/Michael Munger on Desires, Morality, and Self-Interest

Michael Munger on Desires, Morality, and Self-Interest


0:38

Intro. [Recording date: February 2nd, 2021.]

Russ Roberts: Today is February 2nd, 2021, and my guest is economist, political theorist, and author Michael Munger of Duke University.

I want to thank Plantronics for supplying the Blackwire 5220 for today’s guest.

Mike was last here on the program in July of 2020, talking about education. If I’ve counted correctly, this is Mike’s 38th appearance on EconTalk–which is clearly a record. It will probably never be broken. Mike, welcome back to EconTalk.

Michael Munger: It is a pleasure to be the Cy Young of EconTalk.

Russ Roberts: I think it’s probably the Cal Ripken. But, I think that’s your line.

1:13

Russ Roberts: Our topic for today is a small, narrow one. It’s economics, or maybe economists and economics, and how we as economists think about and teach our students about what makes us do what we do. How we choose, how we make decisions. The economist’s view of what is rational, morality.

Now, I’ve touched on these questions in recent episodes and mentioned I’m writing a book related to these questions. It turns out, Mike has been thinking about these issues, too. Great minds think alike. And, he wrote an article, I’m ashamed I hadn’t seen that covers some of these topics, and that article will be the rough basis for our conversation. It’s called, “What Preferences Do You Want?” And it was published on the American Institute for Economic Research website, on June 4th, 2019.

So, let’s start with how economists look at preferences. How would you describe that?

Michael Munger: Well, in the article I caricatured how economists look at preference. So, let me do it in two stages. First, the way economists usually look at preferences is that we say preferences are rational. Now, all rational means is complete and transitive. Transitive means that I can’t really say, you can’t trade things for me and then have me want something else. Complete means that I can make a choice between any different preferences. One of the things that’s complicated about–

Russ Roberts: Any two choices–

Michael Munger: Yeah, any two alternatives. The apples and broccoli and carrots: I can make a choice between any of those. I don’t say I don’t know.

Now, one of the things that’s interesting about saying that preferences are rational, is that we claim–economists claim–that that’s the only thing that motivates people. Or that we can say it ‘as if’ that’s the only thing that motivates people.

So, Christopher Hitchens, who actually was on EconTalk at least once, famously said: The most selfish person he’d ever heard of was Mother Teresa.

Wait, how can that be?

And the answer is: Mother Teresa was only motivated by her preference to help the poor. Famously, she would sometimes show up at a village. And of course, Mother Teresa was a world-class figure. They were very excited. ‘Mother Teresa is coming. We’re going to put her up in a room in our house, and we’re going to make a nice dinner for her.’ And she would get there and say, ‘No, I am not staying in that room. I’m going to stay on the street with my people. And, I’m not eating this food. I’m only going to eat what the people in the village will eat.’

And, of course, this was a great disappointment to her hosts.

But, she only wanted to maximize her own goals–her own preferences.

So, when you say economists think people are selfish, that’s true; but only if you think Mother Teresa was selfish because she was acting in accordance with her own preferences and goals.

So, that’s the way that economists think about preferences. I caricatured this in my little article saying–this actually is something that Doug North always would do when I was in graduate school, and he was also making fun of economists. Or, making fun is wrong. He was using a reductio ad absurdum. So, the logical approach of a reductio ad absurdum. You take the logic of this, and show if you carry it to its extreme, it gives you something ridiculous.

There’s no reason in principle that we could not have a theory of preference, choice and acquisition, and there’s no reason if it’s an economic one, it wouldn’t be rational.

So, I tell the story of–I’m in the mall, and for younger people, malls used to be these big collections of stores that people would go to; I realize that they don’t exist anymore.

But, once upon a time, there were these things called malls. And so, there’s a number of stores there, and I see one of them, The Preference Store. Aand I think ‘Oh, that’s right. My wife, Donna, told me we’re completely out of preferences at home, I should pick some up if I see it in the mall. Thank goodness I saw this.’

So, I walk in and in the store, there are all sorts of different preference orders. And those are really what preferences are, is I like A better than B, better than C, or I like B better than C, better than A.

So, let’s suppose that two of the things that I care about are bologna and caviar. Now, which one of those should I like better?

Notice, I’m not asking which one do I like better. I’m saying which one rationally should I like better?

Clearly, I should like bologna better than I should like caviar. It’s much cheaper.

