Hostname: page-component-586b7cd67f-rdxmf Total loading time: 0 Render date: 2024-11-24T05:52:37.492Z Has data issue: false hasContentIssue false
  • English
  • Français

HOW SHOULD WE RECONCILE SELF-REGARDING AND PRO-SOCIAL MOTIVATIONS? A RENAISSANCE OF “DAS ADAM SMITH PROBLEM”

Published online by Cambridge University Press:  07 January 2021

Natalie Gold
Natalie Gold*
Affiliation:
Philosophy, University of Oxford, United Kingdom
Get access Rights & Permissions [Opens in a new window]

Abstract

“Das Adam Smith Problem” is the name given by eighteenth-century German scholars to the question of how to reconcile the role of self-interest in the Wealth of Nations with Smith’s advocacy of sympathy in Theory of Moral Sentiments. As the discipline of economics developed, it focused on the interaction of selfish agents, pursuing their private interests. However, behavioral economists have rediscovered the existence and importance of multiple motivations, and a new Das Adam Smith Problem has arisen, of how to accommodate self-regarding and pro-social motivations in a single system. This question is particularly important because of evidence of motivation crowding, where paying people can backfire, with payments achieving the opposite effects of those intended. Psychologists have proposed a mechanism for the crowding out of “intrinsic motivations” for doing a task, when payment is used to incentivize effort. However, they argue that pro-social motivations are different from these intrinsic motivations, implying that crowding out of pro-social motivations requires a different mechanism. In this essay I present an answer to the new Das Adam Smith problem, proposing a mechanism that can underpin the crowding out of both pro-social and intrinsic motivations, whereby motivations are prompted by frames and motivation crowding is underpinned by the crowding out of frames. I explore some of the implications of this mechanism for research and policy.

Keywords

AltruismDas Adam Smith Problemframinginstitutionsmarketsmoral sentimentsmotivation crowdingpro-socialityself-interestself-regardtrust
Type
Research Article
Information
Social Philosophy and Policy , Volume 37 , Issue 1 , Summer 2020 , pp. 80 - 102
Copyright
© Social Philosophy & Policy Foundation 2020

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 See Montes, Leonidas, “Das Adam Smith Problem: Its Origins, the Stages of the Current Debate, and One Implication for Our Understanding of Sympathy,” Journal of the History of Economic Thought 25, no. 1 (2003): 63–90 for a survey of the current debate.CrossRefGoogle Scholar

2 Mill, John Stuart, “On the Definition of Political Economy, and on the Method of Investigation Proper to It,” London and Westminster Review, October 1836. Reprinted in Essays on Some Unsettled Questions of Political Economy, 2nd ed. (London: Longmans, Green, Reader and Dyer, 1874), essay 5, paragraphs 38 and 48.Google Scholar

3 Mas-Colell, A., Whinston, M. D., and Green, J. R., Microeconomic Theory (New York: Oxford University Press, 1995), 3.Google Scholar

4 Batson, C. D., “Why Act for the Public Good? Four Answers,” Personality and Social Psychology Bulletin 20, no. 5 (1994): 603–610.CrossRefGoogle Scholar

5 Parfit, Derek, Reasons and Persons (Oxford: Oxford University Press, 1984).Google Scholar

6 Grant, A. M., “Does Intrinsic Motivation Fuel the Prosocial Fire? Motivational Synergy in Predicting Persistence, Performance, and Productivity,” Journal of Applied Psychology 93, no. 1 (2008): 48.CrossRefGoogle ScholarPubMed

7 Feinberg, Joel, “Psychological Egoism,” In Shafer-Landau, Russ and Feinberg, Joel, eds., Reason and Responsibility (Boston, MA: Wadsworth, 1978).Google Scholar

8 Butler argued long ago in his Sermons that it is not in one’s self-interest to be self-regarding (Joseph Butler, Fifteen Sermons Preached at the Rolls Chapel [Cambridge: Hilliard and Brown, 1726]); for a more recent argument against psychological egoism see E. Sober and D. S. Wilson, Unto Others (Cambridge, MA: Harvard University Press, 1998).

