What's love got to do with It?
Once in a while, I come across a new idea that fundamentally changes how I see the world. Sometimes the idea turns everything I thought I knew upside down. Other times, the idea fills in a missing puzzle piece in a dozen different situations, unexpectedly finishing a picture that I didn't even realize was incomplete.
Last month-ish, my favorite brother recommended a book called Predictably Irrational, by Dan Ariely. Ariely is a behavioral economist and the book is about how and why we make certain kinds of decisions. One idea he brings up (not original to him, but this is the first I've come across it) is social norms vs. market norms.
In the world of social norms, we do things for each other without expecting financial compensation (in fact, financial compensation is considered insulting and mercenary), but we do expect some sort of social compensation (often by being on the receiving end of a similar favor). In the world of market norms, everything has a price and exchanges are based on that price.
For example, if you go to a restaurant, everything on the menu has a price and you pay for what you order. Likewise, everything in a grocery store has a clear price. Those are market norms. But if you go to your mother's house for Thanksgiving and she fixes you a big meal and you offer to pay her for it, she'll be offended. And if your roommate asks to borrow a cup of milk and you demand 24 cents for it, you'll probably be considered mercenary. However, you're now in a position to ask him or her a small favor. And if the only time you ever spoke to your mother or had contact with her was at Thanksgiving, you'd probably be considered ungrateful.
Market norms aren't bad—without them, we couldn't go grocery shopping if we didn't personally know the store owner. However, social norms are very useful when you want help moving or need to borrow a cup of milk.
Some other thoughts:
• In the last month, two friends have mentioned that they're tired of giving away their professional expertise for free. One said that it's sucking up all of her free time. The other one didn't give specifics, but I gather it's the same issue. (Or she's feeling underappreciated in other ways. Or both.) My first thought on hearing about these situations was "Breakdown of social norms!" It's not that these people are averse to using their professional skills to help their friends, but they're giving out more than they're getting back.
• I think that social norms explain a lot about how online social collaboration works. In theory, no one should be proofreading articles on Wikipedia or combining book editions on LibraryThing or answering questions on the 100 Hour Board for free. In practice, people make those contributions because they like being part of a community. (There may also be a sense of "ownership" involved, whether it's over your article, your tag cloud, or your set of answered questions, so the contribution isn't necessarily entirely altruistic.)
• I recently read an article arguing that we should give cash instead of presents because, on average, we value the gifts we receive at only 80% of their cash value. (I.e., people aren't perfect at picking out gifts, so the gifts lose an average of 20% of their value when they're given.) However, if we give cash, no value is lost in the transaction.
This article rubbed me the wrong way when I read it, but I couldn't put my finger on why until I read about social norms. Reducing the significance of a gift exchange to the market value of the gifts involved ignores the more complex social factors underlying the exchange. (In addition, this argument ignores the value of the "surprise" factor in gift giving, although some people care more about this than others. Perhaps economists, by personality, are less likely to care.)
• Mormon Wards are basically large social exchange markets. We all pitch in for free, but it's OK because everyone else is also pitching in for free. Of course, some people have to do more work than others, but that also seems to go along with more "prestigious" callings. (Is the added level of social prestige necessary to offset the added time investment? Discuss.)