Posts tagged economics

A review of The Moral Molecule

The Guardian last week published a well-written, thought-provoking review by Oliver Burkeman of neuroeconomist Paul Zak’s recently released book, The Moral Molecule.

The crux of Zak’s new book is essentially this:

“Human beings are almost the only animals who regularly want to be around strange members of our species,” Zak says. “We kind of dig it! It’s fun! But to be able to do that, we have to have something in our heads that says: ‘Oliver is safe, Bob is not safe.’ And that’s oxytocin – this very old, evolutionarily ancient molecule” that helps us respond to being trusted with just the right degree of reciprocal trust in response. Zak’s earlier work had established that trust is a crucial precondition for economic prosperity (to conduct transactions, you have to be able to trust others) but also a result of it (once you’re no longer fighting for basic subsistence, you can afford to trust more). Now, he has located the biological mechanism through which this all worked. The Golden Rule –- treat others as you’d like to be treated –- is, Zak writes, “a lesson that the body already knows.”

Which, as Burkeman notes, raises a philosophical dilemma:

If oxytocin is the mechanism through which moral action takes place, that holds out the possibility — a cause of either optimism or alarm, depending on how you look at it — that by manipulating oxytocin, we might boost the levels of trust, generosity, and ultimately happiness in ourselves and the world at large.

For example:

… what is to stop car dealers, say, pumping oxytocin into showrooms, or politicians using it when canvassing?

Zak says that wouldn’t work (“it is incredibly hard to get enough oxytocin into the bloodstream”), but practical matters aside, the question highlights the ever-important difference between is and ought. The fact that we have the ability to play around with science to bring about better personal outcomes does not mean we ought to. My moral principles tell me deception and manipulation are almost always wrong, and we shouldn’t fool people into feeling better than they should.

Or should we?

Note: you can see my previous posting on Zak and his work here.

The moral impositions of markets

In his review of Harvard University philosopher Michael Sandel’s new book, What Money Can’t Buy: the Moral Limits of Markets, Weekly Standard columnist Jonathan Last says we need to accept that economic systems impose moral values:

Proponents of market morality claim that it imposes no belief system, but that’s just a smoke screen. Choosing to place utility maximization at the core of your belief system is no different from choosing any other guiding ideological precept. Every problem has an incentive-based solution; every tension can be resolved by seeking the maximally efficient outcome.

You can read some of my thoughts on this subject here and here.

"What Money Can’t Buy," the audiobook

You might remember that a couple weeks ago I posted on the forthcoming book from Harvard University political philosopher Michael Sandel, titled What Money Can’t Buy: the Moral Limits of Markets. The book, which I fully expect to be outstanding, is due out April 24, 2012. You can pre-order it here.

What I neglected to mention is that What Money Can’t Buy is also being released as an audiobook by Macmillan Audio, read by Michael Sandel himself. Fortunately for anyone interested — or at least readers of this blog — a publicist for Sandel has offered me the opportunity to post a clip from the audiobook. So, without further adieu:

Click here to hear an excerpt from the What Money Can’t Buy audiobook.

Enjoy! And, as always, let me know what you think.

A response to Sandel

Last week I posted a link to a preview of the forthcoming book from Harvard University political philosopher Michael Sandel, titled What Money Can’t Buy: the Moral Limits of Markets.

As can be expected in a society that so highly values capitalist thinking, Sandel’s arguments will almost certainly draw heavy criticism. Indeed, it turns out Tim Worstall of on Forbes.com has already responded to Sandel:

Michael Sandel, a political philosopher from Harvard, has put forward an argument that some things are just too important to be commodified through market relations. Sadly I think his argument breaks down because he’s made three really rather bad mistakes about the underlying nature of markets and their effects.

Click here to see what Worstall claims are Sandel’s three errors.

Morality on Wall Street?

Keeping on the topic of morality and economics, you might have heard that earlier this week a former Goldman Sachs executive, Greg Smith, detailed in the New York Times outlined why he was leaving the company:

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.

The widespread response to Smith’s article has the Times focusing its newest edition of “Room for Debate” on the question:

"Does morality have a place on Wall Street?"

Check out the eight responses by clicking here.

What isn’t for sale?

You might recall that a couple weeks ago I posted about the forthcoming book from Harvard University political philosopher Michael Sandel, titled What Money Can’t Buy: the Moral Limits of Markets. I am particularly excited for What Money Can’t Buy because Sandel has authored several of my favorite books, such as Public Philosophy: Essays on Morality in Politics and Justice: What’s the Right Thing to Do?

It turns out Sandel is now giving people a brief preview of the book, which is out April 24, on The Atlantic. Check it out:

While it is certainly true that greed played a role in the financial crisis, something bigger was and is at stake. The most fateful change that unfolded during the past three decades was not an increase in greed. It was the reach of markets, and of market values, into spheres of life traditionally governed by nonmarket norms. To contend with this condition, we need to do more than inveigh against greed; we need to have a public debate about where markets belong—and where they don’t…The difference is this: A market economy is a tool—a valuable and effective tool—for organizing productive activity. A market society is a way of life in which market values seep into every aspect of human endeavor. It’s a place where social relations are made over in the image of the market. The great missing debate in contemporary politics is about the role and reach of markets. Do we want a market economy, or a market society?

