those who saw the future too brightly -- people who in the survey overestimated their own likely lifespan by 20 years or more -- behaved in just the opposite way, the researchers discovered.
Rather than save, they squandered. They postponed bill-paying. Instead of taking the long view, they barely looked past tomorrow. Statistically, they were more likely to be day traders. "Optimism is a little like red wine," said Duke finance professor and study co-author Manju Puri. "In moderation, it is good for you; but no one would suggest you drink two bottles a day."
When people start genetically engineering their offspring I hope prospective parents don't become too optimistic about what optimism can accomplish. Sure, give your kids some leaning toward an optimistic outlook. But don't create reckless children who gamble and ring up debts.
The article also describes recent research about optimism coming from the rostral anterior cingulate cortex (rACC) of the brain. I've previously reported about that .
Why do people herd around risky investments, causing "bubbles" that inevitably burst and leave most investors losers in the game? Couldn't the players in the dot.com bust, for example, have seen disaster looming on the horizon? Why did more investors not get out earlier, and why did they continue to pump money into already over-inflated stocks? Similar questions surround the recent bust in the subprime mortgage market.
Two Stanford Graduate School of Business researchers say that what investors fear the most is not the risk of a loss per se, but the risk that they may do poorly relative to their peers. That means even though investments in areas such as new technology may be particularly risky, investors tend to cluster around such pie-in-the-sky opportunities to avoid being the only one in the neighborhood to miss out on the "next big thing."
Think of this in terms of relative status versus absolute wealth. People strongly desire to keep up with and preferably to rise above their peers. When peers are all doing something that might earn big returns this drives the desire to do the same thing in order to avoid falling behind.
If you run with the herd when making investments and you all invest in a big bubble your risk of falling relative to the others in your peer group is decreased. Even though you are investing in a bubble so are your peers. So if you lose they lose. If you all lose equally then you experience no fall in relative status.
If your friends acquaintances get rich they will drive up the price of housing and daycare. You've got to get rich right along side of them or risk getting squeezed out by them.
In three related theoretical studies, Peter DeMarzo and Ilan Kremer, along with Ron Kaniel at Duke University, have discerned that individual investors care deeply about how their level of wealth compares to that of others in their peer group and community. "Investors fear being poor when everyone around them is rich," says DeMarzo, Mizuho Financial Group Professor of Finance at the Stanford Graduate School of Business.
A primary reason for people's concern, they explain, is that the cost of living in any community may depend on the wealth of its residents. The more money people have, the more expensive houses, real estate, daycare, and other necessities and amenities will be. "It's worse to have a lower income in an area where everyone is wealthy than it is in an area where everyone has a similar income as you," says Kremer, Associate Professor of Finance at Stanford Business School.
Using economic models, the researchers have discovered that such external worries have implications for how people invest. Specifically, they motivate people to choose portfolios that look a lot like those of others in their community or professional cohorts. "Such herding around certain investments allows you to combat the fear that everyone else might be betting on the winner while you're not," says DeMarzo.
One of my worries for the future is that as communications technologies enable people to see how more upper class people live then the average feeling of one's internal sense of status ranking will drop. People will tend to see themselves as having lower status than they would have in an earlier era because they'll have more people to compare themselves to. Upper class people get far more media recording them and their possessions. So lower class people will see far more images of upper class people than of lower class people. So lower class people will see more images of people who have higher status. Given the basic human instinctual desire for higher status this . Instead of just comparing oneself to one's neighbors one can feel inferior to a much larger world of higher status people.
Aside: I think one of the reasons some people are doomsters about the future is that a lot of doom fantasies involve bigger losses of status for the wealthy than for the poor. The wealthy have further to fall and in event of an economic collapse the wealthy would experience a much larger decline in status than would poorer people. So a doom fantasy gives some doomsters a form of psychological relief. That doomsters should feel the need for such fantasies demonstrates how market economies fail to supply a way everyone to feel higher in status.
Maybe market economies will some day supply drugs or other therapies that cause people to feel they have higher status even when they don't.
Genes may play a big role in determining how people make economic choices.
An international team of researchers including an MIT graduate student has demonstrated for the first time that genes exert influence on people's behavior in a very common experimental economic game.
Traditionally, social scientists have been quite hesitant to acknowledge a role for genes in explaining economic behavior. But a study by David Cesarini, a Ph.D. student in MIT's Department of Economics, and by colleagues in Sweden indicates that there is a genetic component to people's perception of what is fair and what is unfair.
The paper, published in the Oct. 1 advanced online issue of the Proceedings of the National Academy of Sciences, looked at the ultimatum game, in which a proposer makes an offer to a responder on how to divide a sum of money. This offer is an ultimatum; if the responder rejects it, both parties receive nothing.
Because rejections in the game entail a zero payoff for both parties, theories of narrow self-interest predict that any positive amount will be accepted by a responder. The intriguing finding in the laboratory is that responders routinely reject free money, presumably in order to punish proposers for offers perceived as unfair.
To study genetic influence in the game, Cesarini and colleagues took the unusual step of recruiting twins from the Swedish Twin Registry, and had them play the game under controlled circumstances. Because identical twins share the same genes but fraternal twins do not, the researchers were able to detect genetic influences by comparing the similarity with which identical and fraternal twins played the game.
The researchers' findings suggest that genetic influences account for as much as 40 percent of the variation in how people respond to unfair offers. In other words, identical twins were more likely to play with the same strategy than fraternal twins.
"Compared to common environmental influences such as upbringing, genetic influences appear to be a much more important source of variation in how people play the game," Cesarini said.
This result makes more plausible an argument of Gregory Clark that selective pressures helped create the conditions that brought about the industrial revolution. Yes, there are genetic differences out there that influence economic decision making. So there are genetically caused behavioral differences upon which natural selection can act. See Clark's book A Farewell To Alms and the Gene Expression Interview of Clark.
What I want to know: Did they test the IQs of the players? I'd expect smarter people to make different judgments about the choices of how to play the game. How much of the genetic factor they measured is intelligence and how much is it a wired in algorithm for how to make choices or maybe some wired in emotional reaction?
I would also like to know whether the twins who made smarter choices in the game have lower discount rates for their decision making.
Looking to the future (hey, isn't that the point of my writings?) what I would really like to know: Once the genetic variations that influence economic decisions are identified and offspring genetic engineering becomes possible will people choose genetic variations that will improve the economic performance of their kids? Sure, many will opt for intelligence enhancement. But will they also go for, say, genetic variations that make people put more effort toward longer term goals? Will they thrill to the idea of choosing genes to make Johnny and Jill into little misers and workaholics? Will genes that make us goal oriented be chosen over the genes that make people happy in Margaritaville?
