What Price the Moral High Ground?

What Price the Moral High Ground?: How to Succeed without Selling Your Soul

ROBERT H. FRANK
Copyright Date: 2004
Pages: 224
https://www.jstor.org/stable/j.ctt7zthgc
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    What Price the Moral High Ground?
    Book Description:

    Financial disasters--and stories of the greedy bankers who precipitated them--seem to underscore the idea that self-interest will always trump concerns for the greater good. Indeed, this idea is supported by the prevailing theories in both economics and evolutionary biology. But is it valid?

    InWhat Price the Moral High Ground?, economist and social critic Robert Frank challenges the notion that doing well is accomplished only at the expense of doing good. Frank explores exciting new work in economics, psychology, and biology to argue that honest individuals often succeed, even in highly competitive environments, because their commitment to principle makes them more attractive as trading partners.

    Drawing on research he has conducted and published over the past decade, Frank challenges the familiar homo economicus stereotype by describing how people create bonds that sustain cooperation in one-shot prisoner's dilemmas. He goes on to describe how people often choose modestly paid positions in the public and nonprofit sectors over comparable, higher-paying jobs in the for-profit sector; how studying economics appears to inhibit cooperation; how social norms often deter opportunistic behavior; how a given charitable organization manages to appeal to donors with seemingly incompatible motives; how concerns about status and fairness affect salaries in organizations; and how socially responsible firms often prosper despite the higher costs associated with their business practices.

    Frank's arguments have important implications for the conduct of leaders in private as well as public life. Tossing aside the model of the self-interested homo economicus, Frank provides a tool for understanding how to better structure organizations, public policies, and even our own lives.

    eISBN: 978-1-4008-3391-7
    Subjects: Economics, Business

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Introduction: Infectious Good
    (pp. vii-xii)

    With revelations of corporate accounting scandals dominating the news in the summer of 2002, United States Federal Reserve Chairman Alan Greenspan told a Senate banking committee in Washington that leaders of America’s business community appeared to be in the grip of “infectious greed.” The problem, in his view, was “not that humans have become any more greedy than in generations past,” but rather that “the avenues to express greed have grown so enormously.”

    Many saw the scandals as confirming the cynical view thatdoing well(successfully pursuing one’s narrow self-interest) is accomplished entirely at the expense ofdoing good(respecting...

  4. PART I. DOING WELL

    • 1 Forging Commitments That Sustain Cooperation
      (pp. 3-27)

      Rational choice models typically assume that people choose among possible actions so as to maximize the extent to which they achieve their goals. Such models yield few interesting predictions, however, without first introducing specific assumptions about the nature of those goals. How can we predict what someone will do unless we first have some idea of what he or she cares about?

      The most frequent move at this step is to assume that people pursue goals that are self-interested in fairly narrow terms. Yet many common actions appear to be at odds with this assumption. We leave tips at out-of-town...

    • 2 Can Cooperators Find One Another?
      (pp. 28-44)

      As discussed in the preceding chapter, cooperation in one-shot social dilemmas can be a rewarding strategy, but only under certain conditions. The essential requirement is that cooperating individuals somehow manage to pair off with others who also cooperate. Can we reliably sort ourselves in this way? This chapter reports the results of a study in which my Cornell colleagues Tom Gilovich and Dennis Regan and I attempted to answer this question experimentally.

      Our experiment involved volunteer subjects who played a one-shot prisoner’s dilemma game with one another. Many were Cornell undergraduates recruited from courses in which the prisoner’s dilemma was...

    • 3 Adaptive Rationality and the Moral Emotions
      (pp. 45-57)

      Although they have been the subject of intense discussion for literally thousands of years, the terms rationality and morality remain shrouded in ambiguity. Our discussion in chapter 1 helps to identify some of the sources of this ambiguity and suggests a conceptual framework that can help to reduce it somewhat, by taking account of the strategic role of moral emotions in social interaction. This same framework, however, suggests that ambiguity cannot be fully purged from the concepts of rationality and morality.

      There are many conceptions of rationality, each with its own strengths and weaknesses. Much of the ambiguity concerning rationality...

