Tuesday, September 3, 2013

Pride in community as an alternative to opportunism

Economics is known as the dismal science for a reason.  Scarcity is not fun.  We prefer abundance.  And sometimes pursuit of economic self-interest, rational as that may sound, can be too myopic and as seen by others might appear petty or even larcenous. So I thought I'd extend the discussion we had in class today by giving some real examples of the opposite sort of behavior and what happened as a consequence.  Partly, this makes sense if people follow the herd, whether that is rational or not, so that if you can redirect the herd you might achieve very good consequence.  Another part is that most people feel a need for reciprocation when they receive an unanticipated kindness.  If true, then by doing a few acts of unanticipated kindness for different people you might then begin to move the herd in a different direction.

Before getting to my examples, which will seem mundane by comparison, you might want to have a look at a couple of Economics in the News pieces from last summer.  This one is about a company called Airbnb.com which is in the business of offering an alternative to hotels, which can be somewhat impersonal and unwelcoming for the frequent traveler, and instead staying in somebody else's home or apartment, which if things go right would be preferred by both the traveler and the person letting the space.  But things might go wrong, what then?   In class I mentioned (I think on the very first day) that relationship capital can address this sort of Prisoner's Dilemma problem.  If you read the piece you might ask whether Airbnb's real business is establishing relationship capital where it previously didn't exist (in contrast the Hotel chains have a reputation to live up to and in that sense are known entities and the travelers fork over their credit card when they register to cover charges they might incur).  And, if that is the case, the fascinating thing is how it is done.

The other piece is even more apropos.  It is a profile about a professor at the Wharton School of Business, Adam Grant.  It's called Is Giving the Secret to Getting Ahead?  It was the featured piece in the Sunday Magazine so is a little long.  But it is a fun read.  One thing seems for sure.  It would be much more enjoyable to live in a world where everyone followed Grant's lead than in an alternative world where everyone behaved opportunistically.  But that is true in an ordinary Prisoner's Dilemma as well.  So if you do read the piece, you should keep in your head the question how this sustains.

Now let me turn to my simple examples.  This first one is almost too trivial.  I view change, which I keep in my pockets that not infrequently have holes in them, as not quite money.  I never know where it is or how much of it I have.  In contrast, the bills I have in my wallet are there and not all scattered about, so for me that is real money.  That's some background.  A few months ago I was at the post office waiting in line, when a woman at the counter was engaged in a transaction where she didn't seem to have enough money and she started to get quite distressed.  She wanted to finish her business then and there and not have to go home and then come back.  She was short all of $.36 or something like that.  It wasn't very much at all.  I was kind of surprised that the people behind the counter didn't help her out.  She was a little elderly. But they didn't.  So I gave her a couple of quarters.  No big deal at all for me. Really. But she was so grateful after.  She wanted to give me something in return.  I waved her off.  I had no agenda at the time other than to relieve her distress and send my own stuff.

This next one is when I was a teen growing up in NYC, in a residential neighborhood in Queens, with individual houses.  The house I lived in faced 56th Avenue and dividing the road headed east from the road headed west was a "mall" a weedy area about the same width as one of those road, surrounded by a curb.  This was before pooper-scooper laws went into effect and one main use of the mall was as a place to walk your dog.  People from several block away would have their dogs on a leash and while they walked in the street so as not to step in it, the dogs would do their business.  You may have learned about the Tragedy of the Commons in other classes, but it has a different sort of description.  Yet this too was a tragedy and it made the neighborhood more shabby than it otherwise should have been.

A couple of the neighbors, young working guys, started to take care of the mall.  This beyond taking care of the lawns for their own houses.  Nobody asked them to do this.  They did it on their own, definitely a pride thing.  The mowed the mall, raked out the dog poop, and planted some small trees.   Now I live across the street from a park and the City of Champaign pays people to do this sort of work there.  These guys did similarly, but without pay, just because they wanted the place to look better.  And people reciprocated, either by walking their dogs elsewhere or by scooping the poop.  I was too young at the time to realize I should have helped them.  And my dad was too old (and a diabetic) so also didn't help that way.  But we sure did appreciate their effort.


  1. Pay for laundry and parking a few times and you will come to appreciate quarters and dimes. I value a quarter as much as a dollar now, because a (working!) change machine is so hard to find on this campus.

  2. I am thankful that my days of putting coins into a slot to do the laundry are well in the past. I still do the laundry on occasion, but in a machine that is for my household only.

    Parking meters are a different story. I keep a roll of quarters in my car for that purpose and if I remember I take change from my other interactions and put that into the car. The problem is I often don't remember to do that.

    Coins versus print money and the roll played in expenditure may be an example of income effects, which we mentioned in class today. At higher incomes, coins are less currency and more nuisance. Pennies, in particular, but the general idea applies to all coins.