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Sociability and the Market

Abstract

This paper addresses two classroom activities for exploring sociability and the role it plays in market and non-market allocations. Adam Smith’s moral sentiments theory provides a conceptual framework for understanding such behavior. In the Desert Island activity students have conversations about competing allocation methods (e.g., rationing, lottery, competition, brute force) that provide a backdrop for learning about market mechanisms and behavioral economics. Beginning students consistently pick egalitarian distributions that signal the implicit willingness to share for reasons that might be instinctual, reputational or other. Fairness in allocations mimics that found in the playing of the Ultimatum Game. The results suggest that economic instructors can successfully bring into the classroom concepts of sociability and the roles it serves in human institutions when introducing a new and different institution—the market.

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Notes

  1. Samuelson credited Professor Lyle Owen of the University of Tulsa with this insight.

  2. Some students get accepted to elite schools when favoritism is based on “legacy” or other criteria than merit. And certainly some students “buy” their way into college through their parents’ donations. This latter situation is presumably rare, and most students would likely resent such market arrogance.

  3. Haidt (2001) argues, however, that logical rationales are usually constructed post hoc, that is, after a decision has already been reached; people struggle to justify a choice already made.

  4. For example, Cuba’s life expectancy at birth climbed from 64 to 78 years over the period 1960–2006. By contrast, other large islands in the Caribbean like Jamaica went from 64 to 71 years; Haiti from 42 to 60 years; and the Bahamas from 63 to 73 years (World Bank 2008).

  5. Adam Smith (1981, 456–7) may be guilty of this fallacy when he wrote, “What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom”.

  6. Note: if the groups are uneven in size not everyone will get an offer or some may receive more than one offer. Since this is an activity rather than an experiment, this does not present a problem and it greatly speeds the flow of the game to proceed in this way.

  7. One student from Turkey told me, “I never knew a market could do good. I always thought profit came at the expense of someone else.”

  8. Additionally, for-pay systems for organs would introduce incentives for seller misinformation regarding diseases that may lower the average quality of organs provided and increase the health risks for organ recipients.

  9. According to Murray Wolfson, economics is “easily one of the most difficult subjects to teach....The kids just don't believe a word of what I'm teaching. The relevance isn't obvious to them” (quoted in DeLisser 2000).

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Correspondence to Jonathan B. Wight.

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Helpful suggestions were received from Geoff Schneider and two anonymous referees.

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Wight, J.B. Sociability and the Market. For Soc Econ 38, 97–110 (2009). https://doi.org/10.1007/s12143-009-9034-0

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Keywords

  • Adam Smith
  • Moral sentiments
  • Social behavior
  • Fairness
  • Pedagogy