    • 4 Can Socially Responsible Firms Survive in Competitive Environments?
      (pp. 58-68)

      In his celebrated 1970 article, Milton Friedman wrote that “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” In Friedman’s view, managers who pursue broader social goals—say, by adopting more stringent emissions standards than required by law or by donating corporate funds to charitable organizations—are simply spending other people’s money. Firms run by these managers will have higher costs...

  5. PART II. DOING GOOD

    • 5 What Price the Moral High Ground?
      (pp. 71-91)

      Many economists assume—implicitly or explicitly—that people are essentially self-interested. Thus, in Gordon Tullock’s words, “the average human being is about 95 percent selfish in the narrow sense of the term” (Tullock 1976; quoted in Mansbridge 1990, 12). This approach has generated many powerful insights into human behavior. It explains, for example, why car pools form in the wake of increases in gasoline prices and why the members of “service” organizations are more likely to be real estate salespersons, dentists, chiropractors, insurance agents, and others with something to sell than to be postal employees, truck drivers, or airline pilots....

    • 6 Local Status, Fairness, and Wage Compression Revisited
      (pp. 92-108)

      Nearly two decades ago, I suggested that concerns about relative position might help explain why the distribution of compensation within firms is more compressed than the corresponding distribution of productivity (Frank 1984). In the interim, several other authors have sought to explain the same phenomenon by reference to concerns about equity or fairness. In this chapter, I examine some of the strengths and weaknesses of these competing explanations.

      Standard models of competitive wage determination tell us that the distribution of compensation within a firm will closely mimic the distribution of its workers’ marginal productivities. And yet for those firms for...

    • 7 Motivation, Cognition, and Charitable Giving
      (pp. 109-130)

      In a Monty Python skit, John Cleese plays a banker who is asked to donate a pound to a local orphanage. His first reaction is that the solicitor must be proposing an investment opportunity, or possibly a tax dodge. Neither, the solicitor tells him, at which point Cleese is nonplused.

      CLEESE: No? Well, I’m awfully sorry I don’t understand. Can you just explain exactly what you want.

      SOLICITOR: Well, I want you to give me a pound, and then I go away and give it to the orphans.

      CLEESE: Yes?

      SOLICITOR: Well, that’s it.

      CLEESE: No, no, no, I don’t...

  6. PART III. FORGING BETTER OUTCOMES

    • 8 Social Norms as Positional Arms-Control Agreements
      (pp. 133-154)

      The term “positional arms race” refers to an escalating pattern of mutually offsetting investments undertaken by rivals whose rewards depend on relative performance. Such arms races are abundant in social and economic interaction—advertising wars, anabolic steroid consumption, cram courses for the SATs, social and professional wardrobe expenditures, even cosmetic surgery.

      A variety of formal mechanisms—such as random drug testing of athletes and chronological age mandates for kindergarten students—have been used to control positional arms races. In this chapter, I explore how less formal mechanisms such as social norms and moral suasion have served a similar function. Examples...

    • 9 Does Studying Economics Inhibit Cooperation?
      (pp. 155-178)

      In an essay written in 1879, Francis Amasa Walker tried to explain “why economists tend to be in bad odor amongst real people.” Walker, who went on to become the first president of the American Economic Association, argued that it was partly because economists disregard “the customs and beliefs that tie individuals to their occupations and locations and lead them to act in ways contrary to the predictions of economic theory” (quoted by Robert Solow, as reported in theChronicle of Higher Education,8 January, 1986).

      More than a century later, public skepticism toward economists remains. At least some of...

  7. Appendix: Ethics Questionnaire
    (pp. 179-182)
  8. Epilogue: The Importance of Sanctions
    (pp. 183-190)

    Although the essays in this volume take issue with many elements of the received wisdom of neoclassical economics, it would be a mistake to read them as hostile to the economic way of thinking. Indeed, among the growing number of economists working at the intersections of economics and other disciplines in recent years, I come closer than most to embracing the rational choice tradition of neoclassical economics. For the most part I assume that people have reasonably well-defined goals and try to achieve them as best they can.

    Sometimes I emphasize that this effort is crude and approximate, as in...

  9. References
    (pp. 191-198)
  10. Index
    (pp. 199-203)