The Theory That Self-Interest Is the Sole Motivator Is Self-Fulfilling

New York Times
February 17, 2005
ECONOMIC SCENE

By ROBERT H. FRANK

A NEW YORKER cartoon depicts a well-heeled, elderly gentleman taking his grandson for a walk in the woods. "It's good to know about trees," he tells the boy, before adding, "Just remember, nobody ever made big money knowing about trees."

If the man's advice was not inspired directly by the economist's rational-actor model, it could have been. This model assumes that people are selfish in the narrow sense. It may be nice to know about trees, it acknowledges, but it goes on to caution that the world out there is bitterly competitive, and that those who do not pursue their own interests ruthlessly are likely to be swept aside by others who do.

To be sure, self-interest is an important human motive, and the self-interest model has well-established explanatory power. When energy prices rise, for example, people are more likely to buy hybrid vehicles and add extra insulation in their attics. But some economists go so far as to say that self-interest explains virtually all behavior. As Gordon Tullock of the University of Arizona has written, for example, "the average human being is about 95 percent selfish in the narrow sense of the term." Is he right? Or do we often heed social and cultural norms that urge us to set aside self-interest in the name of some greater good?

If the search is for examples that contradict the predictions of standard economic models, a good rule of thumb is to start in France. During my recent sabbatical in Paris, I encountered many such examples, but one in particular stands out. One mid-November afternoon, I asked my neighborhood wine merchant if he could recommend a good Champagne. It was the week before Thanksgiving, and my wife and I had invited a few American friends to our apartment for a turkey dinner.

He just happened to have an excellent one on sale for only 18 euros. (Normal price, 24 euros.) Fine, I said, and then asked if he could also recommend a bottle of cassis, since I knew some of our guests would want a kir royale - a cocktail of cassis and Champagne. In that case, he said, I would have no need for the high-quality Champagne, because no one would be able to tell the difference once it was mixed with cassis. Well, then, what should I buy? He brought back a bottle that he said would be just right for the purpose.

That particular Champagne, however, was not on sale. When he told me it was 20 euros per bottle - 2 euros more than the better one - an awkward pause ensued. Though I thought I knew the answer, I felt I had to ask whether a kir royale would taste worse if made with the better Champagne. He assured me it would not. And because I knew that some of us would be drinking our Champagne straight, I bought several bottles of the better one. He did not protest, but I could feel him reclassify me as yet another American barbarian.

For many French, the logic of the self-interest model is trumped by an aesthetic principle about what Champagnes are right for specific applications. This particular principle leads to a better outcome over all, because it directs the best Champagne to the uses in which quality matters most. So even though I personally was better off for having ignored the merchant's advice (because I got to drink a better Champagne and spent less), at least some of the better Champagne I bought was wasted.

France is, of course, not the only place in which the self-interest model's predictions fall short.

Most Americans, for example, leave tips even after dining in restaurants they will never visit again. We take the trouble to vote in presidential elections, even though no single individual's vote has ever changed the outcome in any state. We make anonymous donations to charity. From society's perspective, our willingness to forgo self-interest in such instances leads to better outcomes than when we all act in a purely selfish manner.

Does what we believe about human motivation matter? In an experimental study of private contributions to a common project, two sociologists from the University of Wisconsin, Gerald Marwell and Ruth Ames, found that first-year graduate students in economics contributed an average of less than half the amount contributed by students from other disciplines.

Other studies have found that repeated exposure to the self-interest model makes selfish behavior more likely. In one experiment, for example, the cooperation rates of economics majors fell short of those of nonmajors, and the difference grew the longer the students had been in their respective majors.

My point is not that my fellow economists are wrong to stress the importance of self-interest. But those who insist that it is the only important human motive are missing something important. Even more troubling, the narrow self-interest model, which encourages us to expect the worst in others, often brings out the worst in us as well.

Perhaps the theories of human behavior embraced by other disciplines influence their practitioners in similar ways. A core principle of behavioral biology, for example, is that males are far more likely than females to engage in "extra-pair copulations." Does teaching this model year after year make male biologists more likely to stray?

Several years ago, I attended a dinner with a group of biologists that included a married couple. After describing the research about how economics training appears to inhibit cooperation, I asked whether anyone had ever done a study of whether males in biology were more likely than scholars from other disciplines to be unfaithful to their partners. The uncomfortable silence that greeted my question made me wonder whether I had stumbled onto a data point relevant for such a study.

But if biologists are like economists in being influenced by their own theories, they are different from us in another respect: Their most cherished hypothesis is much less likely than ours to be contradicted by the French.

Robert H. Frank is an economist at the Johnson School of Management at Cornell University and the author, most recently, of "What Price the Moral High Ground?"