Wednesday, April 19, 2006

Money and Human Behavior

Money and Human Behavior

There was a very revealing article in the NYT, Friday, April 7, 2006, p. A22, titled "Study Links Punishment To An Ability to Profit." The full study appeared the same day in Science. To quote the essence of the article: "Given a choice, most people playing an investment game created by the researchers initially decided to join a group that did not penalize its members. But almost all of them quickly switched to a punitive community when they saw that the change could profit them personally."

This raises all sorts of questions about how and why we are driven by self-interest when money is involved. It also speaks to the benefit to all when governance is clear and consequential. To tie the outcomes to a monetary incentive magnifies the power of the concept. Economics, the field that focuses on how we meet each others physical needs, thrives when the awareness of interdependence is at the fore. In this context, one works to meet others' needs as others are working to meet yours. This can be scaled to both local and global levels. As the NYT article makes abundantly clear, this is not how we are wired to think as economic citizens. Still, a system in which the rules are fair and equally applied, and each person is given the tools to enforce those rights, is better than the world of disenfranchisement and wealth disparity in which those with the wealth also create and manage the rules. While the laboratory was a simple investment game, it points to the need for a real balance between self-interest and community interest.

John Bloom © 2006

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