Now, it could be that there are both income and price effects in acquiring preferences. If I have enough money, I can afford more expensive preferences. If the price of something goes up, I might want to cultivate a preference for something else. And of course, in the back of the room, you have to show an ID [identification] to even think about those sorts of preferences. Outside, there’s a guy in the alley saying, ‘You want some of these?’ There’s a whole different set of preferences that are completely morally or legally proscribed.

The point is that, that example is incoherent in the way economists usually think of it, because we tend not to think that people have preferences over preferences. Preferences are usually talked about in the podcast recently, with McCulloch–we just think of preferences being subjectively what they are, and that’s it.

And the most–the biggest restriction we’re going to place on them is that they’re relatively fixed, and that,as Becker and Stigler explained, it’s not because we actually think preferences are fixed, but because invoking preference change as the first stage in an explanation, you could explain anything by what preferences change.

So, mostly, we’re going to say preferences are fixed. We’re going to use economic parameters, like price and income change, to explain changes in purchases, and that’s what economics is. In a nutshell. That’s the maximization paradigm that economics is, is that we use preferences that way.

My question is: For much of human history, and certainly from Aristotle onward, the idea that some preferences are better than others has been a big part of every aspect of social life–except economics.

7:10

Russ Roberts: Well, you paused there, suggesting I might say something. That’s very kind of you. Let the record show, I think this is the longest period that Mike Munger has ever spoken on EconTalk without being interrupted by the host. Not a record–it’s not something I’m proud of. But, I think that’s true. I challenge listeners to verify that, if they feel like it.

And we also, of course, we talked about this with with Don Boudreaux in a recent episode about James Buchanan, who said, ‘Man’–meaning people–‘Man wants the liberty to become the man he wants to become.’ Man wants freedom to become the man he wants to become.

I read that quote, not exactly right, verbatim, but that’s the gist of it.

And I think I’m going to give you Ariel Rubenstein’s definition of rationality, a past EconTalk guest. He says: What is feasible? What is desirable? You ask yourself those two things; what is desirable, what is feasible? And then you choose the most desirable of the feasible alternatives. That is, you maximize your wellbeing. Where, desirable, it’s not judged, it is subjective, it is up to you, it is not under the purvey or purview of economists. We just take that as given. And we assume that people, whenever they do something, it must have been the thing that gave them the most well being. Vaguely defined and unspecified.

And, the idea that you might want to have preferences about your preferences–that you might decide to try to change what is desirable–is something I was never taught, never thought of. It’s actually vaguely heretical, as you suggest, in our guild, our religion of economics. I mean, as you say, once you do that, we’re back to square one. I mean, there’s nothing more to say.

So, I do want to say, and this will be the last time I probably say it, but there’s a lot to be said for the argument that we should take preferences as given–as social sciences looking at behavior of strangers out in the world.

When we look at ourselves, or our children, the idea that we should take preferences as given is absurd.

It is–now, having said that, our preferences are not fully under our choice. So, the idea that there is a preference store is a fun thought experiment.

I suspect you know–I know I know–that my attempts to change my preferences over the last 66 years have been a pretty mixed bag. There are a few things I’ve gotten a little bit better at; and a lot of things that haven’t changed at all, because they’re just the way I am. Certainly that’s the way I say it to myself: When I fail, I just say, ‘Well, that’s the way I am.’

Kingsley Amis said it amusingly in a book called One Fat Englishman, a book that is totally unacceptable in today’s world. He said, ‘Inside every fat person is a fatter person waiting to get out.’ The standard line is a thin person. But, of course, we can go in either direction. When we do change our preferences, they don’t always move in the Aristotelian area of virtue. Want to respond to any of that?

Michael Munger: One of the things that provoked me–and I’ve told you this, Russ, several times–but, in my neighborhood, I’m sort of notorious because I walk my dogs, often in the late afternoon, and often it’s on Monday when EconTalk comes out. And often when EconTalk comes out, I feel moved to shout at errors that I perceive in either the guest or much more rarely, but sometimes even in the host. At least once, a woman has come out of their house to bring the children inside in sort of fear, because there’s this crazy person walking his dog and shouting.

And, it’s happened more recently, as you have moved more towards philosophy. Because, philosophy is something that I started to work on in my own way, maybe 10 or 12 years ago, and learned that there were a lot of kind of preconditions that Adam Smith would have taken for granted. And, to be fair, you and Dan Klein, in discussing Adam Smith and others were a big part in moving me in this direction. So, I should also give you credit.

