Report. New research in Science measures our propensity for altruism. Although economists are increasingly realizing people’s basic honesty, economic policy makers have not given up their ideology of economic liberalism.

The importance of being honest

Oscar Wilde’s comedy The Importance of Being Earnest tells a story about the advantages and disadvantages that come with being honest, or appearing to be so, in Victorian society. The play begins with the discovery of a cigarette case—which has been replaced by a wallet in the more recent stagings—and is centered around the loss and recovery of various bags, events through which the characters gradually reveal the more or less noble reasons that are guiding their behavior.

Although one cannot find any mention of it in the bibliography, an interesting study published in the latest edition of Science must have been inspired by Wilde’s play. The economists Alain Cohn, Michel André Maréchal, David Tannenbaum and Christian Lukas Zünd, from the universities of Utah, Michigan and Zurich, tried to measure the importance of being honest, and even altruistic, in daily life.

Altruism is one of the unresolved problems of the modern economy. According to Adam Smith, “it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” According to the dominant economic theory, selfishness is the fundamental impulse for human activity, and altruistic behavior is merely a price that the individual is willing to pay to preclude an excess of selfishness from jeopardizing their survival. But is this hypothesis of a perfectly selfish Homo economicus based in reality? 

To gather empirical evidence to this effect, the researchers set up scenarios featuring the loss of a wallet with a small amount of money in various public places. They left 17,000 wallets on bar counters, in hotels, at banks, police stations, post offices or cinemas, in 355 cities in 40 countries, setting it up so they appeared to have been discovered by chance. Then, the researchers measured the likelihood that citizens who found someone else’s wallet would deliver it to its rightful owner. 

As one might have predicted, the percentage of wallets returned varied significantly from one country to another. In Switzerland and Norway, the return percentage was over 70%, while in China and Morocco, at the other end of the spectrum, it did not exceed 10-20%. Italy was slightly below average, with 40%. 

It’s no wonder that in rich and law-abiding Switzerland, the values of altruism and honesty are more widespread. The result must have been pleasing for the Swiss Gottlieb Duttweiler Foundation, named after the creator of the largest chain of Swiss supermarkets, the Migros cooperative, as they were the ones who provided the money to be placed in the wallets for the experiment.

However, the next result obtained by Cohn and colleagues was a more surprising one. The researchers set up scenarios simulating the loss of wallets of different value, and found that when they contained money, people’s willingness to return them was higher, an effect recorded everywhere. In India, Turkey, China or the UK, the probability of returning a wallet containing money was more than double compared to the case when it only contained documents and other information.

This is clear evidence contradicting the principle of selfishness. From the individual point of view, it appears to be self-defeating behavior, unless one considers the indirect benefit of appearing honest in a society that considers honesty a value, as in Wilde’s play. But if this was the explanation, this seemingly irrational behavior should occur more prominently in Switzerland than in Morocco. The data show otherwise: an increased tendency to return a wallet containing money was found in almost all the countries studied, including Italy. The only exceptions recorded were Peru and Mexico. 

To figure out whether this was a true mark of altruism, the researchers repeated the experiment and placed a key in the lost wallet, in addition to money. Unlike the money, the key is only useful to its rightful owner. Therefore, returning it is a completely disinterested act. However, the addition of the key increased the probability of returning the wallet even more.

That these results are surprising is evident from another aspect of the research: they asked a representative sample of the general population and a separate group of expert economists to try to guess what the result of the experiment would be. A majority of both groups got the answer wrong, predicting that selfishness would prevail. The economists, for what it’s worth, were less mistaken than the laypeople.

In fact, the hypothesis that economic activity is driven by perfectly selfish and rational individuals is becoming increasingly contested among economic theorists as well. The strongest blow to the theory so far seems to have occurred in 2002, when the Nobel Prize in Economics was awarded to a psychologist, Daniel Kahneman from Israel, for his research on irrational behavior in the conditions of uncertainty which are typical for the markets.

However, the theory of the selfish Homo economicus is still the dominant one among those who truly have influence: those running international financial institutions and supranational institutions. The reason for this is purely political: this presupposition lies at the core of the economic theories which hold that the free market is the most efficient form of social organization—with their corollaries of privatizations, fiscal policies and monetary strategies.

The ideological nature of this theory is confirmed by the fact that changing the economic paradigm has been shown to be possible, as long as the goal is to save the markets themselves: post-crisis monetary policies in both the US and Europe have drifted away from strict monetarism over the years. However, the rules of the financial game have remained the same so far—both in Europe and the US, and even in Switzerland.

Subscribe to our newsletter

Your weekly briefing of progressive news.

You have Successfully Subscribed!