6. Moral norms and co-operation
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Norms as constraints on the pursuit of self-interest
6.2 Norms as social devices shaping preferences and expectations*
6.3 Considerations about the emergence and erosion of moral norms
So far we have focused our attention on the kind of predictions to which economic (game) theory can lead when interaction takes place between self-interested individuals with given preferences. This approach is not completely satisfactory in so far as it implicitly assumes an 'undersocialized' conception of human action (Granovetter, 1985). In the following, we would like to go beyond this rather narrow framework by allowing for the influence of social forces acting through moral norms. In all logic, we expect that the possibility of co-operation is enhanced in groups whose members are tied together through the sharing of a common ethos. Analytically, there are two different ways of addressing the issue of moral norms. In the first one, they are seen as a binding constraint limiting the choices of a maximizing self-interested individual while, in the second one, they play an important role in shaping individual preferences.
6.1 Norms as constraints on the pursuit of self-interest
Since the economists' paradigm of human choice is based on constrained individual maximization, a natural way for them to incorporate social phenomena such as moral norms is to consider them as additional constraints on human choice sets. This presumably avoids the pitfalls of treating norms as factors affecting individual utilities, an approach which easily gives way to ad hoc explanations (Becker, 1976). Two pioneering attempts at modelling norms as constraints have been proposed by Laffont (1975) and Sugden (1984). In the following, discussion is limited to the second contribution as it explicitly deals with the problem of the production of a public good (whereas the former contribution is concerned with the consumption of a good that gives rise to a macro-externality in consumption).
In Sugden's attempt, morality manifests itself as a principle of reciprocity that provides not that 'you must always contribute towards public goods, but that you must not take a free ride when other people are contributing'. Moreover, the principle of reciprocity never requires you to contribute more than other people in the group (Sugden, 1984: 775). Everyone accepts this principle as a morally binding constraint.
Let us assume that the production function for the public good has the simple linear form: where q' stands for each individual's contribution. Consider the special case in which all n people have identical preferences, ui = ui(qi,z), i = ( 1, . . ., n). Let hi(qi,z) be the marginal rate of substitution (MRS) between z and qi:
The partial derivatives of hi(qi,z) with respect to q, and z are assumed to be both positive. It follows from the symmetry of the problem that each person's obligations must be the same as everyone else's, so that in equilibrium everyone must make the same contribution. Therefore, the quantity of the public good produced will be given by where i is any individual. Each agent maximizes his utility level subject to the technological constraint and to the reciprocity principle:
This problem yields a continuum of solutions comprised between two limit-values of qi. The upper bound corresponds to the Pareto-optimal solution where qi0 is the contribution that i would most prefer that everyone should make. This solution follows from the maximization problem: The lower bound is actually the Nash equilibrium solution. In the latter, the principle of reciprocity is actually not operating and self-interest dictates a contribution, qi*, which solves the following maximization problem:
We then have hi(qi*,z) = b and the fact that the MRS is continuously increasing ensures that qij, always exceeds q,*. If qi< qi*, 'every individual would find that self-interest dictated a larger contribution, even if he had no expectation that others would reciprocate.' If qi > qi0, every individual would be contributing more than he was obliged to, but if qi* £ qi £ qi0, 'everyone is obliged to reciprocate everyone else's contribution, while neither reciprocity nor selfinterest dictates that anyone should contribute more than he actually does' (Sugden, 1984: 778).
There are therefore a multiplicity of equilibria one of which is Pareto-optimal, while all the others involve undersupply of the public good. The problem is clearly an assurance game problem: 'even for a society of identical individuals, the theory of reciprocity does not predict that the free-rider problem will be solved. Because of the assurance problem, a society of moral citizens can get locked into an equilibrium' in which everyone contributes much less than what he would prefer that everyone, including himself, contributed (Sugden, 1984: 781).
Things get more complex when the homogeneity assumption is relaxed and one assumes instead that preferences may differ between agents and subgroups coexist in which the members' moral obligations are circumscribed to one another. In other words, the principle of reciprocity applies only to subgroups and not to the 'society' at large. In such conditions, the problem associated with the provision of public goods by moral agents is made even more serious. Indeed, Pareto-efficiency is possible in a very special case only, namely if 'everyone were to be asked to choose a single contribution for everyone in the community, they would all opt for the same contribution' (Sugden, 1984: 781). This is obviously a circumstance that the heterogeneity of preferences makes very unlikely.