Also, will the choices parents make vary by economic class? Will the upper classes embrace offspring genetic engineering for maximal economic success while lower classes go for looks, athletic ability, and just plain fun happy attitudes? Will the economic classes therefore grow even further apart than they are already growing now?
Christina Fong at Carnegie Mellon University finds that people who have stronger humanitarian impulses are just as reluctant to donate to the lazy poor as are those who score lower on humanitarianism.
The study by Christina Fong, a research scientist in the Department of Social and Decision Sciences at Carnegie Mellon, supports previous findings that people are more likely to give money to the poor when they believe that poverty is a result of misfortune rather than laziness. What's surprising is that this effect is largest among people who claim to have more humanitarian or egalitarian beliefs. In fact, humanitarians give no more than others when recipients are deemed to be poor because of laziness.
Nobody likes slackers (except for mutual protection slacker leagues I have run into in work places). So why do opinions about the welfare state vary? I can think of a few reasons:
A welfare state can only work well if the overwhelming majority feel strongly motivated to work and to avoid risks. Otherwise the accumulating moral hazard side effects become an unfair burden on those who are more productive and social pathologies grow in frequency. More from this study's press release:
Fong conducted an experiment in which subjects were given $10 and asked to decide how much, if any, to give to a real-life welfare recipient. A few days prior to the experiment, participants completed surveys about their values and beliefs, including beliefs about whether lack of effort or bad luck cause poverty. The survey also included questions designed to measure whether participants considered themselves to be humanitarians.
During the experiment, donors were randomly matched with three different welfare recipients with varying work histories and desires for full-time work. This information, combined with the participants' individual beliefs about the causes of poverty, had a major impact on giving. People who believed that their recipient was poor because of bad luck gave six and a half times as much as people who believed that their recipient was poor because of laziness.
Those who scored high on the humanitarian measure gave more money to recipients judged to be victims of bad luck than those who scored low - but the two groups made the same offers to welfare recipients judged to be lazy. Fong terms this desire to help people on the condition that they appear to deserve it "empathetic responsiveness."
Will advances in scientific understanding of human brains cause people to become more or less supportive of the welfare state? I see several factors to consider in attempting to answer this question:
But the use of more accurate scientific knowledge does not lead automatically to correct answers. Take, for example, obsessive compulsive and addictive behaviors. Even if we can know that a particular person feels a huge compulsion to gamble that does not mean we should necessarily subsidize them. The size of the compulsion might even argue for forcing them to endure greater suffering so that the size of the pain becomes large enough to outweigh the urge to gamble.
We aren't just going to gain greater knowledge of how the brain works and why people act the way they do. Suppose we can discover why, say, some people have behavioral problems that get them fired from jobs or prevent them from looking for work. Then suppose scientists come up with effective treatments to change that group of mentally dysfunctional people to make them capable of supporting themselves. Once those treatments become available would you be willing to tell some group of welfare recipients that they can get treatments (e.g. neural stem cells or neural gene therapy) for their conditions at taxpayer expense but can't get welfare payments any more?
James Fowler at UC San Diego and colleagues have performed an interesting study about the willingness of people to spend their own money to lower the wealth of others. (PDF format)
Participants in laboratory games are often willing to alter others’ incomes at a cost to themselves, and this behaviour has the effect of promoting cooperation1–3. What motivates this action is unclear: punishment and reward aimed at promoting cooperation cannot be distinguished from attempts to produce equality4. To understand costly taking and costly giving, we create an experimental game that isolates egalitarian motives. The results show that subjects reduce and augment others’ incomes, at a personal cost, even when there is no cooperative behaviour to be reinforced. Furthermore, the size and frequency of income alterations are strongly influenced by inequality. Emotions towards top earners become increasingly negative as inequality increases, and those who express these emotions spend more to reduce above-average earners’ incomes and to increase below-average earners’ incomes. The results suggest that egalitarian motives affect income-altering behaviours, and may therefore be an important factor underlying the evolution of strong reciprocity5 and, hence, cooperation in humans.
It is no wonder that redistributive taxes are popular. Economists argue against highly progressive taxes by claiming (probably accurately) that such taxes reduce economic growth. But the participants in this experiment showed themselves willing to reduce their own net worths in order to reduce the net worths of wealthier people. The economists therefore are arguing against a harm that many people are in fact quite willing to inflict on themselves. I see this as driven by a need to lower the status of others who have much higher status. The feeling of one's status position is a relative feeling. If the money spent lowering status of others is less than the money lost by others then policies that do offer considerable appeal.
To separate motives, we use a simple experimental design to examine whether individuals reduce or augment others’ incomes when there is no cooperative norm to advance (see Methods). We call these behaviours ‘taking’ and ‘giving’ instead of ‘punishment’ and ‘reward’ to indicate that income alteration cannot change the behaviour of the target. Subjects are divided into groups having four anonymous members each. Each player receives a sum of money randomly generated by a computer. Subjects are shown the payoffs of other group members for that round and are then provided an opportunity to give ‘negative’ or ‘positive’ tokens to other players. Each negative token reduces the purchaser’s payoff by one monetary unit (MU) and decreases the payoff of a targeted individual by three MUs; positive tokens decrease the purchaser’s payoff by one monetary unit (MU) and increase the targeted individual’s payoff by three MUs. Groups are randomized after each round to prevent reputation from influencing decisions; interactions between players are strictly anonymous and subjects know this. Also, by allowing participants more than one behavioural alternative, the experiment eliminates possible experimenter demand effects12—if subjects were only permitted to punish, they might engage in this behaviour because they believe it is what the experimenters want.
Over the five sessions income alteration was frequent. Among participants, 68% reduced another player’s income at least once, 28% did so five times or more, and 6% did so ten times or more. Also, 74% of participants increased another player’s income at least once, 33% did so five times or more, and 10% did so ten times or more. Most (71%) negative tokens were given to above-average earners in each group, whereas most (62%) positive tokens were targeted at below-average earners in each group.
I see a lesson here that is applicable to the immigration debate: Human societies have a limit to the amount of inequality that people will tolerate. Given that many of the forces that generate inequality do so by incentivizing the most productive to generate wealth we should ask whether we should avoid other policies that generate inequality without generating much wealth.