9 Sen, Amartya, “Rational Fools: A Critique of the Behavioral Foundations of Economic Theory,” Philosophy and Public Affairs 6 (1977): 317–44.Google Scholar

10 Batson, “Why Act for the Public Good?” 603–610.

11 Batson, C. D., Shaw, L. L., “Evidence for Altruism: Toward a Pluralism of Prosocial Motives,” Psychological Inquiry 2, no. 2 (1991): 14.Google Scholar

12 Batson, C. D., Altruism in Humans (New York: Oxford University Press, 2011)Google Scholar; Batson, “Experimental Tests for the Existence of Altruism,” Proceedings of the Biennial Meeting of the Philosophy of Science Association (1992); Batson and Shaw, "Evidence for Altruism.”

13 Batson, Altruism in Humans; Batson, “Experimental Tests for the Existence of Altruism,” 224.

14 Camerer, Colin F., Behavioral Game Theory (Princeton, NJ: Princeton University Press, 2003).Google Scholar

15 Chen, Yan and Li, Sherry Xin, “Group Identity and Social Preferences,” American Economic Review 99, no. 1 (2009): 431–57.CrossRefGoogle Scholar

16 Sugden, Robert, “Thinking as a Team: Towards an Explanation of Nonselfish Behavior,” Social Philosophy and Policy 10, no. 1 (1993): 69–89; M. Bacharach. Beyond Individual Choice: Teams and Frames in Game Theory (Princeton, NJ: Princeton University Press, 2006).CrossRefGoogle Scholar

17 Becker, G. S., “Crime and Punishment: An Economic Approach,” The Economic Dimensions of Crime, ed. Fielding, Nigel, Clarke, Alan, and Witt, Robert (London: Palgrave Macmillan, 1968), 13–68.CrossRefGoogle Scholar

18 Baldry, Jonathan C., “Tax Evasion is Not a Gamble: A Report on Two Experiments,” Economics Letters 22, no. 4 (1986), 333–35CrossRefGoogle Scholar; Jonathan C. Baldry, “Income Tax Evasion and the Tax Schedule: Some Experimental Results,” Public Finance 42, no. 3 (1987): 357–83.

19 Bosco, L. and Mittone, L., “Tax Evasion and Moral Constraints: Some Experimental Evidence,” Kyklos, 50, no. 3 (1997): 297–324.CrossRefGoogle Scholar

20 Gordon, J. P., “Individual Morality and Reputation Costs as Deterrents to Tax Evasion,” European Economic Review 33, no. 4 (1989), 797–805.CrossRefGoogle Scholar

21 C. D. Batson, “Why Act for the Public Good?” 603–610.

22 Fehr, E. and Fischbacher, U., “Third-Party Punishment and Social Norms,” Evolution and Human Behavior 25, no. 2 (2004): 63–87CrossRefGoogle Scholar; C. Bicchieri, The Grammar of Society: The Nature and Dynamics of Social Norms (New York: Cambridge University Press, 2005).

23 Batson, “Why Act for the Public Good?” 603–610.

24 Fehr, E. and Schmidt, K. M., “The Economics of Fairness, Reciprocity and Altruism: Experimental Evidence and New Theories” Handbook of the Economics of Giving, Altruism and Reciprocity 1 (2006): 615–91.CrossRefGoogle Scholar

25 Mellström, C. and Johannesson, M., “Crowding Out in Blood Donation: Was Titmuss Right?” Journal of the European Economic Association 6, no. 4 (2008): 845–63.CrossRefGoogle Scholar

26 Gneezy, U. and Rustichini, A., “A Fine Is a Price,” The Journal of Legal Studies 29, no. 1 (2000): 1–17.CrossRefGoogle Scholar

27 Frey, B. S. and Oberholzer-Gee, F., “The Cost of Price Incentives: An Empirical Analysis of Motivation Crowding-Out,” The American Economic Review 87, no. 4 (1997): 746–55.Google Scholar

28 Fehr and Fischbacher, “Third-Party Punishment and Social Norms,” 63–87.

29 E. Fehr and S. Gächter, “Do Incentive Contracts Undermine Voluntary Cooperation?” University of Zurich, Working Paper Series, 2002. Available at: https://www.researchgate.net/publication/228260609_Do_Incentive_Contracts_Undermine_Voluntary_Cooperation.