But, the idea that–James Buchanan said that we have the freedom to become the man that we want to become–that is the Aristotelian, Aquinas, Montesquieu project. And so, Montesquieu, in the Spirit of the laws really spelled this out very clearly, and he said something that I think is a challenge to what you just said: There’s a lot of things within economics, if we want to know how many potatoes people buy, or how much lettuce they buy, absolutely, that’s a good way of approaching it.

But, what Montesquieu said was that the very–the justification for liberty is so that human beings can do that which they ought to will.

That is: What I want and what I ought to want may be different things. So, I don’t have liberty to do what I want. I have liberty to do what I ought to want. And the question of what I ought to want is something that takes contemplation.

And so there’s a difference in modeling strategy that I tell students about. And they find it–it’s very challenging to think about.

So, one way that we could approach this problem is to think of morality as a constraint. And I thought you and McCulloch did a very nice job of discussing this, and the experiments that he’s come up with about what do people do when there’s absolutely no chance of being caught? Well, sometimes people still do what we might think is the right thing, even if it cost them something, even if they know there’s no chance that they’re going to be caught.

But, for the most part, one approach, and we might call this the Madisonian approach, is to think of morals as being a constraint, and that they’re enforced by a law. Morality becomes embedded in the law, and if we violate morality, we’ll be punished. And so, the reason we obey morality is that otherwise we’re going to be threatened with punishment.

13:30

Russ Roberts: When you say law, do you mean legislation or law? Or both?

Michael Munger: May I insert a parenthesis?

Russ Roberts: Yes.

Michael Munger: So, I often give this example when I talk about the difference between James Buchanan and Friedrich Hayek. I say: Suppose we started a new university; we call it Hayek University. And the first job that we have as the Board of Hayek University is to decide where are we going to put the sidewalks? Now, it’s the first meeting, where are we going to put it? It’s a trick question, we all know that we can’t. We’re going to wait two years and then pave the muddy paths.

And so, that is Hayek’s definition of law. These things emerge from–people have many different plans and purposes. We don’t know why they’re walking this path and not something else, but we do know that a path is the result of many different people having different plans and purposes, all engaging in basically the same act of creating the muddy path. If you pave the muddy path, then you have what the law should be.

All right, now, where are we going to put the buildings? Same thing won’t work with where are we going to put the buildings.

So, Buchanan’s question is more constitutional. We need some kind of central plan. Or, what we could do is say, ‘Look over there, I think it–it is! It’s a group of sociologists. They appear to be massing in some sort of meeting or class.’

Well, that’s not where you decide to put the sociology building. You have some kind of central plan or a set of rules. So, you have a constitution, you have an overall culture or set of received morality that comes down to us from the past, in a sort of Humean, Burkean sense: those things are the muddy paths, and we have law to do that. But, sometimes we also have to have constitutions, and we come up with a way of deciding where are we going to put the main features of this?

So, in parentheses, I mean law, not legislation.

So, where I’m trying to go with the–now, I’ve lost track of where–

Russ Roberts: Yeah; I completely derailed you. But, before you do, I’m going to just expand on that law/legislation thing for a minute, while you regain your train of thought, which is–for longtime listeners, we used to talk about this fairly frequently–that legislation is what legislatures do, like 55 mile an hour speed limit. But, law is what is the expectations that people have about what is acceptable and what is not acceptable, which would mean that actually the speed limit is really 62, or 59, or whatever in your jurisdiction. The letter of the law is only legislated; the actual laws emerges from the behavior of the police, the behavior of drivers, and so on.

I don’t really understand that distinction in your examples. For listeners who are as confused as I am, if you’ve regained your train of thought, I’d like you to explain in the Hayekian, Buchananian–it’s like there’s three things. There’s constitution, legislation, and law. In the Hayekian world, law are the norms–the expectations that arise, the patterns that arise that allow us to make our plans and act accordingly. The muddy path is the law. The paved path would be the legislation. Is that okay? Am I okay there?

Michael Munger: That’s absolutely okay.

Russ Roberts: Carry on.

Michael Munger: And the location of the buildings is the constitution.

Russ Roberts: Most listeners are going, ‘Boy, these guys–what are they talking about? I have no idea.’

Michael Munger: Well, it’s like we have our own little code–

Russ Roberts: Our private language. Sorry about that. ‘But, there’s 37 other episodes to go back to. You figure it out.’

Michael Munger: That are just like this.

Russ Roberts: Yeah, they don’t help at all, actually, they’re all the same.