To put it another way: Think of societies as having inequality budgets. A society has a fixed amount of inequality to spend. In my view it is better to spend that inequality on policies that cause economies to generate the most wealth per person and the most new technology and science. Policies that generate a lot of inequality with little increase in productivity of wealth creators (e.g. immigration of people who have low skills and low earnings power) essentially waste inequality that would be better spent on incentive systems for those with the most potential to generate wealth.
Beyond some level of inequality the masses will demand taxes and other measures to limit the extent of inequality. The masses probably wont' show fairness or wisdom when they demand such taxes and other restrictions on the power of wealth. But by supporting such policies they are catering to their own very deeply felt needs for higher relative status and a reduction in the feeling that wealthier people control their lives.
One of the fundamental problems I see in the world: Globalization is making people part of much larger status hierarchies. In an earlier era of much less communications technology one could only worry about one's status vis a vis one's local community. Now one can develop an appreciation of what one's status is vis a vis all the billionaires or all the national leaders or all the corporate CEOs or all the best athletes or prettiest models around the room. This inevitably gives most people a much larger group of people who seem like they have higher status. Therefore global feelings of lower relative status might well be growing.
The prospect of a paycheck, good grade, or promotion wonderfully concentrates the mind, and researchers have now identified the brain circuitry responsible for such reward-motivated learning.
In an article in the May 4, 2006, Neuron, Alison Adcock and colleagues report brain-scanning studies in humans that reveal how specific reward-related brain regions "alert" the brain's learning and memory regions to promote memory formation.
In their studies, the researchers asked volunteers to participate in two types of reward-related tasks as they scanned the subjects' brains using functional magnetic resonance imaging. In this technique, harmless magnetic fields and radio waves are used to detect regions of higher blood flow in the brain, which reflects higher activity.
In the first task, the researchers aimed at identifying the region involved in anticipating rewards. This task involved presenting the subjects with such symbols as circles or squares that indicated an amount of money the subjects could gain or lose--from no money to $5--by rapidly responding to a subsequently presented target by pressing a button. The subjects were notified immediately whether they had received the reward. The researchers found that reward anticipation activated specific brain structures in the "mesolimbic" region involved in the processing of emotions.
In the second task, the researchers sought to measure how this reward center promoted memory formation. They first showed subjects a "value" symbol that signified whether the image of a scene that followed would yield $5 or ten cents if they remembered it the next day. Then they showed the subjects the scene, and the next day tested their ability to pick the scene out of a group.
The researchers found that the subjects were far more likely to remember high-value scenes than low-value scenes. Importantly, they found that the cues to the high-reward scenes that were later remembered--but not those scenes later forgotten--activated the reward areas of the mesolimbic region as well as the learning-related hippocampus in the medial temporal lobe (MTL) of the brain. Activation prior to scene visualization suggests that the brain actually prepares in advance to filter incoming information rather than simply reacting to the world. Activation of the MTL is associated with higher brain functions, including learning and memory, and subjects who showed greater activation in these regions also showed better memory performance, found Adcock and colleagues.
The researchers concluded that the learning mechanism they identified "may let an organism's expectations and motivation interact with events in the physical world to influence learning. Thus, anticipatory activation of this mesolimbic circuit may help translate motivation into memory."
One of the problems with childhood education is that it seems so distant to eventual rewards in the job marketplace. If schools and parents could find better ways to reward better school performance the average kid in school might spend more time with their medial temporal lobe (MTL) activated and forming memories.
One problem with reward systems is that kids differ greatly in their ability to learn. How to gear a reward system to toward the abilities of each kid so that rewards are geared toward the upper range of how fast they can learn without having the rewards set too high so that the level of performance needed for rewards becomes unattainable for some kids or too easy for other kids?
Also, there's something to be said for a practice that I and many others to do themselves: Reward yourself for achieving some learning goal. When you set rewards for yourself to strive for you are setting up the conditions to active your brain's MTL.
All of economics is just the chattering of neurons. Scientists at Harvard Medical School have identified the neurons that advertisers want to control.
BOSTON--Researchers at Harvard Medical School (HMS) report in the April 23 issue of Nature that they have identified neurons that encode the values that subjects assign to different items. The activity of these neurons might facilitate the process of decision-making that occurs when someone chooses between different goods.
"We have long known that different neurons in various parts of the brain respond to separate attributes, such as quantity, color, and taste. But when we make a choice, for example: between different foods, we combine all these attributes--we assign a value to each available item," says Camillo Padoa-Schioppa, PhD, HMS research fellow in neurobiology and lead author of the paper. "The neurons we have identified encode the value individuals assign to the available items when they make choices based on subjective preferences, a behavior called 'economic choice.'"
Everyday examples of economic choice include choosing between working and earning more or enjoying more leisure time, or choosing to invest in bonds or in stocks. Such choices have long been studied by economists and psychologists. In particular, research in behavioral economics shows that in numerous circumstances, peoples' choices violate the criteria of economic rationality. This motivates a currently growing interest for the neural bases of economic choice--an emerging field called "neuroeconomics." In general, it is believed that economic choice involves assigning values to available options. However, the underlying brain mechanisms are not well understood.
In the study, Padoa-Schioppa and John Assad, PhD, HMS associate professor of neurobiology, found a population of neurons located in the orbitofrontal cortex (OFC) that assigns values to different goods on a common value scale. Assigning values on a common scale allows comparing goods, like apples and oranges, that otherwise lack a natural basis for comparison.
Previous work in other laboratories showed that lesions to the OFC can result in choice deficits such as eating disorders, compulsive gambling, and abnormal social behavior. Moreover, the OFC is part of brain circuitry implicated in drug abuse, which can also be thought of as a choice deficit. Padoa-Schioppa and Assad's results establish a more direct link between the activity of OFC and the mental valuation process underlying choice behavior.
"The activity of these neurons reflects the value subjects assign to the available goods when they make choices," says Padoa-Schioppa.
"A concrete possibility is that various choice deficits may result from an impaired or dysfunctional activity of this population, though this hypothesis remains to be tested."
In his experiment, Padoa-Schioppa had macaque monkeys choose between two types of juice offered in different amounts. In some trials, the monkey chose between one drop of grape juice (which monkeys prefer) and one drop of apple juice. In other trials, the monkey chose between one drop of grape juice and two drops of apple juice, etc. Behaviorally, Padoa-Schioppa observed a trade-off between juice type and juice quantity. The monkey might choose grape juice when one or two drops of apple juice were available. However, the monkey might be indifferent between the two juices when offered one drop of grape juice versus three drops of apple juice, and might always choose the apple juice if four or more drops were available. This indicates that the value the monkey assigns to one drop of grape juice is roughly equal to the value the monkey assigns to three drops of apple juice.