30 Frey, Bruno S., Not Just for the Money (London: Edward Elgar, 1997)Google Scholar; Samuel Bowles, “Policies Designed for Self-Interested Citizens May Undermine the ‘Moral Sentiments’: Evidence from Economic Experiments,” Science 320, no. 5883 (2008), 1605–1609; Bowles, “The Moral Economy: Why Good Incentives Are No Substitute For Good Citizens,” (New Haven, CT: Yale University Press, 2016).

31 Deci, E. L., Intrinsic Motivation (New York: Plenum Publishing Co., 1975), 175.CrossRefGoogle Scholar

32 Deci, Intrinsic Motivation; E. L. Deci, “Effects of Externally Mediated Rewards on Intrinsic Motivation,” Journal of Personality and Social Psychology 18, no. 1(1971), 105.

33 Deci, E. L. and Ryan, R. M., “The ‘What’ and ‘Why’ of Goal Pursuits: Human Needs and the Self-Determination of Behavior,” Psychological Inquiry 11, no. 4 (2000): 227–68CrossRefGoogle Scholar; R. M. Ryan and E. L. Deci, “Self-Determination Theory and the Facilitation of Intrinsic Motivation, Social Development, and Well-Being,” American Psychologist 55, no. 1 (2000): 68.

34 Ryan and Deci, “Self-Determination Theory,” 68.

35 Ryan and Deci, “Self-Determination Theory,” 56.

36 See also Grant, A. M., “Does Intrinsic Motivation Fuel the Prosocial Fire? Motivational Synergy in Predicting Persistence, Performance, and Productivity,” Journal of Applied Psychology 93, no. 1 (2008): 48–58.CrossRefGoogle ScholarPubMed

37 Grant, “Does Intrinsic Motivation Fuel the Prosocial Fire? 48–58.

38 In his paper, Grant refers to motivations as desires, so that intrinsic motivation is “the desire to expend effort based on interest in and enjoyment of the work itself” and pro-social motivation is “the desire to expend effort to benefit other people” (Grant, “Does Intrinsic Motivation Fuel the Prosocial Fire?" 49). I have not repeated this full definition because it is pretty clear to me that it is incorrect to define a motivation as a desire; at the very least this needs to be amended to the desire that is acted on, since we may have plenty of desires that are latent or not acted on.

39 It is not clear that motivations like fairness fit so neatly into this dichotomy, since fairness can be about following correct processes (procedural) as well as about fair outcomes.

40 We might note that it is not so clear whether this contention is true. Grant’s position (see “Does Intrinsic Motivation Fuel the Prosocial Fire”) is consistent with that of other researchers who have hypothesized that self-control and cooperation (especially in prisoner’s dilemmas) both require the subjugation of short-term goals for long-term ones (Dewitte, S., and Cremer, D. D., “Self-Control and Cooperation: Different Concepts, Similar Decisions? A Question of the Right Perspective,” The Journal of Psychology 135 no. 2 [2001]: 133–53.CrossRefGoogle ScholarPubMed) However, there is evidence that cooperation in prisoner’s dilemmas is the spontanteous, intuitive response, which is reigned in by reflective decision-making (D. G. Rand and M. A. Nowak, “Human Cooperation,” Trends in Cognitive Sciences 17, no. 8 [2013] 413–25), which suggests that self-control doesn’t require self-regulation so much as not thinking.

41 Grant, “Does Intrinsic Motivation Fuel the Prosocial Fire?” 49.

42 Grant, R. W., Strings Attached: Untangling the Ethics of Incentives (Princeton, NJ: Princeton University Press, 2011) discussing a slightly different question around the ethics of incentives, takes this sort of line.Google Scholar

43 Grant, “Does Intrinsic Motivation Fuel the Prosocial Fire? 48–58.

44 Ryan and Deci, E. L., “Self-Determination Theory,” 68.

45 Bowles, “Policies Designed for Self-Interested Citizens,” 1605–1609.

46 Nieli, R., “Spheres of Intimacy and the Adam Smith Problem,” Journal of the History of Ideas 47, no. 4 (1986), 611–24CrossRefGoogle Scholar; R. Roberts, “How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness,” (New York: Portfolio Press, 2015).