Michael Munger: All they do is confirm that those are the same thing.

So, I was talking about Montesquieu, and the question of what we ought to will. And, that comes to us in a process where we have developed a set of cultural norms and beliefs about the way that we ought to act.

And so, when you asked about whether those are laws, sometimes–and this is a thing that Hayek was worried about, in his essay, “Why I Am Not a Conservative”–he had this view that we’re really bad at legislation that is not a law.

On the other hand, there are some laws that have come down to us from the past–like slavery, sexism–that are terrible. Somehow, we have to have a way to tell the difference.

And, a number of people have looked at that and tried to solve that problem. Buchanan’s answer was that we could change almost anything through consent, but it would take unanimous consent. The thing that I think is interesting–

Russ Roberts: That’s at the constitutional level, not about my own personal thoughts or preferences. Not my preferences.

Michael Munger: But, remember, Montesquieu said that liberty enables us to do what we ought to will. And, he thinks that there is some objective, shared, collective truth about what we ought to will, that he would call culture. And so, there is–this is a common theme on this show–habits. One of the–Alfred North Whitehead has that famous quote that Hayek also cited: that civilization actually was essentially the replacement of settings where we had to give things thought.

Now, is this right or wrong? With having a habit of doing the right thing? Well, that’s exactly Aristotle’s notion of character.

And so, let me summarize for a minute: Aristotle’s notion of character, because I think it gets us a long way in the direction of explaining why preferences might be relatively fixed.

So, if I start out and I have to think about everything anew, I might apply certain principles to decide how to act. But, over time, I come to situations that are relatively the same, and I develop the habit of saying, ‘Oh, I recognize this. This is analogical[?].’ And, since I know what to do in this situation, I don’t have to think about it anymore.

Our character is the collection of virtues and vices that have become habits.

So, if you always eat too much at a party, you always drink too much if you go to a bar. If you have something to eat and it makes you want a cigarette. I have friends who have not smoked for years that still are subject or are oppressed by–they want a cigarette after they have a drink. These habits are really hard to break.

So, we might cultivate habits of acting in a way that is virtuous. But, in any case, we’re going to cultivate habits of acting in ways that are vicious.

So, you cannot avoid developing a character. Aristotle’s point is–sometimes this is mischaracterized that the unexamined life is not worth living. The reason that’s true is that your character is going to be vicious–that is, characterized by vice–rather than virtuous, characterized by virtue.

So, it is your job to make of your life a project, to develop good habits.

Now, Adam Smith was really optimistic about this, because he thought there was an outside force acting to aid us. And it was propriety. Propriety is the received wisdom that the culture has accumulated over time. So, things are getting better for Smith. And the reason is that propriety helps us to develop a character that is more virtuous than vicious.

Now, people who live outside of good society, yes, propriety is not much of a constraint for them. But it is precisely those people who care about propriety who are most likely to rise in society, and it’s partly for that reason.

So, society itself provides us with a mechanism for making this something more than just a constraint.

So, I said there were two modeling strategies. And one is to treat morality as a constraint; and I think most economists are tempted to do that: ‘We will do anything we want to do, except that morality and the law,’ by which I mean the law, not legislation, ‘act as a constraint.’

Now, in addition, legislation might act as a constraint. We might be forced to do things that are wrong.

So, in a repressive society, I might be forced to do things that are wrong against my will, even though I know that they’re wrong.

Now, that would mean that maybe I would cultivate a character of viciousness. Some societies can be bad that way. On the other hand, Rousseau and a number of people who followed him, and I would put–Montesquieu was actually before Rousseau. But, this is a more Aristotelian notion.

Instead of making it part of a constraint, you could make morality part of the objective function.

So, the reason that I act well is not that I will be punished otherwise, but because it feels good to act well. And if you cultivate the habit of giving yourself plaudits and rewards for acting well, you can actually greatly increase your ability to do that.

And you actually gave a very interesting example about visiting the sick. I don’t want to go to a hospital and visit someone who may be dying. It’s really sad and depressing, and I might catch something. Hospitals are scary places. I don’t want to do that.

Except that if you do it, and you start to realize that it makes a difference, maybe more than most of the other things that we do as professionals, it becomes part of the objective function.

Rousseau had a really great way of saying this. He said, the correct way to solve the problem was to ‘inscribe the law on men’s hearts.’

Russ Roberts: Yeah. Nice line.