As is evident from the above characterization of equilibrium, even when everybody in a 'society' abides by the reciprocity principle, the Pareto-efficient equilibrium is almost impossible as soon as there is some heterogeneity (in the sense of segmentation) in this 'society'. In the words of Sugden: 'the more homogeneous a community is in respect of incomes and tastes, the more closely it can approach Pareto efficiency, and the greater will be its success in producing public good through voluntary activities.... People in heterogeneous communities may be just as willing to meet their moral obligations to one another as people in homogeneous ones, and yet the heterogeneous communities may still be less capable of supplying public goods through voluntary co-operation' (Sugden, 1984: 783).
6.2 Norms as social devices shaping preferences and expectations*
Norms and co-operation
In Chapter 5, we have described a number of unfortunate situations in which cooperation does not get established or is not sustainable even though there are agents who would like to cooperate in the group. In particular, situations can arise in which people who are relatively strongly interested in co-operation start by co-operating but thereafter defect when they realize that there are not enough people around to join them. Or, they may continue to co-operate but other agents who are less interested in co-operation or are free-riders do not participate in the collective action. Now, it may be argued that collective actions are more likely to be successful if:
The following discussion is based on the idea that the fulfilment of the aforementioned conditions largely depends on the prevalence of moral norms in the society.
This is because moral norms have several positive effects. They structure individual expectations and foster mutual trust thanks to the development of group identity. They also modify the preferences or the pay-off structures of the agents. This should not be taken to mean that norms necessarily transform individual preferences in the framework of a particular CPR problem. Indeed, especially when groups are relatively small, moral norms, by articulating the society together, may have the effect of connecting various situations in which the same individuals interact. As a result, actors do not view a given CPR problem in isolation of other collective action domains. They instead tend to consider them as various parts of the 'total' situation of the group to which they belong. In this 'total' situation, individual contributions must be roughly in balance, lest the stability or the survival of the group should be threatened. Viewed in this light, the main role of moral norms is that it leads people to perceive the 'game' of social life as a kind of generalized assurance game: by contributing to a particular public good, an individual manifests his willingness to share the life of the group and his understanding that everyone has to participate at some level in collective efforts to make the group viable.
On the other hand, an important possibility is that, under the pressure of emotions, moral agents may act without calculating whether their decision is optimal for them. In other words, they are no more rational agents in the sense of economic theory. True, emotional reactions can easily be interpreted as deliberate choices by a rational agent, provided that his utility function is redefined so as also to integrate emotional rewards and moral judgements in its arguments. Norms would then fit into the orthodox framework of economic theory. We do not, however, follow this approach here and, for reasons which will become clearer in the discussion, we instead argue that such an approach conceals too many important aspects of the issue at hand to be considered fruitful.
Norms as internalized rules of conduct
Norms are expectations about one's own action and/or that of others which express what action is right or what action is wrong (Coleman, 1987: 135). The concept suggests a standard of conduct which people believe they ought to follow lest they should expose themselves to some form of sanctioning or to some unpleasant experience. Obedience to the norm will occur when the sanctions or discomfort are sufficiently great and sufficiently certain to make disobedience less immediately attractive than obedience (ibid. 141-2). For patterns of behaviour to be sustained by norms, a society (and the underlying social consensus) must therefore exist to impose sanctions on norm violators. This can be done through a central agency acting as an external norm-enforcer, through agents inflicting sanctions upon one another in a decentralized manner, or via a self-policing mechanism. None the less, the first two solutions are fraught with serious problems. As far as the first one is concerned, it must be stressed that central monitoring can prove extremely costly because the central agency must collect a lot of information to avoid making errors in imposing punishments. As James Buchanan emphasized, life in society would be extremely costly and difficult if a great many aspects of social intercourse were not organized anarchistically (Buchanan, 1975: 118; see also Shott, 1979: 1329).
The practicability of the second solution is obviously much greater in small groups where interactions among individuals are somewhat close and continuous (and where reputation loss is an effective threat) than in many-person settings where relationships are largely anonymous and where private sanctioning activities are certain to bring no future reward to the punishing agent. Therefore, the third solution is all the more relevant as a practicable way of solving collective action problems in large groups. A self-policing mechanism obtains when external monitoring and sanctioning devices (whether formal or informal) can be actually dispensed with. Moral norms, understood as rules that are at least partly internalized by the agents (thereby forming, in Freudian terms, their super ego) and prompt them to take others' interests into account, provide such a mechanism.'
