North Texas Daily

Economics, morality work together

Economics, morality work together

February 01
00:20 2011


A professor of mine recently described Adam Smith, the so-called father of modern economics, as a heroin-addicted economist who threw numerous wild parties that escalated into massive, unrestrained orgies of unheard proportions.

My professor was joking. It was an attempt to grab our attention and raise our interest in Smith.

Unfortunately, some of those who disparage the market system view it and its supporters along the same lines as this version of Smith: immoral, vile and exploitative. In their minds, capitalism breeds nothing but selfishness and a disregard for one’s fellow man. Society cannot continue to function with a system that destroys charity and virtue.

What is sad about this widely believed version of capitalism is that it is as fictional as my professor’s account of Adam Smith.

Behavioral economics is a new neuroscience that seeks to understand the psychology behind economic decisions.

Among the experimental bargaining games developed by researchers is one known as the Ultimatum Game. The gist is a certain sum (say, $100) is split between you and your partner.

You are given the power to divide the sum between both of you, and if your partner accepts the division (whether it be $50-$50 or $99-$1), both of you get to keep the money. If your partner rejects the offer, both of you go home empty-handed.

Irrationally, most partners reject unequal splits starting at about $70-$30. I say irrationally because any rational profit maximizer should take whatever free money they are offered, no matter if it is $50, $30 or $1.

Apparently, fairness takes precedence over economic self-interest — a trait of reciprocal altruism that developed over eons of exchange and barter.

What is even more surprising is that those heavily immersed in societies that are driven by market systems tend to leave more money on the table in these experiments. They are more altruistic than those who have little contact with market exchange, which writer Matt Ridley also found.

Ridley correctly points out that “enlightened self-interest lies in seeking cooperation.”

The data gathered by social scientist Arthur C. Brooks confirms the implications of these bargaining games. We Americans are often seen by some intellectuals as trailing behind our social democratic brothers and sisters in Europe.

It turns out that Americans privately donate more than Europeans, per capita. On top of this, Americans in favor of free enterprise give more to both religious and secular causes than those who favor governmental redistribution, even when adjusted for age, religion, income, gender, marital status, race, political views and education.

Anti-redistributionists are also more likely to give their time to charitable causes and activities, such as blood donations or giving money to a homeless person on the street.

To support markets is not to support the glorious selfishness of the individual. It is to support a collective enterprise — a system in which we all end up working for each other. In a system like that, we can all learn to be truly charitable.

Walker Wright is an organizational behavior and human resource management senior. He can be reached at

About Author




No Comments Yet!

There are no comments at the moment, do you want to add one?

Write a comment

Write a Comment

The Roundup

<script id="mcjs">!function(c,h,i,m,p){m=c.createElement(h),p=c.getElementsByTagName(h)[0],m.async=1,m.src=i,p.parentNode.insertBefore(m,p)}(document,"script","");</script>

Search Bar

Sidebar Thumbnails Ad

Sidebar Bottom Block Ad

Flytedesk Ad