On the basis of such choice pattern, Padoa-Schioppa could correlate the activity of neurons in the OFC directly with the value assigned to the two juices. For example, the activity of one particular neuron could be low when the monkey chose one drop of grape juice or when it chose three drops of apple juice (low value). The activity of the same neuron might be medium-high when the monkey chose two drops of grape juice or when it chose six drops of apple juice (medium-high value). And the activity of the same neuron might be high when the monkey chose three drops of grape juice or when it chose 10 drops of apple juice (high value). This means that the activity of such OFC neurons encodes the value chosen by the monkey independently of the physical characteristics of the juice--its taste, quantity, etc.
Padoa-Schioppa also found that other neurons in the OFC encode the value of only one of the two juices offered to the monkey. Some neurons encoded the value of the grape juice, while other neurons encoded the value of the apple juice. "The monkey's choice may be based on the activity of these neurons," says Padoa-Schioppa.
An important aspect of the results is that neurons in the OFC encode the economic value of offered and chosen goods independently of the particular way the goods are offered to the monkey, and independently of the specific action the animal uses to signal its choice. For example, OFC neurons encoding the value of apples and oranges would do so regardless of whether the apple is offered on the right and the orange on the left, or vice versa.
"This result has broad implications for possible psychological models of economic choice," says Padoa-Schioppa. "It suggests that economic choice is, at its essence, a choice between goods as opposed to a choice between actions--such as reaching to the right to take the apple or to the left to take the orange."
This work follows a paper published in February in the journal Cognition by Padoa-Schioppa with collaborators Lucia Jandolo and Elisabetta Visalberghi of the Italian National Research Council in Rome. That behavioral study found that monkeys indeed make choices by assigning values to available foods. In the present study, Padoa-Schioppa and Assad identify the neurons in the OFC that correlate such values.
If you could change the value your brain assigns to various goods would you do it? Would you want the ability to consciously change what your desires are to make your desires more adaptive for your health or more easy to fulfill or less likely to get you into trouble?
One of the scariest things I see about advances in neuroscience is that ultimately these advances are going to point toward directions for the development of neurotechnologies that will make personality and desires malleable. Inevitably governments, terrorist groups, and other entities will use neurotechnologies to mold minds to give them different values, desires, drives.
Feelings of mortality change charitable giving and food choices.
After the Sept. 11, 2001, terrorist attacks many Americans reported dramatic changes in their behavior, from increased church attendance and charitable giving to -- at the other end of the scale -- overeating and overspending.
Intrigued by these anecdotal reports, Baba Shiv, associate professor of marketing at Stanford Graduate School of Business, and colleagues Rosellina Ferraro and James R. Bettman from Duke University's Fuqua School of Business set out to discover what might be driving these changed behaviors. Their paper, "Let Us Eat and Drink, for Tomorrow We Shall Die," is published in the June 2005 Journal of Consumer Research.
They discovered that when confronted with thoughts of death, people tend to act in ways that will boost their self-esteem. They also have fewer cognitive resources to resist behaviors that are not central to their self-image. People for whom being slim or fit is important to their self-image, for instance, will not be as likely to overeat, but if physical appearance isn't as important, the willpower to resist that fudge sundae will plummet.
I've long suspected that terrorists are motivated in large part by a desire to manage their own feelings of self esteem. They carry out terrorist acts as a way to feel more efficacious and in control.
As a basis for the study, the researchers built upon an existing body of work on "Terror Management Theory," which attempts to explain how people cope when faced with a threat to their mortality. The theory holds that when reminded of their own mortality people first tend to cope in two ways: forcefully defending their cultural worldview (which could manifest itself in forms such as acting more aggressively toward someone with different political beliefs); or behaving in ways most likely to bolster their self-esteem.
The researchers decided to test the second part of this theory by examining two possible sources of self-esteem: physical appearance and being virtuous.
People who consider being virtuous as more important donate more when reminded of their mortality.
Researchers told 115 student subjects that they would be entered into a $200 lottery as part of their compensation for participating in a study. All participants first answered a questionnaire that measured the importance of virtue to their self-esteem. Half were then asked questions about the prospects of their own deaths while the other half were asked about dental pain. At the end, subjects in each group were asked how much of the $200 they would be willing to donate to charity if they won the lottery.
Participants for whom virtue was an important source of self-esteem offered significantly higher donations (an average of $65) when reminded of their mortality than when they were not (an average of just $34.50). Participants for whom virtue was not an important source of self-esteem actually donated less when reminded of their own deaths (an average of $20.36 compared with $28.60).
I wonder about the motivations here. Is the reminder of mortality more likely to result in virtuous behavior among those religious believers who expect they'll some day be judged by God in the afterlife? How would the results of this experiment differ with believers in different religions?
Do those who respond to reminders of mortality by donating money otherwise act more virtuous on average as compared to those who do not respond by upping their donations? What other differences are there between people who attach high importance to virtuous behavior and those who do not?
Will charities start running ads reminding people of their mortality as a way to boost donations? Or how about charities that help the homeless? Would they get more donations if they reminded people that health and financial reversals might some day make them homeless too?
Next we come to the very important choice between chocolate cake and fruit salad when placed in the context of future death.
A second part of the study investigated body image as a source of self-esteem. Participants were first asked questions to determine how their attitude toward their bodies contributed to their sense of self. Half were then asked about their reactions to September 11 while the others were asked about a recent local fire in which a building was destroyed but no one was hurt.
Afterward, all participants were given the choice between two snacks -- chocolate cake or fruit salad -- ostensibly as part of their reward for participating in the study.
Among women whose bodies contributed greatly to their self-esteem, only 23 percent chose cake when their sense of mortality was high; a dramatic drop from the 38 percent that chose cake when their sense of mortality was low.
These numbers make perfect sense, according to Shiv. "When people are reminded of their deaths, they are desperately seeking to cope, and if a decision can help them boost their self-esteem, they will make that decision. Thus women whose bodies were important to their self-esteem were much more likely to reject the offer of chocolate cake when their sense of mortality was heightened."
However, among women whose bodies did not contribute significantly to their sense of self-esteem, 94 percent chose chocolate cake when reminded of 9/11 -- more than twice as many as those who chose cake when their sense of mortality was low (44 percent).
"If you are using all your resources to focus on some important aspect of self-esteem in order to cope with thoughts of death, and body esteem is not central to you, then you simply have fewer resources to help you resist that tempting piece of chocolate cake," said Shiv.