Internalization of standards may be said to arise when an individual actually conforms because of a personal attitude about the act itself, that is, when conformity becomes a motive of its own because it is intrinsically rewarding or because deviation is intrinsically costly (Weber, 1971: 22-3; Opp, 1979: 777, 792; 1982: 146; Jones, 1984: 89; Taylor, 1987: 13). Hence 'internalization refers to the aspect of the process of socialization through which attitudes, values, and behaviour patterns come to be maintained even in the absence of external rewards or punishments' (Jones, 1984: 8990; see also Aronfreed, 1968, 1969, 1970: 104; Bergsten, 1985: 115). As a result, moral norms are followed even when violation would be undetected, and therefore unsanctioned, because the moral actwhich appears to be in conflict with the immediate or direct interests of the actor himselfis valued for its own sake (Griffith and Goldfarb, 1988: 22; Elster, 1989a: 131; 1989b: 104).
Now, an important lesson from developmental psychology is that moral behaviour and the ability to empathize emerge hand-in-hand with the maturation of specific emotional competencies. In this maturation process, identification obviously plays a crucial role since a failure to follow the standards set (consciously or not) by reference persons is bound to generate the painful feeling that one is unable to meet their expectations and, thereby, to deserve their love or respect. Thus, the principal claim of Kagan (1984) is that moral norms are actually supported by a limited number of simple, highly uniform emotional capacities. According to him, the main motivating force behind moral behaviour is the desire to avoid feelings of guilt and shame which are themselves the combined outcome of unpleasant emotions (anxiety, empathy, responsibility, fatigue/ennui, uncertainty). 'Bad' or unpleasant feelings stirred by violations of the prevailing moral norms are the ingredients of a 'tortured conscience' which tend to deter many people from breaking these norms. Such deterrence would not occur if violating norms was just felt as a mistake or a lapse from rationality (Elster, 1989a: 188). In addition, as found in numerous experiments, subjects induced to commit some transgression (or to believe that they have transgressed) are more likely than non-transgressors to engage in altruistic or compensatory behaviour. This is apparently because they are eager to repair their self-image so as to convince themselves as well as others of their moral worthiness (see Shott, 1979: 1327).
It is noteworthy that, in the above scheme of analysis, emotions or passions have a positive role to play in society. This is at variance with the position adopted by Adam Smith in The Theory of Moral Sentiments: there, we are told that passions (fear and anger on the one hand, and 'the love of ease, of pleasure, of applause, and of many other selfish gratifications' on the other hand) are so many drives that are apt to mislead man into mischievous actions while their control enables him 'upon all occasions to act according to the dictates of prudence, of justice, and of proper benevolence' (Smith, 1759: pt. VI, sect. III, 238). What Smith appears to believe is that, when man reasons coldly, he can think of the long-term or of the social consequences of his behaviour (at least if he is a 'wise' man) while, on the contrary, when he is given to the urgent drives of passions, he is unable to see beyond his immediate short-term interests and he may thus be sometimes seduced 'to violate all the rules which he himself, in all his sober and cool hours, approves of' (ibid. 237). What we argue instead, following a line suggested by Frank (1988), is just the opposite: emotions are susceptible of leading people, almost unconsciously, to overcome the temptation to give in to short-term considerations and to therefore act in accordance with their long-term interests.
From the above discussion, it is evident that inculcation of moral norms involves much more than purely cognitive learning. This is particularly true of primary socialization which an individual undergoes in childhood since it takes place in circumstances that are highly charged emotionally (Berger and Luckmann, 1967: 14957). Note carefully that primary socialization (henceforth called PS) creates in the child's consciousness a progressive abstraction from the roles and attitudes of concrete significant others (usually the parents) to roles and attitudes in general, implying that the child becomes able to identify 'with a generality of others, that is, with a society' (ibid. 152-3). This is an important aspect in so far as any moral rule includes an element of conceptual generality that involves the capacity to recognize the claims of others and to impose such rules both on oneself and on others similarly situated (Griffith and Goldfarb, 1988: 22-3). Moreover, since it is rooted in the idea that there exists a community of people linked by solidarity ties, a strong moral attitude is generally associated with the belief that most others are also behaving morally, although the attitude itself is not formulated conditional terms.
