What Price the Moral High Ground?

Abstract

I. Introduction Are people fundamentally selfish? In textbook accounts of rational choice, economists generally take an agnostic position on this question: a person's tastes are her own business, and rationality requires merely that she act efficiently in pursuit of whatever preferences she happens to hold. This approach affords obvious flexibility. A person's anonymous gift to charity, for example, can be readily explained as the consequence of a taste for helping others. But this flexibility comes at the expense of what George Stigler might have called the "crankcase oil" problem. If we see a person drink the used crankcase oil from his car, and he then writhes in agony and dies, we can assert that he must have really liked crankcase oil. (Why else would he have drunk it?) Virtually any behavior, no matter how bizarre, can be "explained" after the fact by simply assuming a taste for it. With this difficulty in mind, many economists assume-implicitly or explicitly-that people are essentially self-interested. Thus, in Gordon Tullock's words, "the average human being is about 95 percent selfish in the narrow sense of the term" [21; 12, 12]. This approach has generated many powerful insights into human behavior. It explains, for example, why car pools form in the wake of increases in gasoline prices and why the members of "service" organizations are more likely to be real estate salespersons, dentists, chiropractors, insurance agents, and others with something to sell than to be postal employees or airline pilots. But the assumption of selfishness is not without drawbacks of its own. The most apparent is that, for every behavior that is consistent with this assumption, there seems to be another that contradicts it. Travelers on interstate highways leave tips for waitresses they will never see again. People vote in presidential elections and they walk away from profitable transactions whose terms they believe to be "unfair." Soldiers throw their bodies atop live grenades to save the lives of their comrades. In these and countless other ways, people do not seem to be maximizing utility functions of the egoistic sort. A second difficulty with the selfishness assumption is that our models of human behavior appear to mold the behavior of both the modelers themselves and those they teach. Thus, Gilovich, Regan and I found evidence that people with extensive training in economics are less likely than *Financial support for this research was provided by the Alfred P. Sloan and Russell Sage Foundations. I thank Todd Zielinski, Caglar Ozden, and Sendhil Mullainathan for able research assistance. I also acknowledge helpful discussions with Femida Handy, whose thoughtful paper [9] prompted me to complete the work I had begun several years earlier on this study. And of course I was deeply honored by John Siegfried's invitation to present my findings as the Distinguished Guest Lecturer to the 1995 annual meetings of the Southern Economic Association. 1. See Frank, Gilovich, and Regan [6] and Frank [5, ch. 12]. For a challenge to...

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