Why your thoughts on a zero-sum game mat­ter

If a given cul­tural trait en­cour­ages a cer­tain way of un­der­stand­ing how the world works, then it fol­lows that it also de­ter­mines economic de­ci­sion-mak­ing.

Finweek English Edition - - OPINION - Ed­i­to­rial@fin­week.co.za Jo­han Fourie is as­so­ciate pro­fes­sor in economics at Stel­len­bosch Univer­sity.

ques­tion: A farmer in your neigh­bour­hood has had an ex­cep­tion­ally pro­duc­tive 2016. He has man­aged to dou­ble wheat out­put, and his favourite cow, Daisy, was awarded first prize in the national com­pe­ti­tion. What is the rea­son for the farmer’s success? Is it: (a) He has worked very hard, (b) he was lucky, or (c) he put a spell on the rest of the farm­ers in his vil­lage?

This is an ex­am­ple of the type of sur­vey ques­tions a team of Har­vard econ­o­mists have been ask­ing sub­sis­tence farm­ers in the Demo­cratic Repub­lic of Congo on sev­eral vis­its over the last few years. In con­trast to what one might think, the an­swer to this ques­tion is al­most al­ways the same: (c). Witchcraft and su­per­nat­u­ral be­liefs are wide­spread in Africa and through­out the de­vel­op­ing world. One aim of the re­search is to iden­tify how these cul­tural traits af­fect economic de­ci­sion-mak­ing. Clearly, if my an­swer to this ques­tion was that the farmer’s success was due to hard work, I would con­clude that the way to ex­cel is to work harder. But if my un­der­stand­ing is that this farmer some­how cheated – that his success was due to a spell he put on the rest of the com­mu­nity, and that his gain was our loss – then I would think that I need to spend more of my sur­plus not on in­vest­ing in my farm, but on brib­ing the lo­cal spir­i­tual leader for favours.

The be­lief that the world is a zero-sum game is wide­spread. Like these Con­golese farm­ers, many of us be­lieve that the success of one mem­ber of our com­mu­nity must be to the detri­ment of oth­ers. In some cases, this is of course true: when one bowler in cricket takes seven wick­ets in an in­nings, it leaves only three scalps be­tween the re­main­ing bowlers. But gen­er­ally the world is not zero-sum. China’s success is not a con­se­quence of Amer­ica’s de­cline, de­spite what the Trump pro­pa­ganda ma­chine says. Trade, as econ­o­mists have known since David Ricardo, can be mu­tu­ally ben­e­fi­cial, even if it means that the ben­e­fits and costs of growth are not shared by ev­ery­one equally. My neigh­bour’s fi­nan­cial success af­ter she de­signed and mar­keted a new app is not the result of her “steal­ing” my success.

The wide­spread be­lief in a zero-sum world re­sults in what has be­come known as Tall Poppy Syn­drome (TPS). I’ve seen this in ac­tion: stu­dents that ex­cel some­times draw the envy of their poorer-per­form­ing peers. It has con­se­quences: the en­vi­ous ones be­lieve that the good stu­dent must have achieved the high marks be­cause of ex­ter­nal fac­tors, such as be­ing the teacher’s favourite. They avoid tak­ing re­spon­si­bil­ity for their own medi­ocre ef­forts. The star stu­dent, de­pend­ing on the sanc­tion of the en­vi­ous ones, also re­acts, ei­ther by with­draw­ing from so­cial in­ter­ac­tion or, worse, by putting in less ef­fort in the next test to avoid stand­ing out.

TPS is preva­lent in all so­ci­eties, but its den­sity and ef­fects are likely to vary. If TPS is more con­cen­trated in poorer com­mu­ni­ties, for ex­am­ple, it will ham­per so­cial mo­bil­ity, re­in­forc­ing both the poverty and the cul­tural be­liefs it­self. De­vel­op­ment econ­o­mists are there­fore hop­ing to not only iden­tify the causes of these be­liefs, but also how to change them.

This will not be easy: be­liefs are dif­fi­cult to mea­sure ac­cu­rately, and their ori­gins may be deep in history. Nathan Nunn and Leonard Wantchekon’s work sev­eral years ago showed how the At­lantic slave trade still af­fects trust in African so­ci­eties: peo­ple that to­day live in ar­eas where most slaves were cap­tured are more likely to dis­trust their neigh­bours and the gov­ern­ment. In a new pa­per, Oded Galor and Ömer Özak show that peo­ple’s be­lief about time pref­er­ence – whether you have a long-term hori­zon or not – were af­fected by what type Farm­ers walk in a field with a vol­canic chain stand­ing out in the dis­tance, North Kivu in the Demo­cratic Repub­lic of Congo. of crops their an­ces­tors grew. Both trust and time pref­er­ences are nec­es­sary in­gre­di­ents for de­vel­op­ment. As Adam Smith al­ready pointed out in the 18th cen­tury, trust is nec­es­sary for spe­cial­i­sa­tion and ex­change. A long-term hori­zon al­lows one to forego future in­come, in­vest in the present and earn the higher future re­turns. It af­fects our propen­sity to save, to adopt new tech­nolo­gies, and, as Galor and Özak show, even our like­li­hood to smoke.

If these cul­tural be­liefs are so deeply rooted and have such a per­va­sive in­flu­ence over our be­hav­iour, what can be done to change them? This is dif­fi­cult to an­swer, and re­quires the in­ter­dis­ci­pli­nary ef­forts of psy­chol­o­gists, econ­o­mists, an­thro­pol­o­gists and neu­ro­sci­en­tists. The an­swers they pro­vide may not only con­trib­ute to sus­tain­able de­vel­op­ment and so­cial mo­bil­ity, but may have ap­pli­ca­tions else­where. Mar­keters may have to de­sign prod­ucts that ap­peal to those with a zero-sum world view, or man­agers may have to lead teams of peo­ple where some as­cribe to this view. The in­cen­tives that mo­ti­vate peo­ple who have TPS, for ex­am­ple, are likely to be dif­fer­ent to those who are less en­vi­ous of their suc­cess­ful col­leagues.

Our be­liefs about the world shape our economic de­ci­sion-mak­ing. We are only now be­gin­ning to un­der­stand how it does, and what to do to change it.

China’s success is not a con­se­quence of Amer­ica’s de­cline, de­spite what the Trump pro­pa­ganda ma­chine says.

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