47 Ross, L. and Ward, A., “Naive Realism in Everyday Life: Implications for Social Conflict and Misunderstanding,” in Reed, E., Turiel, E., and Brown, T., eds., Values and Knowledge (Mahwah, NJ: Lawrence Erlbaum, 1996), 103–135.Google Scholar

48 Gneezy and Rustichini, “A Fine Is a Price,” 1–17; Heyman and Ariely, “Effort For Payment: A Tale of Two Markets,” 787–793.

49 Lindenberg, S. and Frey, B. S., “Alternatives, Frames, and Relative Prices: A Broader View of Rational Choice Theory,” Acta sociologica 36, no. 3 (1993): 191–205.CrossRefGoogle Scholar

50 Bacharach, M., “Framing and Cognition: The Bad News and the Good,” ed. Dimitri, N., Basili, M., and Gilboa, I., Proceedings of ISER Workshop XIV: Cognitive Processes in Economics (London: Routledge, 2003), 63–74.Google Scholar

51 A. Tversky and D. Kahneman, “The Framing of Decisions and the Psychology of Choice,” Science 211, no. 4481 (1981): 453–58.

52 L. Ross and A. Ward, “Naive Realism in Everyday Life: Implications for Social Conflict and Misunderstanding,” in Reed, Turiel, and Brown, Values and Knowledge, 103–135.

53 Messick, D. M. and McClintock, C. G., “Motivational Bases of Choice in Experimental Games,” Journal of Experimental Social Psychology 4, no. 1 (1968): 1–25CrossRefGoogle Scholar; D. Pruitt, “Reward Structure and Cooperation: The Decomposed Prisoner’s Dilemma Game,” Journal of Personality and Social Psychology 7, no. 1 (1967): 21–27.

54 However, we cannot assume that a player would see any given decomposition from the parent game because, if a prisoner’s dilemma is decomposable, then there are an infinite number of possible decompositions (Messick and McClintock, “Motivational Bases of Choice in Experimental Games).

55 Pruitt, “Reward Structure and Cooperation”; Komorita, S. S., “Cooperative Choice in Decomposed Social Dilemmas,” Personality and Social Psychology Bulletin 13, no. 1 (1987): 53–63CrossRefGoogle Scholar; Cookson, R., “Framing Effects in Public Goods Experiments,” Experimental Economics 3, no. 1 (2000): 55–79.CrossRefGoogle Scholar

56 Pruitt, D., “Motivational Processes in the Decomposed Prisoner’s Dilemma Game,” Journal of Personality and Social Psychology 14, no. 3 (1970): 227–38.CrossRefGoogle Scholar

57 Pruitt, “Motivational processes in the Decomposed Prisoner’s Dilemma Game,” 235.

58 Colman, A. M., Game Theory and Its Applications in the Social and Biological Sciences, 2nd ed. (Oxford: Butterworth-Heinemann, 1995).Google Scholar

59 Kahneman, D. and Tversky, A., “Prospect Theory: An Analysis of Decision under Risk,” Econometrica 47, no. 2 (1979): 263–91.CrossRefGoogle Scholar

60 Dietrich, F. and List, C., “Reason-Based Choice and Context-Dependence: An Explanatory Framework,” Economics and Philosophy 32, no. 2 (2016): 175–229CrossRefGoogle Scholar; Weirich, P., “Utility and Framing,” Synthese 176, no. 1 (2010): 83–103CrossRefGoogle Scholar; Gold, Natalie and List, C., “Framing As Path Dependence,” Economics and Philosophy 20, no. 2 (2004): 253–77CrossRefGoogle Scholar; Schick, F., Ambiguity and Logic (Cambridge: Cambridge University Press, 2003).CrossRefGoogle Scholar

61 Schick, Ambiguity and Logic.

62 Slovic, P., Fischoff, B., and Lichtenstein, S., “Response Mode, Framing, and Information-Processing Effects in Risk Assessment,” in: Bell, D., Raiffa, H., and Tversky, A., eds., Decision Making: Descriptive, Normative and Prescriptive Interactions (Cambridge: Cambridge University Press, 1988), 152–66CrossRefGoogle Scholar; B. Fischhoff, P. Slovic, and S. Lichtenstein, “Fault Trees: Sensitivity of Estimated Failure Probabilities to Problem Representation,” Journal of Experimental Psychology: Human Perception and Performance 4, no. 2 (1978): 330.