Michael Munger: So, if you inscribe the law on your heart, it’s not that I say, ‘Okay, I’m going to do this; I better check. No, it’s illegal, I can’t, I’m sorry.’ You know what to do, because it’s been inscribed on your heart.

Now, under those circumstances, though, it really needs to be the right thing. We need to have inscribed the right things on people’s hearts.

And so, this has led us to a situation–Patrick Deneen and others have said about liberalism: ‘Liberalism says you can do whatever you want.’

Well, I’m not sure that’s exactly what liberalism says. But, there certainly is a version of liberalism, that’s not too much of a caricature, that has that view, compared to Montesquieu’s much more conservative vision, that liberty is just there so that we can do what we ought to will.

And there’s two kinds of injustice. One is we’re forced to do what we ought not to will, but the other is, we will things we ought not.

And so, the second is the problem of the individual. The first is the problem of the state. And bringing those things in harmony, the constitution, the legislation, and the law, is a really hard, collective problem.

24:21

Russ Roberts: For listeners, that was also maybe your longest or second-longest oration. You’re on such a roll today, I’m leaving you alone.

But, I want to help listeners who might be a little bit lost with a practical example. Before we do that–which will be the wallet–before we do that, I do want to just make a couple of comments. There’s a great line from Burke that I think I got from Scott Newstok’s book even though we didn’t talk about the episode, which was that our passions forge our fetters. Meaning: We think we’re free, but if we’re not careful, we’ll be enchained–those fetters or chains–we’ll be enchained and restrained by our–and be slaves to our passions, our innate wants, not the things that we ought to want.

I think that’s very powerful. The hospital story you referred to, I think was from the McCulloch episode that was released this morning, if listeners want to listen to more about that.

But, I want to talk about the wallet, because I think the wallet gives us a way of thinking about this issue of the constraints and putting the objective function–for people who aren’t academic economists who might be a little bit confused.

So, it’s weird, because I thought of this example, at least I think I did, in a conversation with high school students. I think I mentioned it recently, and you used the exact same example in your 2019 article, slightly embarrassing. I read it and not remember that I’d read it? or did I steal it, and then pretend that I hadn’t read it? I think it’s neither. I think I hadn’t read it, and we thought of it independently. It’s kind of a classic example. But, I’m slightly embarrassed to say that. But, anyway–yeah?

Michael Munger: Where I published it was extremely obscure in terms of academic publications, and I got the example from Doug North.

Russ Roberts: Okay. He’s an honest man. Doug thought of it himself. No, I’m sure Doug read it from Aristotle, or somewhere. Anyway, here’s the problem. The problem is I’m walking down the street. I find a wallet. And no one’s around. I hate these hypotheticals usually, because there’s really no such thing as no one’s around. There’s really no such thing as no one will ever know. It’s always some lingering uncertainty about that, that makes it difficult even in an experiment. You’d have to really know a lot about, say, technology, the experiment to really feel confident that it was anonymous.

But let’s pretend, because I think it’s useful in this case, that no one is around, no one sees you.

And, you find the wallet. You open it up. It’s filled with $20s and $10s, and $100s–has a lot of cash. And, there’s an ID card at the front with a phone number and address that’s nearby; it’s really not a big cost to return it. The big cost is not getting to keep the money.

So: What do you do?

And, I’d asked these high school students, ‘What do you find–what’s rational? What does economics predict?’ They were all convinced that economics predicts that–one of two things. Either you should keep the wallet, because that way, you’ll be able to buy stuff with it and get a higher level of utility. Or, maybe you shouldn’t, in case if you ever lose a wallet, somebody would return it for you, which of course, not something you want to rely on, and is not related, in fact, at all to this case–except as a moral, Kantian, consideration, which we’ll put to the side is already too complicated.

But, my question is this: What I said to the students was: What if you feel guilty keeping the wallet? Doesn’t that mean that it would be rational to return the wallet?

And that’s your example of putting morality into the objective function, into the preferences. I want you to talk in a second about the constraints. But, the question I want to raise, which I think brings us back to this whole question of Montesquieu, and the question of virtue-ethics, the question that Aristotle raised of character, and what should be your natural response?

So, for me, just for example, I’d like to think, or maybe I’m fooling myself, that’s actually not a decision I make about whether to keep the money and throw the wallet in the bushes and move on. It’s just something I don’t think about. I just want to return the wallet, and it’s just a question of how hard it’s going to be to return it. You could argue, I’ve gone somewhere down the Aristotelian path.

