A fair share of the pie: people everywhere put a social spin on economic exchanges

Science News, Feb 16, 2002 by Bruce Bower

Hadza hunter-gatherers in Tanzania chow down on gazelle meat, fruit, honey, and other mealtime staples without spending a dime. The Au and Gnau foragers of Papua New Guinea generously give food and other gifts to their neighbors without bothering to take out bank loans. Kazakh herders in western Mongolia monitor the weather and their animals' health but ignore the ups and downs of international stock markets.

These groups have little need for the colored paper and bits of metal known lovingly as money in industrialized nations. Nonetheless, small societies lying outside the Western word's corporate bustle are hotbeds of economic activity. In fact, more than a dozen such groups, including those just mentioned, have yielded insights into social forces that may shape economic behavior from Tennessee to Timbuktu.

There's a simple explanation for this unlikely development: Experimental economics has gone native. Until now, this academic exercise in controlled financial exchanges has rarely strayed from the laboratory. Researchers typically recruit college students to play games in which two or more strangers divvy up a sum of money using a set of ground rules.

In a break from this tradition, 11 anthropologists and an economist spent the past couple of years probing how people in diverse cultures play economic games. Initial results come from 15 small-scale societies located in 12 countries that span the globe. Participating groups consist of three hunting-and-foraging societies, six communities that rely primarily on slash-and-burn agriculture, four nomadic-herding groups, and two farm villages.

This extension of experimental economics far beyond the realm of indentured undergraduates has proven enlightening, says project director Joseph Henrich, an anthropologist at the Institute for Advanced Study in Berlin. Henrich and several other project scientists described themes emerging from their data in a session at last November's annual meeting of the American Anthropological Association, held in Washington, D.C.

Traditional economic theory assumes that basic human self-interest lies at the heart of commerce. As a result, regardless of his or her cultural background, a volunteer who receives a wad of money in an economics experiment should offer as little as possible to a partner, even if both players will be left penniless if that partner rejects the often In theory, a self-interested partner should accept even a stingy offer since it's better than nothing.

However, a chief discovery of the project, Henrich says, is that nowhere do individuals behave out of pure self-interest, whether they live in college dorms or thatched huts. In one group after another, a person given a chunk of money or other valuable stuff tends to offer a substantial, although highly variable, share to an anonymous partner. Moreover, the partner often rejects any offer perceived as too low and contentedly departs empty-handed.

Cross-cultural results indicate that economic games tap into collective notions of what makes for a fair transaction. These flexible rules of thumb for sharing resources run circles around any brute instinct for self-interest.

In economic games, members of societies that feature lots of bargaining and bartering gravitate toward dividing available goods equally. Communities in which families are isolated come closest to exhibiting the traditional economic model.

As bastions of market economies and cooperative business ventures, industrialized nations promote a stronger ethic of fairness than do many of the traditional societies studied so far, Henrich notes.

These findings raise profound issues that have been little explored, says economist Colin Camerer of the California Institute of Technology in Pasadena, a participant in the cross-cultural project.

"The opportunity to trade in economic markets may create social expectations about sharing and trust that exist over and above individual decisions and motivations," Camerer remarks. "Such findings can show us how to look at economic-game data with a fresh eye."

TAKE IT OR LEAVE IT The idea of going global with experimental economics grew out of Henrich's initial findings among a community in Peru. Each forest-dwelling Machiguenga family lives in near-isolation and subsists on slash-and-burn farming, hunting, foraging, and fishing.

Henrich administered to pairs of unrelated Machiguenga volunteer's a version of the so-called ultimatum game. Each duo had at its disposal a relatively large sum of money, equal to about 2 day's worth of labor by a Machiguenga adult. The first player, the proposer, was free to offer any part of the total to the other player, the responder. If the responder accepted the offer, each player received those amounts; if the responder turned it down, neither player got anything.

Machiguenga proposers displayed a greater streak of self-interest than any college student had in previous laboratory studies (SN: 3/28/98, p. 205). The Peruvian forest dwellers usually offered 15 percent to 25 percent of the pot. Responders agreed to nearly all offers, including those below 15 percent. In contrast, undergraduate proposers in the United States and elsewhere usually tender 30 percent to 40 percent of the total, and most of their responders reject anything below 20 percent.