Ernst Fehr on the individual and society at seminar

Ernst Fehr

On the 7th of December 2012 the tipped Nobel Prize-candidate and Professor of Economics Ernst Fehr came to visit the Institute for Futures Studies in order to hold the seminar "The Weave of Social Life – How Community Participation Shapes the Individual."

– How does society shape the individual?, that is a fundamental question, says Fehr when I talk to him after the seminar. It’s true that society is within the individual, but the individual also affects society.

The assumption that individuals and society influence each other, making it difficult to study the relationship between them, is according to Fehr one of several reasons as to why neither economists or sociologists have approached the matter in any significant way. Convinced that it is possible to find causal relationships in the field, he and some colleagues carried out an extensive experiment in 2006. The experiment was based on the hypothesis that participation, in the sense of social interaction with other individuals in a group in society, affect our trust in others and the importance of trustworthiness.

A game of trust with eBay

The experiment was performed using eBay as a partner. 70 000 people who had ever bought or sold anything through eBay.com were selected. Part of that group was chosen as an experimental group and received e-mails on three occasions from eBay with information about the opportunity to participate in eBay's various web communities. Four months later, all 70 000 people got an e-mail from the University of Zürich with a request to participate in an experiment. 15 000 people participated, about half of them from the experimental group.

The experiment was designed as a game involving two investors and one manager. Investor One got some money and was informed that giving the money to the Manager would triple the amount. This first part of the experiment showed whether Investor One trusted the Manager to repay some of the money. The experiment also showed whether the Manager cared to build credibility with Investor Two by his or her action towards Investor One. In the second part of the experiment Investor Two got the same offer as Investor One. In this part focus was on the degree of altruism that the Manager showed towards Investor Two.

Community participation feeds altruism

The experiment showed that the individuals in the experimental group, who were more likely to participate in web communities than the people in the control group, tended to trust the Manager more often in the role of Investor One. It also showed that they were more sensitive to the trustworthiness of the Manager in the role of Investor 2, and being more altruistic towards Investor 2 in the role of Manager.

The conclusion is that community participation does affect the individual, and part of this effect could be a tendency to trust other people and to give more significance to the trustworthiness of others.

I ask Fehr what to do with this knowledge. Is it possible to say that a high degree of trust and trustworthiness is a good thing in a society?

– An excessively high level of trust is not good because then we will be deceived by those who are not altruists, answers Fehr. On the other hand, we feel bad if we are always afraid of being deceived. In a good society trustworthiness is rewarded, and a high degree of trustworthiness also results in a higher degree of trust.

– At society level it means we need to create institutions which reward trustworthiness. For example, active corruption control, laws that protect us and our property, or a system for credit rating, says Fehr.

In a society where trustworthiness is critical, the consequences of a bad reputation (correct or not) can be harsh. The game of trust namely shows that the participants from the experimental group were not only more straightforward with their praise of trustworthy Managers, they were also more judgmental towards those less trustworthy. – That kind of society also needs to be able to give people second chances, says Fehr.

Curiosity crossing borders

Before it is time for Fehr to leave and step out in the snowy street to take a taxi to the plane going back to Zürich, I ask him a last question. “How come you are also interested in brain research nowadays?”

– Humans are not only mind but also body, says Fehr. If I change your neurons, I change the way you act. It is impossible to understand the individual disregarding this fact.

Before leaving, he corrects the fundamental question "how does society shape the individual" to "how does society and biology shape the individual".

Erika Karlsson