My research over the last 20 years has aimed at a better understanding of the role of human motivation in economic and social interaction. Twenty to 30 years ago, mainstream thinking in economics was thoroughly based on the assumption of, first, rationality and, second, self interest. While it is undoubtedly the case that self interest is one important component in human motivation, it is not the only component and I always was convinced that social motives – motives to help, to support, to reciprocate, to cooperate, and to do justice to other people – play an important role, even in the economic domain. But one’s beliefs and what one can prove scientifically are two different pairs of shoes.Therefore, I started a research program studying the economic implications of these social motives, with the help of laboratory experiments and, more recently, by conducting field experiments and combining neuroscience with experimental economics.
I still remember in the early 1990s, when I started doing this, the smiles on my colleagues’ faces, who did not take that seriously. In the course of this research, we found, among other things, that individual heterogeneity in social motives is fundamentally important for how institutions function. Small institutional details, which should play no role at all if all people are selfish, can play a tremendous role if some people have social motives. In fact, it is possible to show, theoretically and empirically – and that is what we did – that even a small share of people who have social motives can make a big difference for aggregate outcomes in the economy, for what happens in various types of social interaction, in organizations and in markets.Economics is beginning to change and to take some of these insights seriously and I have the feeling and the impression that even politicians are taking that seriously. The insight that institutional design has to take into account fundamental human motivations is, I think, quite an important insight. And, by the way, this year the Nobel Prize in Economics has been awarded to three famous economists for their work on mechanism design, which is concerned with the question “How should we design a good world, how should we design good institutions?” The literature on mechanism design has without doubt provided deep insights and important foundations for economics. But in my view one limit of many of the contributions to this literature is that they assume that all people are exclusively selfishly motivated. What our research has shown is that this assumption can lead to wrong conclusions and that you have to take into account these motives, even if only a small share of the people have these motives.
Another point why I find my research satisfying is that it happened several times in the past that politicians sat in the audience and after they listened to my presentation they came to me and said, “We have to change the way we present ourselves, we have to take these insights into account and we should not just assume that everybody is all the time selfish.” Finally, what also has been very gratifying is the potential wide applicability of our experimental paradigms in the other social sciences like, for example, sociology, political science, or anthropology and, more recently, even neuroscience and behavioral genetics.
Ernst Fehr is Director of the Institute for Empirical Research in Economics at the University of Zurich.
Fehr is the 2008 AAPSS John Kenneth Galbraith Fellow. These remarks were delivered upon accepting his Fellowship on May 8, 2008.