63 Montgomery, H., “Decision Rules and the Search for a Dominance Structure: Towards a Process Model of Decision Making,” Advances in Psychology 14 (1983): 343–69.CrossRefGoogle Scholar

64 Gold and List, “Framing As Path Dependence.”

65 Shafir, E., Simonson, I., and Tversky, A., “Reason-Based Choice,” Cognition 49, nos. 1–2 (1993): 11–36.CrossRefGoogle ScholarPubMed It is possible to translate between the “value-based” model given by Tversky and Kahneman and the “reason-based” tradition. Roughly, what Kahneman and Tversky describe as a change in curvature of the utility function becomes a difference in how people value the options. See also Gold and List, “Framing As Path Dependence.”

66 Liebrand, W. B., Jansen, R. W., Rijken, V. M., and Suhre, C. J., “Might Over Morality: Social Values and the Perception of Other Players in Experimental Games,” Journal of Experimental Social Psychology 22, no. 3 (1986): 203–215.CrossRefGoogle Scholar

67 Pruitt, “Motivational Processes in the Decomposed Prisoner’s Dilemma Game.”

68 Colman, Game Theory and Its Applications in the Social and Biological Sciences.

69 Baranowski, T. A. and Summers, D. A., “Perception of Response Alternatives in a Prisoner’s Dilemma Game,” Journal of Personality and Social Psychology 21, no. 1 (1972): 35.CrossRefGoogle Scholar

70 Liebrand, Jansen, Rijken, and Suhre, “Might Over Morality.”

71 Bruner, J., “On Perceptual Readiness,” Psychological Review 64, no. 2 (1957): 123–52;CrossRefGoogle ScholarPubMed

Camerer, C. F., Behavioral Game Theory: Experiments in Strategic Interaction (Princeton, NJ: Princeton University Press, 2011).CrossRefGoogle Scholar

72 Herr, P. M., Sherman, S. J., and Fazio, R. H., “On the Consequences of Priming: Assimilation and Contrast Effects,” Journal of Experimental Social Psychology 19, no. 4 (1983): 323–40.CrossRefGoogle Scholar

73 Deci, Intrinsic Motivation; Deci, “Effects of Externally Mediated Rewards on Intrinsic Motivation,” 105.

74 In further support of the framing theory of motivation crowding for the paradigm effects, we know that the salience of the reward affects motivation crowding. M. Ross (“Salience of Reward and Intrinsic Motivation,” Journal of Personality and Social Psychology 32, no. 2 [1975]: 245–54) has shown that a highly salient reward is more detrimental to intrinsic interest than the same reward when it is relatively non-salient. He also showed that reward is less detrimental when the subject’s attention is distracted from it.

75 Jones, E. E., Kannouse, D., Kelley, R., Nisbett, R., Valins, S., and Weiner, B., eds., Attribution: Perceiving the Causes of Behavior (Morristown, NJ: General Learning Press, 1972)Google Scholar; Heider, F., The Psychology of Interpersonal Relations (New York: Wiley, 1958).CrossRefGoogle Scholar

76 Ross, L., “The Intuitive Psychologist And His Shortcomings: Distortions in the Attribution Process,” in Advances in Experimental Social Psychology, ed. Berkowitz, L. (New York: Academic Press, 1977), 173–220.Google Scholar

77 Interestingly, the Fundamental Attribution Error might also explain why people do not predict motivation crowding effects in others, tending to choose to use incentives even when their effect is counterproductive (E. Fehr and J. A. List, “The Hidden Costs and Returns of Incentives: Trust and Trustworthiness Among CEOs,” Journal of the European Economic Association 2, no. 5 [2004], 743–71).