I see the use of chocolate cake in this experiment as unfortunate. A lot of people think that chocolate makes them feel better when unhappy. This is especially so when heart broken over the end of a romance. So maybe the people who ate more chocolate cake when reminded of 9/11 were self-medicating.
A heightened sense of mortality did not cause men to resist chocolate cake.
Interestingly, there was no difference between the men's choice of cake or fruit salad based on their sense of mortality. The researchers attributed this to the fact that physical appearance is more of a "hot button" for women than for men.
I wonder if men would more likely choose high protein foods in response to a heightened sense of mortality on the theory that protein is needed to build muscles and muscles help in self defense.
I wonder how much of the response reported above is due to generalized feelings of stress versus feelings of lowered self esteem. Would other forms of stressors cause the same response? Or in response to stressors that do not remind us of our mortality would more people eat chocolate as a way to reduce the feelings of stress?
In the future the ability to manage one's emotional state might reduce charitable behavior. If people feel up and unstressed all the time I bet they are a lot less likely to donate to charities. Add in some future nanotech implants that automatically release compounds that block stress or negative emotions and the desire to engage in charitable behavior might decline markedly. I'd love to see a study of charitable giving of depressed people before and aftey they go on Prozac or Paxil. I bet anti-depressants reduce charitable giving by emotionally distancing people from those who suffer.
Human gambling problems probably have very ancient roots.
DURHAM, N.C. -- Duke University Medical Center neurobiologists have pinpointed circuitry in the brains of monkeys that assesses the level of risk in a given action. Their findings -- gained from experiments in which they gave the monkeys a chance to gamble to receive juice rewards -- could give insights into why humans compulsively engage in risky behaviors, including gambling, unsafe sex, drug use and overeating.
The researchers, Michael Platt, Ph.D., and Allison McCoy, published their findings in the advanced online version of Nature Neuroscience, posted August 14, 2005. The research was sponsored by the National Institutes of Health, the EJLB Foundation, and the Klingenstein Foundation.
In their experiments, the researchers gave two male rhesus macaque monkeys chances to choose to look at either of two target lights on a screen. Looking at the "safe" target light yielded the same fruit juice reward each time. However, looking at the "risky" target light might yield a larger or smaller juice reward. The average juice reward delivered by looking at either target was the same.
To their surprise, the monkeys overwhelmingly preferred to gamble by looking at the risky target. This preference held, regardless of whether the scientists made the risky target reward more
variable, or whether the monkeys had received more or less fruit juice during the course of the day.
This result is another knock at the foundations of economic theories that assume perfect rational utility maximization by market actors.
"There was no rational reason why monkeys might prefer one of these options over the other because, according to the theory of expected value, they're identical," said Platt. The researchers also tested whether the monkeys were simply responding to the novelty of the risky target.
Well, the theory of expected value is wrong. Monkeys, like homo sapiens, are not homo economicus.
I wonder if manufacturers who sell products that are sometimes great and sometimes terrible attract repeat buyers who keep hoping for a repeat of that successful thrill.
"We wondered whether the monkeys preferred the risky target because the experiment was dull and boring, and they wanted the variability," said Platt. "But when we made the task more interesting by changing the color of the lights on each trial, the monkeys didn't care anything about it."
Monkeys, like many humans, like to gamble in games where the odds are stacked against them.
In fact, when the researchers made the average payoff for the risky target less than for the safe target, "we found that they still preferred the risky target," said Platt. "Basically these monkeys really liked to gamble. There was something intrinsically rewarding about choosing a target that offered a variable juice reward, as if the variability in rewards that they experienced was in itself rewarding."
Even when the researchers subjected the monkeys to a string of "losses," the high of a "win" appeared to keep them going, said Platt.
"If they got a big reward one time on the risky choice, but then continued to get small rewards, they would keep going back as if they were searching or waiting or hoping to get that big payoff. It seemed very, very similar to the experience of people who are compulsive gamblers. While it's always dangerous to anthropomorphize, it seemed as if these monkeys got a high out of getting a big reward that obliterated any memory of all the losses that they would experience following that big reward," said Platt.
The researchers inserted microelectrodes into the posterior cingulate cortex of the brain to further studied monkey gambling.
Confident that they had developed a valid animal model that would reveal insights into the brain mechanism for assessing risk, the researchers next explored the neural circuitry that governed that assessment. They threaded hair-thin microelectrodes into a brain region called the posterior cingulate cortex, which studies in humans and animals had implicated in the processing of information on rewards. They then measured the electrical activity of neurons in the region as they administered the same behavioral task to the monkeys.
"We found that the neurons behaved very similarly to the monkeys," said Platt. "That is, as we increased the riskiness of a target, the neurons' activity would go up in the same way the monkey's frequency of choosing that target would go up. It was amazing the degree to which the activity of these neurons paralleled the behavior of the monkeys. They looked like they were signaling, in fact, the monkeys' subjective valuation of that target," he said. Further analysis of the neuronal activity indicated that, indeed, the neurons were reflecting the risk value the monkeys placed on the target, rather than an after-the-fact response to the payoff.
Where does this sort of insight lead to? Picture in the future microelectrodes inserted into the brain to deliver jolts to cancel out the feeling that some gamble is worth taking.
While Platt and McCoy believed they have isolated one component of the neural machinery of risk, they do not believe they have mapped the entire circuitry.
"We don't think the posterior cingulate cortex is by any means the only area that's important for assessing risk, for deciding what's valuable and for actually making a choice based on that valuation," said Platt. "We think that this is just part of a whole circuit that's involved in that process." However, he said, pinpointing a key region involved in risk assessment will enable further studies to map that circuitry.
"It's going to be interesting to trace this circuitry to see which parts of the brain are signaling something about subjective utility and which parts of the brain are signaling information about true reward and punishment experiences," said Platt.
The animal study results can help map where to place electrodes to cancel out the desire to gamble (not that the researchers made such a claim).
He emphasized that such animal studies are a highly useful complement to human studies and genetic studies using mice. Neuroimaging studies in humans performing such tasks can identify brain regions involved in making decisions based on risk, he said.
"And then, using these animals, we can do electrophysiological studies that allow us to understand how the fundamental processing units of the brain -- single nerve cells -- actually process information about reward and risk and uncertainty; and how that information might contribute to the actual decision process that results in the monkey's choice," said Platt. What's more, he said, the monkey studies allow manipulation of the circuitry using drugs to determine how the circuitry might malfunction in human disorders.
The monkey model of desire to gamble also makes for a convenient lab model for the development of pharmaceutical agents to dampen down the gambling impulse.