Now, it bears emphasis that the ability to put others on a similar footing with oneself can apply to groups of varying size. Generally, limited-group morality is understood as morals restricted to concrete people with whom one has a close identification while generalized morality is morals applicable to abstract people (to whom one is not necessarily tied through personal family or ethnic links) (see, e.g. Granovetter, 1985). The first concept clearly involves personal loyalty feelings. By contrast, generalized morality implies the ability to recognize the claim of a large generality of others and to identify oneself with a society of abstract individuals (refer to Weber's distinction between Gemeinschaft and Gesellschaft). This ability is clearly present in the ethical principle according to which we ought not to do to other people what we would not like them to do to us; or in the Kantian generalization principle according to which one ought to abstain from any action that would threaten to disrupt social order were everybody to undertake it or that one would not be prepared to see everyone else adopt (an action is morally possible only if it can be universalized without self-contradiction).
It would be wrong to assume that, once they have been properly internalized, moral norms are completely compelling with the result that decision outcomes are mechanically determined. In the words of Dasgupta, an individual's upbringing 'ensures that he has a disposition to obey the norm. When he does violate it, neither guilt nor shame is typically absent, but the act will have been rationalized by him' (Dasgupta, 1993: 209). As has been aptly noted by Elster, moral beings are usually outcome-insensitive with respect to benefits but not with respect to costs: the costs of co-operation may be so high as to offset the call of duty. Furthermore, they are somewhat sensitive to benefits in the following sense: if they do not consider the likely impact of their own cooperation, they pay attention to the impact of universal co operation. It is plausible, Elster argues, that the strength of their feelings of duty depends on the difference between universal co-operation and universal non-co-operation: 'The smaller the difference, the lower the voice of conscience and the more likely it is to be offset by considerations of cost' (Elster, 1989a: 193).
Regarding the stronger propensity to co-operate in small groups (see Olson, 1965), we are now able to add the following point: in so far as moral norms arise more easily in small than in large groups and tend to represent the collectively rational outcome as morally desirablenorms of limited morality are easier to come by than those of generalized moralityco-operation is more likely to emerge and to be sustained in the former than in the latter. Why is it that moral norms are likely to arise more easily in small than in large groups? According to Homans (1950), repeated interactions among people give rise to 'friendliness' and the associated feelings tend to prompt them to establish informal codes of 'good' behaviour and to assign positive utility to compliance.
The need for reinforcement processes
We have seen above that primary socialization plays a crucial role in the norm-generation process. Nevertheless, moral norms are subject to erosion: they form a 'social capital' (Coleman, 1988) liable to depreciation, especially so if norm-abiding individuals come to realize that many people around them behave opportunistically. They therefore need more or less continuous reinforcement to be maintained. One such kind of reinforcement consists of what Berger and Luckmann have called secondary socialization. Secondary socialization is 'the acquisition of rolespecific knowledge, the roles being directly or indirectly rooted in the division of labour' (Berger and Luckmann, 1966: 158). Contrary to primary socialization which cannot take place without an emotionally charged identification of the child with his significant others, most secondary socialization 'can dispense with this kind of identification and proceed effectively with only the amount of mutual identification that enters into any communication between human beings' (it is necessary to love one's mother, but not one's teacher).
In primary socialization, the child does not apprehend his significant others as institutional functionaries, but as mediators of the only conceivable reality: in other words, he internalizes the world of his parents not as one of many possible worlds, not as the world appertaining to a specific institutional context, but as the world tout court Luckmann, 1966: 154, 161). This explains why the world internalized in primary socialization is 'so much more firmly entrenched in consciousness than worlds internalised in secondary socializations'. As a matter of fact, since the main function of secondary socialization is to transmit specific knowledge (in schools, in factories, etc.), the social interaction between teachers and learners can be formalized and the former are in principle interchangeable (ibid. 154, 162).