The question I want to raise is this: What preferences do I want to have? That is– which is our first question–which is in this case, would I be a–I don’t know what word to put in front of person–happier, better, better-off person, if I didn’t have a conscience?

Do I want to raise my children to not feel guilty? Because I didn’t do it that way. I raised my kids to feel guilty when they lied, when they stole. And when my son tried to get my other son to make a really bad baseball card swap that it was to the disadvantage of the younger one because he didn’t know anything about who Adam Wainwright was or was going to be; and I knew that was wrong. It was just wrong. And I told him as a commissioner I’d veto that trade. I haven’t talked about that for ages on here. But, a long time ago I did.

And, so, do I tell my kids: ‘Consciences are for suckers?’ ‘You don’t want to have a conscience, because if you do, you’re not going to enjoy that wallet. You want to live in a world where you can just take the wallet and keep it.’

But, most people would feel uneasy about that, I think.

The man I want to become is the man who returns the wallet. The man who is welcomed in civilized society. Because that person is honorable and can be trusted to do the moral thing when people aren’t looking.

Now, that just complicates everything for what we’ve been talking about. For me, that helps us–maybe you have a framework for talking about it. So, explain to me how that fits into your example. This is your example too, Doug North, and whether as I raise my kids or myself, because that’s the whole project, is: I’m growing up. I’m becoming the person I want to become through my habits. Do I want to be a person who returns wallets or keeps them? Does economics have anything to say about that?

Michael Munger: The interesting part about Doug’s example, and again, you can say this is reductio ad absurdum, but it is almost a Beckerian–that is, after Gary Becker–application of economic reasoning to a setting where it’s not normally done.

What North said was that this is probably subject to both price and income considerations. And you actually laid it out in your example. It’s nearby; it doesn’t cost me much to return it.

Suppose that’s not true. Suppose it actually is really expensive or difficult for me to find a person. What on the margin that’ll make it less likely because demand curve slope down. Now, I don’t know what the level is, but at the margin, it’ll make it less likely.

Now, suppose that I really and probably cannot get caught and there’s $10 in it. Then I’m probably going to return it. Suppose there’s $1000? Suppose there’s $10 million in it? The question is–and this was North’s question–suppose you could do experiments, and you actually could enforce the conditions pretty well. Is there a price where anyone, literally anyone would not return the wallet? It’s just that they differ about what price that is? Is there a different level at which all of us would say: This is so much money, I’m keeping it.

31:37

Russ Roberts: So, that whole idea–this is a G-rated program, so I’ll give the G-rated version. You know–Mike would you–

Michael Munger: Winston Churchill.

Russ Roberts: I heard it from George Bernard Shaw. Which is–would you–Mike’s not interested in having dinner with me tonight. But, I say, ‘Okay, Mike, how about for $100? If I paid you $100, would you have dinner with me tonight?’ And you say, No. ‘How about $1000?’ ‘No, I don’t like having dinner with you.’ And then I say, ‘How about a million?’ Like, ‘What kind of person do you think that I am?’ And then the answer is: we’ve already established that, we’re just talking price.

But, in the economists view, the Beckerian, Gary Becker review, the way I was trained, the way I taught my students for decades in the classroom is that, yeah: Demand slopes downward. I used to say this with such smug glee and pride in my insight as an economist, that there’s some amount of money that everyone would do something immoral. Or, it might be to save the life of a child, like Jean Valjean stealing a loaf of bread. You know, it’s: We all have our price.

And, that view of humanity, we were taught as economists, is, “realistic,” because that is the way people pretty much behave.

And yet, when you tell that to people who aren’t economists, they find it deeply offensive. And the reason they find it offensive–it’s taken me a long time to appreciate it–but the reason they find it offensive is that it treats them as if they are merely a robot. A machine. A utility machine. And I just have to pick the right setting to get you to do what I want.

And we know in human history, it’s literally not true. We know there are people who stand up to the incentives and say, ‘I know I have an incentive to do X, but X is wrong.’

And in economics, we have a term for this: lexicographic preferences. It means I have certain things I take care of regardless of price. So, we found a way to squeeze that into the model. But, it’s not really in the model. The way the model works is that people respond to incentives–and they do. So, therefore, everybody has their price to do anything.

And, the way the world works is that there are different prices at which different people will do different things, and so on.

And so, the idea that I would want to change my price, that I would want to change at what price I would do what is dishonorable is outside the model. It’s not in the model. It is not the way economists think about it.

And I think it’s a terrible shortcoming.

