Transcriber: 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)