- Paul Constant is a writer at Civic Ventures and cohost of the “Pitchfork Economics” podcast with Nick Hanauer and David Goldstein.
- They recently spoke with Stanford professor Margaret Levi about the ‘economic man’ and government distrust.
- People are largely cooperative, Levi says, and want a government that will step up and deliver on its promises.
- See more stories on Insider’s business page.
For most of the 20th century, the field of economics hinged on the idea that humans are rational and self-interested actors, and their economic decisions are similarly rational and self-interested. If you buy into this concept of homo economicus, or economic man, the economy becomes easy to predict and simple to understand.
People who believe in the idea of homo economicus tend to argue that government intrusion is unnecessary, and even harmful to the well-being of the economy. But as Nick Hanauer pointed out in a popular TED Talk, homo economicus is a ridiculous theory that bears no relationship to real life. Human beings don’t behave in purely rational and self-interested ways, and the market doesn’t self-regulate efficiently. The good news is that we’re largely cooperative and moral creatures. The bad news is that we don’t always act in our own rational best interests and bad actors can manipulate those impulses in very harmful ways.
In the latest episode of the “Pitchfork Economics” podcast, Hanauer interviews Stanford political science professor Margaret Levi about her groundbreaking work in behavioral sciences. In books like “In the Interest of Others,” which she coauthored with John Ahlquist, Levi has deeply explored the bonds of trust that inspire people to think beyond mere material self-interest and instead work as part of an organization with larger and wider-reaching goals than any individual could attain.
What inspires people to do ‘the right thing’
Lately, Levi has been thinking and speaking on the subject of how and why citizens develop confidence in government.
“I started by thinking about compliance,” Levi said. Mere compliance is enough for a government to run: People pay their taxes and follow laws and so there’s enough stability for people to go to work and start families. But “a more effective state,” Levi said, “is one in which people prefer to comply because they think it’s the right thing to do. They think that they’re getting what they should from the government, and they’re willing to give some of their cooperation, even in extractive terms, in return.”
Levi’s work has shown that in large part, “people are very social. They’re not individualistic. They’re looking for connections, they’re looking for approval,” she said. “So reciprocity is an incredibly important piece of the story” that homo economicus doesn’t reflect at all. With a handful of sociopathic exceptions, people are happier when our peer groups are happy, and we’re eager to contribute to the health, prosperity, and happiness of our communities even if our actions don’t benefit us directly.
Scan the headlines on your favorite news site, though, and you’ll see that reciprocity isn’t necessarily the order of the day: A relatively small but decidedly vocal minority is refusing vaccines and masking guidelines, and political polarization (to say nothing of the radicalization of some right-wing groups) is at a generational high.
How governments can gain trust
What does Levi think our leaders can do to stem the tide of distrust in government and regain the people’s trust? The most important thing, she says, “really is stepping up to the plate and showing that the government can and will act to help people – and that it can and will deliver.”
Levi believes that President Biden is “more or less” succeeding at regaining people’s trust through programs like the Child Tax Credit on a federal level, but she thinks local leaders have to step up as well. “My prescription at the local level would, would be to focus on local policies and local programs to re-institute trust at the local level,” and the best way to do that is to “elect city council-people and state legislators who actually make people believe that democracy can work and that mobilization will matter.”
For what it’s worth, Levi said, “I’m hopeful.” She believes that harmful policies like the anti-voting laws and abortion ban that Texas passed “may get people onto the streets, and even more importantly, into the voting booths” to reclaim society for the people. In a reciprocal society, self-interest can get you pretty far – but downright anti-social behavior tends to be punished.