And, in fact, you know, if I said to you, ‘After going to graduate school in economics, what have you learned about the life well lived?’ I don’t know what your answer would be.

But I have come to believe that the life well lived is learning how not to do what you were incentivized to do, either by money–and I’m not going to give any examples, but I have turned down money because of things I thought were reprehensible that it would take to acquire it–and to do much more smaller, and more important decisions about enduring sacrifices, because I thought that was the right thing to do.

And, so, I want you to respond to that. Then I want you to tell me about whether I’m a sucker? What the heck? Why didn’t I enjoy my older age by becoming a less moral person, where I could get to a higher point on the hill of happiness? Why would I burden myself with these constraints of morality? Which I think is what exactly–that’s the constraint model you were talking about–why should I do that? Isn’t that, isn’t that–it’s irrational.

Michael Munger: Let me take a little detour and come back because I think it connects. So, E.O. Wilson, the famous entomologist says that we should understand–

Russ Roberts: It’s a bug person–

Michael Munger: We should understand biology, at least, evolutionary biology as a contest between two forces.

First, any selfish individual will always dominate any altruistic individual. So, you could call it altruism. You could call it morality. It’s a big drawback for the individual. And in fact, if we only were individuals, then the selfish individuals might very well out-compete the altruistic individuals and they wouldn’t exist.

Second, groups of altruistic individuals will always dominate groups of selfish individuals, because we care about each other. And it’s not just that we are militarily better. We are better in society; we’re happier; we reproduce more; we’re more economically active; we’re able to trust each other; contracting costs are less.

And so, any society has this tension between individual and group domination.

Now, E. O. Wilson, because he’s a bug man, he can talk about group selection. Friedrich Hayek was often criticized for talking about group selection, because evolutionary biology is supposed to work at the level of the mean. Well, one of the questions that you asked again about McCulloch–and this was at the point when I was shouting at the dogs–but, when you raised the question for McCulloch–

Russ Roberts: Honey, bring in those kids. That man’s out there yelling at himself again–

Michael Munger: You said, how would genes do this? How would genes actually operate at the way–how would genes know? Well, genes wouldn’t have to know. What genes would do is evolve in a setting where we live in small clan groups, no larger than 150 or so because of the Dunbar number–that’s the level where we can organize things just by keeping track of reputations. And if you act badly in that setting, you’ll get put outside the wall and eaten by wolves.

So, we pretty quickly select. We have big brains–we’re good at detecting dissembling, and we remember when you said you would do something you didn’t. There’s a lot of selection at that level. Getting put outside the wall is really bad. It’s not a joke. This is not a night in prison: this is your leg getting bitten off. But, at some point, when we get into larger groups, then it may be more difficult for us to detect dissembling. We may have to have other rules for deciding whether we’re going to detect dissembling, and things that were evolved at the other level may not work as well.

So, there’s the famous–the Westermarck effect. The Westermarck effect was named after Edvard Westermarck, who claimed that the source of the taboo against incest was the fact that young people raised together assumed genetically that they were related. So, unrelated people who were raised together never had any attraction for each other. And so there were a number of experiments in kibbutzim in Israel in the 1960s and 1970s that showed that people that had been raised together were much, much less likely, even though they were unrelated–so, your genes don’t know you’re unrelated. Your gene says, if you’re raised with someone–

Russ Roberts: Familiarity–

Michael Munger: that means that your genes think you’re related, and so there’s no attraction. You actually couldn’t violate the taboo even if you wanted, because it’s written on your heart. It’s not, ‘Oh, man, my sister’s really hot, but there’s a law against it, so never mind.’ It’s literally written on your heart, but it’s because of genetics.

Now, culture is the inheritance you get from the people who raise you. Genetics are the inheritance you get from the people who gave birth to you. But, culture is the inheritance you get from the people who raised you. So, if you’re raised with a group of people, you could have people separated at birth, they’re raised in different religions. There’s the story of Shibboleth from the Book of Judges in the Old Testament, what I call the Old Testament–

Russ Roberts: We call it the Hebrew Bible. Go ahead. That’s fine. Shame on you, Mike. I’m horrified, but no big deal.

Michael Munger: The people who were–if you had twins that were raised in separate cultures, one would be able to pronounce Shibboleth and the other would not be able to pronounce Shibboleth. But that’s cultural: there’s nothing genetic that would prevent me from being able to say it.

The way that genes do this–and I realize this is a complicated story, but this is the way I have come to think of it–human beings are evolved to have what may be an atavistic or that is a sort of throwback tendency to accept morality and to think morality is really important.

