Predictably Irrational

Dan Ariel, a behavioral economist, is the author of Predictably Irrational.  The premise of the book and behavioral economics is that human beings do not always always think and act in rational ways but more often are very irrational in our decisions and actions and those irrational responses are, in fact, predictable. Because current economic policy assumes rational responses, Ariely argues those policies are flawed because our behavior is not rational but irrational and predictably so. The book is interesting and worthy of consideration. Here is an excerpt that I thought interesting not only from an economic prospective but also from a spiritual and religious view.

In the chapter entitled The Cost of Social Norms (Why We Are Happy to Do Things , but Not When We Are Paid to Do Them) , the author examines the reality that we live in two different worlds – one where social norms prevail and the other where market norms prevail.

Social norms are wrapped up in our social nature and our need for community. They are usually warm and fuzzy. Instant paybacks are not required: you may help move your neighbor’s couch, but this doesn’t mean he has to come right over and move yours. It’s like opening a door for someone: it provides pleasure for both of you, and reciprocity is not immediately required.

The second world, the one governed by market norms, is very different. There is nothing warm and fuzzy about it. The exchanges are sharp-edged: wages, prices, rents, interest, and cost-and-benefits. Such market relationships are not necessarily evil or mean – in fact they include self-reliance, inventiveness, and individualism – but they do imply comparable benefits and prompt payments. When you are in the domain of market norms, you get what you pay for – that’s just the way it is. It is clear that when we keep social norms and market norms on their separate paths, life hums along pretty well. … When social and market norms collide, trouble sets in.

Ariely developed experiments to explore the effects of social and market norms. There were several experiments cited. However, this statement summarizes, in general, the conclusions of the experiments:

So we live in two worlds: one characterized by social exchanges and the other characterized by market exchanges. And we apply different norms to these two kinds of relationships. Moreover, introducing market norms into social changes, as we have seen, violates the social norms and hurts the relationships. Once this type of mistake has been committed, recovering a social relationship is difficult.

This study illustrates well the point:

My good friends Uri Gneezy (a professor at the University of California at San Diego) and Aldo Rustichini (a professor at the University of Minnesota) provided a very clever test of the long-term effects of a switch from social to market norms.

A few years ago, they studied a day care center in Israel to determine whether imposing a fine on parents who arrived late to pick up their children was a useful deterrent. Uri and Aldo concluded that the fine didn’t work well and in fact it had long-term negative effects. Why? Before the fine was introduced, the teachers and parents had a social contract, with social norms about being late. Thus, if parents were late – as they occasionally were -they felt guilty about it-and their guilt compelled them to be more prompt in picking up their kids in the future. (In Israel, guilt seems to be an effective way to get compliance.) But once the fine was imposed, the day care center had inadvertently replaced the social norms with market norms. Now that the parents were paying for their tardiness, they interpreted the situation in terms of market norms. In other words, since they were being fined, they could decide for themselves whether to be late or not, and they frequently chose to be late. Needless to say, this was not what the day care center intended.

But the real story only started here. The most interesting part occurred a few weeks later, when the day care center removed the fine. Now he center was back to the social norm. Would the parents also return to the social norm? Would their guilt return as well? Not at all. Once the fine was removed, the behavior of the parent didn’t change. They continued to pick up their kids late. In act, when the fine was removed, there was a slight increase in the number of tardy pickups (after all, both the social norms and the fine had been removed).

This experiment illustrates an unfortunate fact: when a social norm collides with a market norm, the social norm goes away for a long time. In other words, social relationships are not easy to reestablish. Once the bloom is off the rose-once a social norm is trumped by a market norm – it will rarely return.

The church has chosen to adopt market norms (consumerism) to achieve what it believed it could not accomplish, or accomplish as well, with social norms. It has subjugated social norms (koinonia, community, love, body) to market norms. The result has been similar to the experience of the Isreali daycare. Once the market norms prevail, church members feel they are paying for their “misbehavior” or they feel a sense of entitlement and expect to receive “what they are paying for”. As I begin to understand how social and market norms interrelate, it becomes clearer why so many churches are struggling.

What bothers me the most is the conclusion that once a social norm is trumped by a market norm – it will rarely return. The implication is that consumer churches cannot just reinstate social norms and expect to return to being the church (become), the body of Christ. For leaders of churches who are searching to escape the grasp of consumerism, this seems to negate a strategy that would simply trash the market norms and expect that koinonia, community, love, body, et al will be restored. It is an interesting and challenging problem. I am going to give it more thought.