78 Lindenberg and Frey, “Alternatives, Frames, and Relative Prices.”

79 Levin, I. P. and Gaeth, G. J., “How Consumers Are Affected by the Framing of Attribute Information before and after Consuming the Product,” Journal of Consumer Research 15, no. 3 (1988): 374–78.CrossRefGoogle Scholar

80 McNeill, B. J., Pauker, S. G., Sox, H., and Tversky, A., “On the Elicitation of Preferences for Alternative Therapies,” New England Journal of Medicine 306, no. 2 (1982): 1259–62.CrossRefGoogle Scholar

81 Skyrms, Brian, “Review of Frederick Schick’s Making Choices,” The Times Literary Supplement 949 (1998): 30.Google Scholar

82 Rabin, M., “Incorporating Fairness into Game Theory and Economics,” The American Economic Review 83, no. 5 (1993): 1281–1302.Google Scholar

83 Bicchieri, The Grammar of Society.

84 Cohn, A., Fehr, E., and Maréchal, M. A., “Business Culture and Dishonesty in the Banking Industry,” Nature 516, no. 7529 (2014): 86–89.CrossRefGoogle ScholarPubMed

85 Bicchieri, The Grammar of Society.

86 List, J. A., “On the Interpretation of Giving in Dictator Games,” Journal of Political Economy 115, no. 3 (2007): 84.CrossRefGoogle Scholar

87 G. Lakoff (The All New Don’t Think of An Elephant!: Know Your Values and Frame the Debate [White River Junction, VT: Chelsea Green Publishing, 2014]) has already been doing this sort of thing, not in the context of incentives, but in the context of political persuasion.

88 Henrich, J., Boyd, R., Bowles, S., Camerer, C., Fehr, E., et al., “In Search of Homo-Economicus: Behavioral Experiments in 15 Small-Scale Societies,” American Economic Review 91 (2001): 73–78.CrossRefGoogle Scholar

89 Al-Ubaydli, O., Houser, D., Nye, J., Paganelli, M. P., and Pan, X. S., “The Causal Effect of Market Priming on Trust: An Experimental Investigation Using Randomized Control,” PloS One 8, no. 3 (2013): e55968.CrossRefGoogle ScholarPubMed

90 Natalie Gold, “Trustworthiness and Motivations,” in D. Vines and N. Morris, eds., Capital Failure: Rebuilding Trust in Financial Services (Oxford: Oxford University Press, 2014), 129–53.

91 Otteson, James, “Adam Smith’s Marketplace of Morals,” Archiv fur Geschichte der Philosophie 84, no. 2 (2002): 190–211CrossRefGoogle Scholar; Smith, V. L., “The Two Faces of Adam Smith,” Southern Economic Journal 65, no. 1(1998): 2–19.CrossRefGoogle Scholar

92 V. L. Smith, “The Two Faces of Adam Smith.”

93 Zelizer, V. A. R., The Social Meaning of Money (Princeton, NJ: Princeton University Press, 1997).Google Scholar

94 Anderson, E. S., “Is Women’s Labor a Commodity?” Philosophy and Public Affairs 19, no. 1 (1990): 71–92.Google ScholarPubMed

95 Frey, B. S. and Oberholzer-Gee, F., “The Cost of Price Incentives: An Empirical Analysis of Motivation Crowding-Out,” The American Economic Review 87, no. 4 (1997): 746–55.Google Scholar

96 Grant, A. M., Give and Take: A Revolutionary Approach to Success (Westminster: Penguin, 2013).Google Scholar

97 Schmidtz, David, “Adam Smith on Freedom,” in Hanley, Ryan Patrick, ed., Adam Smith: His Life, Thought, and Legacy (Princeton, NJ: Princeton University Press, 2016), 208–227CrossRefGoogle Scholar; Paganelli, Maria Pia, “The Adam Smith Problem in Reverse,” History of Political Economy 40, no. 2 (2008), 365–82.CrossRefGoogle Scholar