"For example, it is believed that people who have low levels of the neurotransmitter serotonin might be more risk prone and impulsive," said Platt. "Disturbances in such neurotransmitter systems might be the basis of pathological conditions like pathological gambling, obsessive-compulsive disorder and depression. We can do pharmacological manipulation of the serotonin system in monkeys to see how it influences risk perception and risk preferences, and whether we see changes at the level of the single neurons that we're studying."
Plus, if monkeys can be genetically engineered to be less prone to gambling then some day the same will be doable with offspring genetic engineering.
What's more, said Platt, the studies with monkeys can guide studies in mice, in which scientists can make genetic alterations in the mice and study the behavioral effects of those alterations. Such studies could contribute to understanding of the genetic basis of compulsive behaviors and other such behavioral disorders.
With greater understanding comes greater powers to manipulate. How about a virus genetically engineered for surreptitious injection into a political opponent to make him a reckless gambler? Risks with illicit affairs or foreign policy adventures might help bring down the politician. Then again, if recent experience serves as a guide, perhaps not. Hmmm....
PHILADELPHIA, PA--Financially richer people tend to be happier than poorer people, according to sociological researcher Glenn Firebaugh, Pennsylvania State University, and graduate student Laura Tach, Harvard University. Their research is focused on whether the income effect on happiness results largely from the things money can buy (absolute income effect) or from comparing one's income to the income of others (relative income effect). They present their research in a session paper, titled "Relative Income and Happiness: Are Americans on a Hedonic Treadmill?," at the American Sociological Association Centennial Annual Meeting on August 14.
Firebaugh argues that, in evaluating their own incomes, individuals compare themselves to their peers of the same age. Therefore a person's reported level of happiness depends on how his or her income compares to others in the same age group. Using comparison groups on the basis of age, the researchers find evidence of both relative and absolute effects, but relative income is more important than absolute income in determining the happiness of individuals in the United States. This may result in a self-indulgent treadmill, because incomes in the United States rise over most of the adult lifespan.
"If income effects are entirely relative, then continued income growth in rich countries today is irrelevant to how happy people are on the whole," says Firebaugh. "Rather than promoting overall happiness, continued income growth could promote an ongoing consumption race where individuals consume more and more just to maintain a constant level of happiness."
Firebaugh tested what he refers to as the hedonic treadmill hypothesis, which uses a comparison of age-based cohorts. The hedonic treadmill requires a specific type of relative income effect--one where "keeping up with the Joneses" means continually increasing one's own income, because we can be sure that the Joneses are increasing theirs.
This suggests a reason why some find socialism attractive: People want to be freed from the competitive need to keep up with others. Socialists want to eliminate the ability to get ahead so that they no longer have to worry about the need to keep up others in order to preserve their happiness. Therefore the lure of socialist policies stems from innate genetically determined features of how the mind works.
The researchers' measured the age, total family income, and general happiness of 20- to 64-year-olds using analysis from the 1972-2002 General Social Survey. They controlled for health, education, effects of getting older, race, and marital status. Happiness was measured using a self-report response of "very happy," "pretty happy," or "not too happy."
While income is important in determining happiness, Firebaugh's data found that physical health was the best single predictor of happiness, followed by income, education, and marital status. The researchers found a relative income effect--the richer you are relative to your age peers, the happier you will tend to be.
Aside: This is yet another argument for the development of Strategies for Engineered Negligible Senescence or SENS. SENS therapies will rejuvenate the body and make everyone healthier. Since healthiness is the most powerful determinant of happiness rejuvenation therapy will greatly increase happiness for entire populations.
"We find with and without controls for age, physical health, education, and other correlates of happiness," said Firebaugh, "that the higher the income of others in one's age group, the lower one's happiness. Families whose income earners are in jobs with flat income trajectories are likely to become less happy over time. Thus the relative income effect observed here implies adverse effects for some individuals over the working years of their life cycles."
On the other hand, the longer people live the more they will feel unhappy due to losing out to more successful people their same age. The range of incomes and accumulated assets will get wider with passing years due to differing levels of ability, motivation, and luck. However, if everyone walks around in youthful bodies comparison between oneself and people of one's own age group will become more difficult. How to tell who is your age or 50 years older or younger than you?
But comparison of relative wealth as a source of unhappiness will be solved by advances in neuroscience. People will use drugs, gene therapies, and cell therapies to reprogram their circuits for determining their level of happiness. For example, I predict that people setting out to achieve some goal (e.g. getting an advanced degree or starting a business or leaning to play a musical instrument) will get their own brains reprogrammed to cause them to get more of their sense of happiness from how well they are progressing toward that goal and less from comparison with other people.
One of the problems posed by cheap worldwide communications technologies is that they increase the pool of people to which people compare each other. Someone in Pakistan or Yemen or South Africa can compare their material possessions to those in Britain or America or Taiwan and find more people who are far better off than them. Therefore satellite TV and the internet are probably sources of increased unhappiness (and likely resentment) among the poorer folks who have access to such technologies. Super poor people in places like Bangladesh or Niger probably feel less unhappiness about relative levels of wealth than moderately poor people in places like Egypt or Indonesia.
Update: Another point: If rich peope were to hide their wealth by living in places that are either obscure (plant trees and bushes and live in small remote valleys in rural locales or perhaps on private islands) or in homes that are outwardly modest looking then the happiness of an overall population would be raised. Also, if wealth gets concentrated into a small number of countries and the poorer folks are kept from emigrating to those countries then again relative differences in levels of wealth would be less obvious and poorer folks would probably feel happier.
Monkeys respond to the same odds differently depending on how the choices are presented.
New Haven, Conn., June 20, 2005—The basic economic theory that people work harder to avoid losing money than they do to make money is shared by monkeys, suggesting this trait has a long evolutionary history, according to a Yale University study under review by the Journal of Political Economy.
This phenomenon, known as “loss aversion,” refers to the tendency for people to strongly prefer avoiding losses to acquiring gains. “A large body of studies suggest that losses are more than twice as psychologically powerful as gains,” said author M. Keith Chen, assistant professor at Yale School of Management.
In this study conducted with Venkat Lakshminaryanan, a research assistant in the Department of Psychology, and Laurie Santos, assistant psychology professor and director of the Capuchin Cognition Laboratory at Yale, tufted capuchin monkeys were given small disks to trade for rewards—apples, grapes or gelatin cubes. The researchers said capuchins are well-suited subjects for study since they are relatively large-brained primates, skilled problem solvers, and a close evolutionary neighbor to humans.
