Michael Shermer writes "The Skeptic," a regular column in Scientific American. In February 2008's "The Mind of the Market," Shermer discusses why the seeming irrationality of our financial decision-making — we are anything but rational in any purely abstract sense — is really much more sensible than it is often given credit for being.
A scientist puts you in a game with another individual in which the scientist offers you alone $100 and tells you to offer any part of it to your counterpart in the game. If he or she accepts your offered amount, you will receive the $100 and dole out the agreed portion of it to your counterpart. But if he or she refuses your offer, neither of you gets a penny.
How do you decide how much to offer your counterpart?
You might think this way: my counterpart is surely a rational individual who should accordingly be satisfied with any pittance of a sum I'm willing to part with. After all, he (or she) would rather have a tiny amount of free money than no free money at all, right?
But, no. It turns out that most players in the counterpart role won't settle for less than, say, $30 of the original $100.
Why not? Because it offends their (and our own) built-in notion of fairness that the split should be any less than 70-30.
Why does it make sense to be fair, and to expect fairness in return? Because (a) we know we'll be dealing again and again with our various societal counterparts, not just on a one-shot basis, but continually, and also (b) a conscious awareness of the fairness imperative has been programmed into us by evolution.
The key thing here is that we humans actually have a built-in idea of fairness. It's not just a learned-through-culture add-on. Our primate relatives, experiments show, have one too! So we and our hairier cousins share a capacity for fairness, because evolution gave it to us. Shermer:
Just as it is a myth that evolution is driven solely by “selfish genes” and that organisms are exclusively greedy, selfish and competitive, it is a myth that the economy is driven by people who are exclusively greedy, selfish and competitive. The fact is, we are ... selfish and selfless, cooperative and competitive. There exists in both life and economies mutual struggle and mutual aid. In the main, however, the balance in our nature is heavily on the side of good over evil. Markets are moral, and modern economies are founded on our virtuous nature. The Gordon Gekko “Greed Is Good” model of business is the exception, and the Google Guys “Don’t Be Evil” model of business is the rule. If this were not the case, market capitalism would have imploded long ago.
Here is an area, then, where science and religion chime together to challenge philosophical attitudes of the past which held that human beings are, at base, selfish and venal. Religion has long claimed that we are destined to have angels' wings. Now, evolution science can confirm that a sense of fairness and morality is our birthright. But much in the modern history of philosophy has claimed the opposite.
The 18th-century Scots philosopher David Hume, according to Arthur Herman's How the Scots Invented the Modern World: The True Story of How Western Europe's Poorest Nation Created Our World & Everything in It, was a religious skeptic who insisted that:... self-interest is all there is ... [so] a secular Golden Rule: I won't disturb your self-interest, if you don't disturb mine [is] the best we can hope for ... [since] morality is largely a matter of convention and ingrained habit [,] the laws of nature offer nothing to help, and appeals to reason fall on deaf ears ... . (pp. 200-202)
Hume made no allowance for Darwin's theory of evolution, which was more than a century off when he published A Treatise on Human Nature in 1734, or for how that theory might be extended in the 21st century to show how the laws of nature are perfectly capable of generating a species (or more than one) with an inbuilt moral sense.
So much so, in fact, that our species can be criticized for not being perfectly rational when it comes to money matters. Our innate sense of fairness sometimes trumps our "reason."
(Another, similar article by Michael Shermer can be read here.)
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