Wednesday, January 26, 2011

Social Rules vs. Economic Rules

These two worlds don't always go together says Dan Ariely, author of "Predictably Irrational."  Particularly, the rules of each world make us act in different ways.  When we act in the social world and feel obligated to do something we might do the same thing differently if we were in the economic world.  Consider helping a friend move his stuff from one apartment to the other.  You might do this as a favor--socially--for free, thought it takes some time to do so, but the minute the friend offers you a buck fifty, you don't think, wow that's great because I get benefit of helping my friend (some warm emotional thing) with a buck fifty, no.  Instead the calculation changes into: "I'm worth much more than a buck fifty and this is an insult."  Pretty interesting. 

Ariely also points to an interesting idea to illustrate his points that these worlds are filtered with different rules: imagine offering up your mom or girlfriend or wife money after thanksgiving dinner, or your girlfriend or wife money after sex.  His point is that as soon as money is brought up--even when money is at stake or changing hands--it fundamentally alters the valuation into the economic, and it is very difficult to go back to the purely social.  Companies of course try to get you to think in terms of the social, another example he uses is starbucks, for instance. 

So, to bring this back to the post the other day about pain.  We don't like to value our social stuff in the economic sense, because it makes us feel bad to be valued less than others are, or to be quantified like this in the first place.  After all, the concept of love, which I've been struggling to define, isn't exactly an infinite amount of "love credits"--particularly if we have a limited amount of love credits to give out.  But that's how we think of it in the social realm.  We are "fully" dedicated to the one's we love.  And that's why economic understandings of love always somehow miss that intangible "infinite" more than one can explain mark.  I think. 

Now, that doesn't mean that economic thinking can't be hugely useful or that social valuation isn't useful.  It just means that we act differently depending on which system we're in.  In one of Ariely's studies, he compared how much candy people or cookies people took from a pile of candy or cookies when they were marked "free" vs. when they were charging a very small fee (like 5 cents).  People take something like three more items when they are valued cheaply than when the items are free.  They somehow devalue the social equity aspect of the item once they make the shift into economic thinking.  Ariely's point is that when we know we're in an economic market, we do behave as rational consumers, but that we're not always in that market.  More to come as I keep reading.

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