In their studies monkeys were given a budget of disks and asked to decide how much to spend on apples, and how much to spend on the gelatin cubes, even as the prices of these goods and the size of their budgets fluctuated. Capuchins performed much like humans do. Capuchins, like humans, react rationally to these fluctuations.
In a second experiment, capuchins were asked to choose between spending a token on one visible piece of food that half the time gave a return of two pieces, or two pieces of visible food, that half the time gave a return of only one piece. Economic theory predicts that consumers should not care which of these outcomes they receive since they are essentially both 50-50 shots at one or two pieces of food. The capuchins, however, vastly preferred the first gamble, which is essentially a half chance at a bonus, than the second gamble, which is essentially a half chance at a loss.
“The goal of this work,” said Santos, “is to learn whether other animals share some of our basic economic decision processes or whether human economic behavior is unique to our own species.”
“The economic view,” Chen added, “says people are aware, rational and in control of their major decisions. Social psychology cuts in the opposite direction, maintaining that people are often unaware of the forces that dictate their behavior. We wanted to understand the interactions of these two things. What we’ve shown is that capuchin monkeys look remarkably like us; making rational decisions in many of the same settings that humans get right, but also make many of the same mistakes we make.”
Their work provides an evolutionary spin on the current debate about why Americans do not save enough for retirement or put enough of their savings into the stock market. “Although the stock market offers a better rate of return than investing in safer financial products, such as bonds, people tend to experience stock market fluctuations through the biased lens of loss aversion, a lens that appears to be shared with other primates,” Santos said. Chen added, “We are fighting tendencies that may be biologically hard-wired.”
We are more like monkeys that most of are willing to admit. Resistance to the theory of evolution is just one manifestation of that reluctance.
To learn about work done on humans with loss aversion read about the classic experiment on risk aversion done by Kahneman, Knetsch, and Thaler with coffee mugs. Basically, people value objects that they own more than objects that they could buy. Also, see the Wikipedia Loss Aversion entry. Or see an example that perhaps more closely mirrors the example with the monkeys where different styles of framing choices causes different preferred outcomes.
This whole area of economics calls for attempts to develop methods to compensate for systematic biases in human cognitive processes. For example, to overcome resistance to regulatory changes due to status quo bias loss aversion Lynne Kiesling of Knowledge Problem argues that experiments to demonstrate the effects of policy changes might help reduce the resistance to changes in the regulatory status quo.
People overestimate the amount of extra time they will have in the future to do additional tasks. (same article here)
If your appointment book runneth over, it could mean one of two things: Either you are enviably popular or you make the same faulty assumptions about the future as everyone else. Psychological research points to the latter explanation. Research by two business-school professors reveals that people over-commit because we expect to have more time in the future than we have in the present. Of course, when tomorrow turns into today, we discover that we are too busy to do everything we promised.
The study appears in the February issue of the Journal of Experimental Psychology (JEP): General, which is published by the American Psychological Association (APA).
Gal Zauberman, PhD, of the University of North Carolina at Chapel Hill, and John Lynch Jr., PhD, of Duke University, also learned from paper-and-pencil questionnaires (respondents to seven different surveys numbered 95, 68, 241, 61, 264, 48 and 130) that that this expectation of more time “slack,” a surplus of a given resource available to complete a task, is more pronounced for time than money.
The authors suspect that’s because every day’s a little different: The nature of time fools us and we “forget” about how things fill our days. Money is more “fungible,” freely exchanged for something of like kind -- such as four quarters for a dollar bill. Write Zauberman and Lynch, “Barring some change in employment or family status, supply and demand of money are relatively constant over time, and people are aware of that. Compared with demands on one’s time, money needs in the future are relatively predictable from money needs today.”
Participants believed that both time and money would be more available in “a month” than “today,” and believed it more strongly for time than for money. A deeper investigation of a psychological phenomenon called “delay discounting,” in which people tend to lessen the importance of future rewards, showed that people also discounted future time more than both gains and losses in future money.
The best time to ask someone for a favour is at least several weeks in advance, a new study suggests. The research finds that people consistently over-commit because they expect to have more time in the future than they do right now.
Yes, I believe I do this. Most of the time future of one's life a couple of months from now looks simpler than the future of one's life tomorrow. More of the detailed clutter of tasks for tomorrow are clear in one's mind than is the case for days further out in the future.
Is this tendency to underestimate the number of more distant future tasks simply a result of having longer lists of tasks to do tomorrow versus a month from now? Or is something deeper at work? The ability to think of all the tasks one has to do a month from now may have been maladaptive. The ability to think in detail about the many detailed tasks one might do weeks into the future was probably a counter-productive distraction from concentration on more immediate needs.
Fun goods are much preferred as long as they are not compared to more practical goods.
In a study that sheds new light on how consumers choose between pleasurable or practical products, a University of Washington researcher has found that people are more likely to buy fun products, but only if the situation allows them the flexibility to rationalize their purchases.
According to Erica Okada, an assistant professor of marketing at the UW Business School, goods can be broadly categorized into hedonic goods that offer enjoyment and utilitarian goods that offer practical functionality.
For example, she said, in the wide product category of automobiles, sports cars are more hedonic and sport utility vehicles are generally more utilitarian. Between a sports car and an SUV, consumers may find the prospect of buying a sports car more appealing, but in a side by side comparison, consumers are much more likely to buy the SUV to avoid feeling guilty for buying something that is perceived more as a want than a need.
She found that when a hedonic product and a utilitarian one of comparable value are each presented singly for evaluation, the hedonic alternative tends to elicit a higher rating. However, when the two are presented side by side, the utilitarian alternative is more likely to be chosen.
So then is the secret of the growth in popularity of Sports Utility Vehicles the presence of the word Utility in the middle? Makes sense. People can spend a lot of money on a fancy vehicle and defend their choice by saying it is practical. This suggests that marketers need to relabel various products to make them seem more utilitarian. How about Emergency Work Energy Boost Ice Cream marketed to people who need to work long hours to complete projects?
Or how about selling sports cars based on the idea that their low profiles make them more able to handle heavy crosswinds when trying to evacuate an area ahead of a hurricane? Show an animation of SUVs getting blown into a Lousiana Bayou while practical people escape New Orleans in advance of hurricane winds and massive flooding. Maybe sports cars need to be sold with 4 wheel drive and wide tires designed to keep going on icy roads. Or how about a battery hybrid sports car? People could buy it to protect the environment.
People view hedonic (pleasurable) versus practical goods differently in terms of time and money spent to acquire them.
