The Rational Optimist: How Prosperity Evolves. Matt Ridley
by pleasing others, are you being selfish or altruistic? As the philosopher Robert Solomon put it, ‘What I want for myself is your approval, and to get it I will most likely do what you think I should do.’
This ability to transact with strangers as if they were friends is made possible by an intrinsic, instinctive human capacity for trust. Often the very first thing you do when you meet a stranger and begin to transact with him or her, say a waiter in a restaurant, is to smile – a small, instinctive gesture of trust. The human smile, the glowing embodiment of Smith’s innate sentiment of sympathy, can reach right into the brain of another person and influence her thoughts. In the extreme case, a baby smiling causes particular circuits in its mother’s brain to fire and make her feel good. No other animal smiles in this way. But even among adults, a touch, a massage, or, as experiments have shown, a simple act of financial generosity, can cause the release of the hormone oxytocin in the brain of the recipient, and oxytocin is the chemical that evolution uses to make mammals feel good about each other – whether parents about their babies, lovers about their mates or friends about their friends. It works the other way, too: squirting oxytocin up the noses of students will cause them to trust strangers with their money more readily than those who receive a placebo squirted up their noses. ‘Oxytocin is a physiologic signature of empathy,’ says the neuro-economist Paul Zak, who conducts these experiments, ‘and appears to induce a temporary attachment to others.’
In 2004 Zak, together with Ernst Fehr and other colleagues, conducted one of the most revealing experiments in the history of economics, which showed just how specific the trusting effect of oxytocin is. They recruited 194 male students from Zurich (the experiment must not be done with females, because if one happens to be pregnant without knowing it, oxytocin might trigger labour) and made them play one of two games. In the first game, the trust game, a player called the investor is given twelve monetary units and told that if he hands some of it over to another player, the trustee, that amount will be quadrupled by the experimenter. Thus if he hands over all twelve units, the trustee will receive forty-eight. The trustee may pay some of it back to the investor, but has absolutely no obligation to do so. So the investor risks losing all his money, but if he can trust the trustee to be generous, he might stand to make a good profit. The question is: how much will the investor hand over?
The results were remarkable. Investors who receive a squirt of oxytocin up their noses before the experiment begins hand over 17 per cent more money than those who receive a squirt of inert saline solution up their noses, and the median transfer is ten units rather than eight. The oxytocin investors are more than twice as likely to hand over the full twelve units as the controls. Yet oxytocin has no such effect on the back transfers offered by the trustees, who are just as generous without oxytocin as with. So – as animal experiments have suggested – oxytocin does not affect reciprocity, just the tendency to take a social risk, to go out on a limb. Moreover, a second game, identical to the first except that the generosity of the trustees is randomly decided, shows no effect of oxytocin on the investors. So oxytocin specifically increases trusting, rather than general risk-taking. As with lovers and mothers, the hormone enables animals to take the risk of approaching other members of the species – it ‘links the overcoming of social avoidance with the activation of brain circuits implicated in reward’. It does this partly by suppressing the activity of the amygdala, the organ that expresses fear. If human economic progress has included a crucial moment when human beings learned to treat strangers as trading partners, rather than enemies, then oxytocin undoubtedly played a vital role.
People are surprisingly good at guessing who to trust. Robert Frank and his colleagues set up an experiment in which the volunteer subjects had conversations in groups of three for half an hour. After that, they were sent to separate rooms to play, with their conversation partners, the prisoner’s dilemma game (in which each player must decide whether to cooperate in the hope of a mutual gain or defect in the hope of a selfish gain if the other player cooperates). First, though, each player filled in a form not only saying how she would play with each partner, but also predicting what strategy each partner would adopt. As so often in this game, three-quarters of subjects said they would cooperate, reinforcing Smith’s point that people are innately nice (economics students, who have been taught the self-interested nature of human beings, are twice as likely to defect!). Remarkably, the subjects were very good at predicting who would cooperate and who would defect: people who were predicted to cooperate did so 81 per cent of the time, compared with 74 per cent for the group as a whole. People who were predicted to defect did so 57 per cent of the time, compared with 26 per cent for the group as a whole. Most people, says the economist Robert Frank, can think of an unrelated friend who they would trust to return to them a wallet that had been lost in a crowded concert. Conversely, people acutely remember the faces of those who cheat them.
Thus, the entire edifice of human cooperation and exchange, upon which prosperity and progress are built, depends on a fortunate biological fact. Human beings are capable of empathy, and are discerning trusters. Is that it, then? That human beings can build complicated societies and experience prosperity is down to the fact that they have a biological instinct that encourages cooperation? If only it were that simple. If only the arguments of Hobbes and Locke, of Rousseau and Voltaire, of Hume and Smith, of Kant and Rawls, could be brought to such a neat and reductionist conclusion. However, the biology is only the start. It is something that makes prosperity possible, but it is not the whole explanation.
Besides, there is still no evidence that any of this biology is uniquely developed in human beings. Capuchin monkeys and chimpanzees are just as resentful of unfair treatment as human beings are and just as capable of helpful acts towards kin or group members. The more you look at altruism and cooperation, the less uniquely human it appears. Oxytocin is common to all mammals, and is used for mother-love in sheep and lover-love in voles, so the chances are that it is available to underpin trust in almost any social mammal. It is necessary, but not sufficient to explain the human propensity to exchange. On the other hand, it is highly likely that during the past 100,000 years human beings have developed peculiarly sensitive oxytocin systems, much more ready to fire with sympathy, as a result of natural selection in a trading species. That is to say, just as the genes for digesting milk as an adult have changed in response to the invention of dairying, so the genes for flushing your brain with oxytocin have probably changed in response to population growth, urbanisation and trading – people have become oxytocin-junkies far more than many other animals.
Moreover, finding the underlying physiology of trust does little to explain why some human societies are much better at generating trust than others. As a broad generalisation, the more people trust each other in a society, the more prosperous that society is, and trust growth seems to precede income growth. This can be measured by a combination of questionnaires and experiments – leaving a wallet on the street and seeing if it is returned, for instance. Or asking people, in their native tongue, ‘generally speaking, would you say that most people can be trusted, or that you cannot be too careful in dealing with people?’ By these measures, Norway is heaving with trust (65 per cent trust each other) and wealthy, while Peru is wallowing in mistrust (5 per cent trust each other) and poor. ‘A 15% increase in the proportion of people in a country who think others are trustworthy,’ says Paul Zak, ‘raises income per person by 1% per year for every year thereafter.’ This is most unlikely to be because Norwegians have more oxytocin receptors in their brains than Peruvians, but it does suggest that Norwegian society is better designed to elicit the trust systems than Peruvian.
It is not at all clear what comes first: the trust instinct or trade. It is most unlikely that the oxytocin system fortuitously mutated into a sensitive form, which then enabled human beings to develop trading. Much more plausibly, human beings began tentatively to trade, capturing the benefits of comparative advantage and collective brains, which in turn encouraged natural selection to favour mutant forms of the human mind that were especially capable of trust and empathy