You can pre-order What Money Can’t Buy here.

Study ties wealth to unethical behavior

The higher a person’s income, the more he or she is prone to act unethically, according to a new study on the relationship between socioeconomics and ethics.

The study, carried out by researchers at the University of California, Berkeley and released in the most recent issue of Proceedings of the National Academy of Sciences, included seven different experiments of real-world and laboratory settings, from rude drivers to test subjects given a chance to take candy from children.

Said psychologist Paul Piff of the findings:

“Occupying privileged positions in society has this natural psychological effect of insulating you from others. … You’re less likely to perceive the impact your behavior has on others. As a result, at least in this paper, you’re more likely to break the rules.”

I have not yet read the paper, but it is important to note the headline of the Wired article to which I linked above: “Wealth Could Make People Unethical” (emphasis mine). I raise this point because the study (apparently) did not find that people necessarily swing toward unethical behavior when confronted with higher levels of income. That would make sense, since there are plenty of ethical wealthy people. Instead, it seems more likely that people have certain psychological tendencies (ie, toward wanting more money), and their surroundings (ie, insane amounts of wealth, privilege, and insulation) help to draw out or tamp down those tendencies.

What do you think?

Linking morality and economic behavior

If one of our main goals as a society is to maximize collective prosperity, and we were given the opportunity to pick between a range of moral beliefs and values, what kind should we choose?

That’s the central question of new book, The Moral Foundation of Economic Behavior, by David Rose, chair and professor of economics at University of Missouri-St. Louis. For those unlikely to buy and read it, Rose recently discussed his book with Russ Roberts of the podcast EconTalk. Here’s a synopsis of their conversation:

Rose argues that morality plays a crucial role in prosperity and economic development. Knowing that the people you trade with have a principled aversion to exploiting opportunities for cheating in dealing with others allows economic actors to trust one another. That in turn allows for the widespread specialization and interaction through markets with strangers that creates prosperity. In this conversation, Rose explores the nature of the principles that work best to engender trust. The conversation closes with a discussion of the current trend in morality in America and the implications for trust and prosperity.

The entire podcast can be heard here.

Michael Sandel’s forthcoming book

Harvard University political philosopher Michael Sandel has authored several of my favorite books, including Public Philosophy: Essays on Morality in Politics, and most recently, Justice: What’s the Right Thing to Do?

Sandel is now back with a new book, titled What Money Can’t Buy: the Moral Limits of Markets. From Amazon:

Should we pay children to read books or to get good grades? Should we put a price on human life to decide how much pollution to allow? Is it ethical to pay people to test risky new drugs or to donate their organs? What about hiring mercenaries to fight our wars, outsourcing inmates to forprofit prisons, auctioning admission to elite universities, or selling citizenship to immigrants willing to pay?

In What Money Can’t Buy, Michael J. Sandel takes up one of the biggest ethical questions of our time: Isn’t there something wrong with a world in which everything is for sale? If so, how can we prevent market values from reaching into spheres of life where they don’t belong? What are the moral limits of markets?

In recent decades, market values have crowded out nonmarket norms in almost every aspect of life—medicine, education, government, law, art, sports, even family life and personal relations. Without quite realizing it, Sandel argues, we have drifted from having a market economy to being a market society.

In Justice, an international bestseller, Sandel showed himself to be a master at illuminating, with clarity and verve, the hard moral questions we confront in our everyday lives. Now, in What Money Can’t Buy, he provokes a debate that’s been missing in our market-driven age: What is the proper role of markets in a democratic society, and how can we protect the moral and civic goods that markets do not honor and money cannot buy?

The book is due out April 24, 2012. You can pre-order it here. Trust me: the book should be an outstanding read.

Enjoy your weekend.

The ethical banker

Many people believe that careers in the banking industry necessarily demand selfishness and unethical behavior. One consequence of this thinking is that ethically concerned youngsters tend to shy away from careers in finance and investing.

Yet Oxford University philosopher Will Crouch is warning young people to not automatically consider banking a less ethical option than others. In fact, Crouch argues that people with a strong interest in ethics should opt for careers in banking.

His reasoning:

… if ethical people went into finance — and then gave back a slice of their higher salaries — the impact would be greater than a career as a charity worker.

"We are calling on people to be like Robin Hood, but by earning the money rather than stealing it," he says.

He argues that someone becoming an investment banker could create sufficient wealth to make philanthropic donations that could make a bigger difference than someone choosing to work in a “moral” career such as an aid charity.

"The direct benefit a single aid worker can produce is limited, whereas the philanthropic banker’s donations might indirectly help 10 times as many people," says Mr Crouch.

Click here for the rest of the story.