In addition, Okada found that the difference in the need for justification also affects the combination of time, or effort, and money that people choose to expend in order to acquire hedonic versus utilitarian items. Specifically, she said people have a relative preference to pay in time for hedonic goods, and in money for utilitarian goods.
"Consumers are generally willing to pay a premium for convenience, and go the distance for a bargain," she said. "Given a choice between paying in time versus money, individuals are more likely to go the extra mile and find a good deal on the DVD player – that is, pay in time – and more likely to pay a higher price monetarily at a convenient location for the food processor."
Maybe selling hedonic goods with a promise on the part of the seller to donate some percentage of the sale to some charity (say helping kids who have cancer) would give people the opening they need to rationalize the purpose: "I'm doing it for the kids" or "I'm doing it to save the Siberian tigers from extinction". Each type of hedonic good may need a different ideal charity that its sales could be paired up with. Who or what do you need to help to allow you to feel good about buying a sports car? Abandoned children perhaps? Is it best to medical research in order to justify the eating of ice cream? Surely research could provide the answers to these questions all broken out by demographic profiles and hot guilt buttons to cool down. Of course, this all has to be done in ways that do not dampen the pleasure of the purchase.
Something like a sports car could be sold with real life inspiring stories of practical uses of the product: "I was called in to do emergency heart surgery at this rural hospital in the middle of the night and I was the only one in 250 miles who could do it. If I hadn't sacrificed my plans for a fourth vacation home to buy the Lamborghini there is just no way I could have driven 150 miles an hour to make it to the hospital in time so save the heart and life of that mother of 4 children who had been severely injured in a car accident. Those kids have their mom to take care of them thanks to my Lamborghini. I can't possibly give it up."
Commuting is the least enjoyable activity for women? I bet women would enjoy commuting a lot more if they regularly car-pooled with close friends.
The technique, described in the Dec. 3 issue of Science, provides insight into what people actually enjoy and what kinds of factors affect how happy we are with our lives.
Some of the findings confirm what we already know while others are counter-intuitive. The researchers assessed how people felt during 28 types of activities and found that intimate relations were the most enjoyable, while commuting was the least enjoyable.
More surprisingly, taking care of their children was also among the less enjoyable activities, although people generally report that their children are the greatest source of joy in their lives.
"When people are asked how much they enjoy spending time with their kids they think of all the nice things---reading them a story, going to the zoo," said University of Michigan psychologist Norbert Schwarz, a co-author of the Science article. "But they don't take the other times into account, the times when they are trying to do something else and find the kids distracting. When we sample all the times that parents spend with their children, the picture is less positive than parents expect. On the other hand, we also find that people enjoy spending time with their relatives much more than they usually assume."
General reports of what people enjoy may also differ from descriptions of how people actually feel in a specific situation because many people hesitate to report socially inappropriate feelings. This is less of a problem when they report on specific episodes. "Saying that you generally don't enjoy spending time with your kids is terrible," Schwarz said, "but admitting that they were a pain last night is quite acceptable." The new Day Reconstruction Method provides a better picture of people's daily experiences by improving accurate recall of how they felt in specific situations.
By illuminating what kinds of activities, under what conditions and with what partners, are most likely to be linked with positive or negative feelings, the method has potential value for medical researchers examining the emotional burden of different illnesses and the health consequences of stress, according to Schwarz, who is a research scientist at the U-M Institute for Social Research (ISR).
For the study, researchers analyzed questionnaires completed by a convenience sample of 909 working women. Participants answered demographic and general satisfaction questions and were asked to construct a short diary of the previous day: "Think of your day as a continuous series of scenes or episodes in a film," the directions began. After participants developed their diary, they answered a series of structured questions about each episode, including when it started and ended, what they were doing, where they were, with whom they were interacting, and how they felt. The study builds on earlier work on Americans' use of time, initiated by ISR economist F. Thomas Juster.
The average number of daily activities participants reported was 14.1 and the average duration of each episode was 61 minutes.
In addition to intimate relations, socializing, relaxing, praying or meditating, eating, exercising, and watching TV were among the most enjoyable activities. Commuting was the least enjoyable activity, with working, doing housework, using the computer for e-mail or Internet, and taking care of children rounding out the bottom of the list.
Interactions with friends and relatives were rated as the most enjoyable, followed by activities with spouses or significant others, children, clients or customers, co-workers and bosses. At the bottom of the list: activities done alone.
Personal characteristics such as trouble maintaining enthusiasm (an indicator of depression) or a poor night's sleep exerted a pervasive influence on how people felt during daily activities. Features of the current situation such as the identity of partners in an interaction or the level of time pressure experienced at work exerted a powerful effect.
But general life circumstances---such as how secure people think their jobs are, or whether they are single or married---had a relatively small impact on their feelings throughout the day. These factors were closely linked with how satisfied people said they were with their lives in general, but had little influence on how positive they felt during specific activities.
"It's not that life circumstances are irrelevant to well-being," notes Schwarz. "On the contrary, we found that people experience large variations in feelings during the course of a normal day. This variation highlights the importance of optimizing the allocation of time across situations and activities. If you want to improve your well-being, make sure that you allocate your time wisely."
Unfortunately, that's not easy. When the researchers examined the amount of time spent on various activities, they found that people spent the bulk of their waking time---11.5 hours---engaged in the activities they enjoyed the least: work, housework and commuting.
Women do not like using the computer to surf the internet. No wonder most blog comment posters appear to be men. But web surfing is a solitary activity in most cases. No wonder women do not like it.
Women do not like their children as much as they pretend to.
On average, the 900 women gave "Intimate relations" a positive score of 5.10, compared to 4.59 for socializing. Housework scored 3.73, which was better at least than working at 3.62 and commuting with a lowly score of 3.45.
As for who the women preferred to be with, friends clearly won out with a positive score of 4.36. Children landed in the middle, after relatives and spouses.
The measurement method to produce these results is called the Day Reconstruction Method (DRM).
The tool, called the Day Reconstruction Method (DRM), assesses how people spend their time and how they feel about, or experience, activities throughout a given day. In a trial of the new technique, a group of women rated the psychological and social aspects of a number of daily activities. Among these women, relaxing with friends was one of the most enjoyable activities, and the least enjoyable was commuting.
DRM is described by Daniel Kahneman, Ph.D., a professor of Psychology and Public Affairs at Princeton University, and colleagues in the December 3, 2004, issue of Science. Dr. Kahneman was joined in this study by his Princeton University colleague, economist Alan B. Krueger, and psychologists David A. Schkade of the University of California, San Diego, Norbert Schwarz of the University of Michigan, and Arthur A. Stone of Stony Brook University.
"Current measures