Translator: Mark Freehoff
Reviewer: Capa Girl So, a few years ago,
Oded and I had an idea of studying the effects
of drugs and alcohol on decision making. I studied decision making in general, I thought Burning Man
would be the best place to do it. So we came here and we tried
to do all kinds of experiments. It turns out, that people were either not drugged enough,
or way too drugged. (Laughter) We never got the exact sweet spot,
so, if at any point in the next few days you’re interested in participating in the experiment then you are in that sweet spot, come and look for us. But, actually I want to talk about
something else, I want to talk about how we think
about money in general and how we think about social interactions. So consider the following. Imagine you are 24-year-old guy, you’re on a date, it’s been great. You’ve gone to the theater,
you’ve got some drinks afterwards and now you’re walking with your date
to her apartment and you’re hoping that this
will end with a passionate, goodnight kiss
and you’re going up her steps and your leaning forward
to kiss her and just before you lean you say,
“By the way, this date of ours cost me a 116 dollars.” How will that experiment turn out? You know, most likely, not very well. And the question is, “Why?” Because everybody knows
how much money was changing hands
and who payed for what and what are the prices,
but the moment we make the price explicit, something seems to change
in the relationship. Or consider another idea, imagine that I ask you to help me. I say, “Hey, would you help me
change the tire on my car?”, or do something and think yourself what’s the likelihood that you would help me? Now what would happen
if instead I would say, “Would you help me change the tire on my car, I’ll give you 5 dollars?”
Now, most likely, you would say,
“No thank you. I don’t work for 5 dollars! Give me 150 dollars, we can talk!” What happens here and we have shown it in many experiments,
is that when we pay people nothing, people are very happy to work,
to help, to assist. When we add money to the equation, often the motivation decreases,
rather than increases. So we can take the motivation
that people have to help, we can offer them
a little bit of money and rather than getting people to say, “Gee, I get to help Dan plus I get money” they actually are less motivated. If we pay them a lot of money, of course, people will work again a lot. I think this is for example what we are doing for teachers with the
No Child Left Behind policy. We are taking teachers
who are internally motivated to care for their kids
and then we give them a slight amount of of money
that is contingent of their kids performing well in High School
and rather than increase their motivation it does,
what you call, “crowding out’,
it eliminates the internal motivation. So we have this pattern that you add money and people care less,
at least for a while. Now, if you think about it,
there are all kinds of things that we have to have exchanges,
workplace, government, I mean there is lots of things
that have to have money. We think that we have this social norm, this social world,
in which we do things for each other, we have these market norms, in which we go and we work for pay and most of these things are, kind of in the middle,
and in the middle we have these problems. So what do we do? Well one of the things that people have solved is about gift-giving.
So think about gift. From an economic perspective
gifts are incredibly odd. If you invited me for dinner,
and I was going to spend 50 dollars on a bottle of wine, I should come to you and say, “Thank you very much for inviting me, I’m delighted but I don’t know
which wine you like, you like red, white, what type? I’m going to spend 50 dollars
and maybe giving you only 25 dollars of benefit out of that,
so instead, here is 35 dollars, go and buy yourself
something that will maximize your utility.” (Laughter) That would be the answer that
an economist would give you about what gifts are for, it’s inefficient.
But at the same time, if it’s economically inefficient,
it’s socially efficient. So when we do our experiments, we get people to help us pick sofas and we get people to help us do
all kinds of boring stuff on computers and we see this pattern: we pay them nothing,
they work hard, we pay them a little,
they don’t work at all, we pay them a lot,
they work again. What happens when we have a gift? What happens when you say,
“Here’s a tiny gift, a tiny bit of chocolate.”
“Here’s a big chocolate.” What happened?
Will people get upset with this small chocolate?
No! It turns out that the moment we remain in the social realm,
the moment that we stay in the social good,
in which we just give each other gifts, money doesn’t enter the equation and people don’t get offended,
we don’t get this reduction in effort, small gifts are great, small amounts of money are terrible.
The last question we asked is, “What happens when you have both?” Imagine you invited me for dinner and I say, “Here’s a 40 dollar bottle of wine.” I give you the gift but I remind you
how the money works underneath it. What would happen?
Would it look like money, when people get demotivated
by small amount or would it look like gift that people keep on their motivation
and desire to help? It turns out that the moment you add money into the equation, motivation goes down dramatically. It’s enough for us to remind people that behind these transactions is actually money, we apply very different norms to it and we’re not willing to help each other out of the generosity of our hearts. It takes away all of our humanity and care, in a way. There was a funny story, in the news,
a few years ago. There was a woman who wrote on a craigslist and she said she was
a very beautiful woman and she has been wanting
to date men who make more than 500,000 dollars a year.
This was before the financial crisis and she lived in New York
and she said she needs some help.
She said, “Look, I reached the plateau, I’ve been dating men
that make up to 250,000 but I’ve not been able
to break this barrier, Help me.”
And she got a lot of advice. A lot of people got angry with her. And you know, in many ways,
we all know that more beautiful woman
marry richer men, I mean that’s not a big secret, but the fact that she said it explicitly, created a very different contract. And imagine, if you yourself entered one of those contracts, right,
it would be really strange. And what captured this the most was an answer from a banker who wrote her,
and he said, “You know what,
I make enough money but, here is how I view this transaction. I have money and resources and most likely my resources would increase, over time. You’re very beautiful but most likely, your resources will decrease (Laughter) and under those conditions,
I might as well lease.” (Laughter) So, what is the point for thinking
about Burning Man? If we think about these continuum
between social norms in which we do things for other people and we think about financial norms, in which we do things for money and most of the relationships we have
are somewhere in the middle. I think what’s special about
this place is that the money norm, the monetary norm,
[is] just non-existent, [it’s] just not even part of the equation. So by itself we’re moving
further away in the equation. And that is allowing us to create
very different social norms. All of a sudden we’re not bounded
by this relationship. So, not having money, I think is key. And the second thing is gifts. Right? Gifts are a really interesting value for an economy. It’s not efficient from a financial perspective. You’re not always getting what you could get if the market was complex and efficient. But at the same time,
it’s socially efficient and at the end of the day,
in this socially efficient market, I think we are getting more than we put into it. Thank you very much. (Applause)