But, the content of what that morality is, is socially constructed. So, if I am raised in a different culture [crosstalk 00:40:09] genetic person, I would have different views about what is right and wrong, but I have an ability to think that those things are important.

So, I think this is a story I’ve told on the show before, but let me do it quickly. Once I was in Washington, D.C., and I was waiting in line for a movie–this was back when you couldn’t buy stuff online: it was in the 1980s, so, you had to wait in line for 30 or 40 minutes before the movie started.

Russ Roberts: And you waited in line because the price was too low and there weren’t enough seats. So, only the people who were lined up could get in. It’s not just to get the good seats.

Michael Munger: I think the price was too low, because I’m rich. The poor people thought the price was just right, because they had more of the resource that this was testing for. Spoken like a typical wealthy person, that everything should be the one resource you have a lot of.

Russ Roberts: No, it’s the neoclassical economist who sometimes forgets that positive and normative are not the same thing. I apologize. Carry on.

Michael Munger: In line, I’m standing in line. And, if you’re standing in line for a long time, you know the people around you. I’m talking to the guy behind me, and I turn around and there is a small, five foot two, slender woman who was not there before. And, I say, ‘You can’t cut in line like that.’ And, she immediately looked up at me and said, ‘If you say another word, I’m going to call the police and say you assaulted me.’

Now, I was completely undone. I remember it so vividly, and I also remember–I don’t remember anything about the movie, I was so upset. I could not sleep that night, I was so upset at this transgression of the rules. Now, what did she cost me? What would the economist say she cost me? 20 seconds?

Russ Roberts: Kind of. I mean, you didn’t even have to pay attention to her. But, your brain took it in. You’re saying, what did it cost you to hear her complaint? or for cutting in line?

Michael Munger: Objectively, what did cutting in line did–

Russ Roberts: Is she in front of you or behind you?

Michael Munger: In front.

Russ Roberts: Oh, I like behind because it’s even better, because then–

Michael Munger: I don’t think it would have made a difference. I think I would have been just as upset.

Russ Roberts: Yeah, of course. But, cutting in front of you made no difference as long as she didn’t prevent you from seeing the movie, and she didn’t.

Michael Munger: Save for probably 20 seconds extra where she paid for a ticket and went inside.

Russ Roberts: Yeah.

Michael Munger: I was so upset that I didn’t sleep that night, and I still remember the incident.

So, the point is, we are evolved to provide the public good of norm-enforcement–against our will. It’s irrational. I should not, if you’re an economist, I should not have provided this public good of norm-enforcement. However, if I live in a society where all of us do provide the public good of norm-enforcement, there is an emotion called shame, which is: I know that I did it and there’s an emotion–forgive me, called guilt–meaning that I know that I did it; and there’s one called shame where I’m upset when other people point to me and said, ‘He did it.’

Those two things mean that much of the problem of policing bad action is taken away. The society actually solves the problem itself.

So, there is a group rationality argument–and this is something that Hayek talks about quite a bit–there’s a group rationality argument for having an adapted, moral sense. So, morality is not a disadvantage, except that an individual sociopath, like that woman, might be able to invade this society as a mutant because there’s not 150 of us anymore. There’s a million people that live in Washington, D.C. I’ll never see her again. She paid no cost. So, long as she has no sense of guilt, she paid no cost for cutting in line.

If there are more people like that–well, the point is that they’re more able to survive in societies that don’t have small clannish groups.

And so, will this adaptive feature of human brain architecture disappear? Are we throwbacks that have this old feature that, in the future, societies are going to have to–you’re not going to be able to say–and this actually is what Patrick Deneen is worried about–what a number of people that are worried about liberalism are worried about, is that we need small groups where we get up in each other’s face when we act badly. Not, ‘Oh, it’s okay. You can do whatever you want.’

44:18

Russ Roberts: That was really amazing, and I’m not sure what to take away from that. Let me try to summarize the amazing part, and then I want to apply it to something really personal and embarrassing that it’s worse than your story of sleeping badly that night, I think.

So, here’s what I understand that you just said. You said that: our desire for meaning–excuse me, I was going to use ‘meaning’–our desire for morality–for justice, doing the right thing–is not a rational choice. It is actually somewhat hardwired in us from the past.

And so, it is something of a constraint, but it’s a funny kind of constraint because what its content is, is unspecified at any particular point in human history and in society. [More to come, 45:18]

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