Note that reinforcement of moral norms is particularly effective when church attendance ensures that people are continuously exposed to a moral discourse which repeatedly emphasizes the same values as they were taught by their primary socialization agents during childhood. The Church (both Catholic and Protestant) obviously played a central role in the process of moralnorm generation and maintenance throughout modern Western history. Its impact was all the more significant as (1) it promised a considerable reward (an eternal life of absolute happiness) for all those who were ready to incur personal sacrifices by behaving in other-regarding ways; and (2) monitoring costs could be brought to a minimum in so far as God was thought to act as an impartial and free-monitoring agent. In the words of Frank:
Teaching moral values was once the nearly exclusive province of organised religion. The church was uniquely well equipped to perform this task because it had a ready answer to the question. 'Why shouldn't I cheat when no one is looking?' Indeed, for the religious person, this question does not even arise, for God is always looking. (Frank, 1988: 250)
Moral-norm reinforcement must also come from the State or the rulers. As noted by Kenneth Arrow, 'it is not adequate to argue that there are enforcement mechanisms, such as police and the courts; . . . it has to be asked why they will in fact do what they have contracted to do' (Arrow, 1973: 24, quoted from Williamson, 1985: 4()5). In actual fact, morality and a high sense of public purpose among the rulers are important not only because they ensure that rules will be properly enforced but also because of the positive demonstration effect exercised by leaders with whom people have perhaps come to strongly identify. Indeed, other-regarding norms are more easily followed by the people when they can observe a broad consistency between those culture-determined norms and the actual behaviour displayed by the elite in everyday life.
Morality and legitimacy
In deciding how to act, people do not look only at the way their leaders behave but they also assess the degree of legitimacy of rules and institutions. As emphasized by Tyler (1990), compliance with a rule is indeed strongly influenced by the extent to which individuals think that the rule and the enforcing agency are legitimate. The idea is that people are more willing to comply when they perceive the rule and the enforcing agency as appropriate and consistent with their internalized norms of fairness. In the words of Sutinen and Kuperan, 'legitimacy depends in large part on the authority's ability to provide favourable outcomes. That is, people perceive as legitimate and obey the institutions that produce positive outcomes for them. However, there is considerable evidence that people place great importance on procedural issues' (Sutinen and Kuperan, 1994: 14). Tyler has actually demonstrated that the people he studied abide more by the law if the procedures employed by the legal or political authority are deemed to be fair (Tyler, 1990). This implies, in particular, that rule violators are not only treated in acceptable ways (an outcome-related criterion), but also that they are effectively detected and consistently prosecuted. For instance, people may wish that freeriders are being punished, but they may not agree to have them thrown into jail at the first (minor) offence.
The relationship between morality and legitimacy is more complex still. As a matter of fact, that rules and procedures ought to be in conformity with cultural patterns and moral norms is only part of the picture. The other way round, it is also true that social perceptions of what are legitimate behaviours are partly influenced by the legality of the matter (see Kaufmann, 1970). In other words, when they are embodied in laws, rules can influence these cultural patterns and moral norms: they may thus shape people's sense of duty and what is right. Of course, for legal rules to be effective, it is important that the political elites follow them scrupulously. For example, in fisheries management, when government and industry leaders disparage management measures, 'the fishing community's sense of obligation to the management program is weakened, leading to more noncompliance' (Sutinen, Rieser, and Gauvin, 1990: 342).
In a pioneering attempt, Kuperan and Sutinen have tried to explain actual behaviour of compliance with management rules in fisheries not only as a function of deterrence variables (probability of detection of violators, severity of the sanctions imposed, etc.) but also through variables that capture the effect of moral obligation and the impact of legitimacy (Kuperan and Sutinen, 1994). They conclude, in an econometric study measuring the determinants of compliance with zoning regulations in Malaysian fisheries, that the latter variables have a significant effect. Nevertheless, their results are to be treated with caution in so far as the different effects which we have highlighted above are not clearly distinguished in their estimates. In particular, their index of moral development is constructed in such a way that it can be interpreted as an index of law-abidingness. There is admittedly no easy way to disentangle empirically the various relationships between law-abidingness, morality, and legitimacy.
To summarize, the prevalence of moral norms in a society tends to favour the emergence of cooperation through better realization of the conditions (1)-(6) stated above. Thus, when such norms are well established and effectively sustained through appropriate secondary socialization processes, people tend (a) to adopt the others' viewpoint when making decisions that may harm others' interests and to feel internally rewarded when behaving in other-regarding ways; (b) to be confident that others will abide by the same code of good behaviour as themselves; (c) to cling to this code even when they had unpleasant experiences in which they were 'stickers'; (d) to feel guilty after they have (perhaps mistakenly) deviated from the moral rule; and (e) to feel vengeful and willing to punish detectable free-riders (and perhaps also people who refuse to do so and continue to entertain good relations with the freeriders).
The fact that moral norms are typically inculcated in early childhood when they are strongly associated with the maturation of specific emotional competencies is important with respect to almost all the aforementioned points. In particular, this fact helps resolve the problem of punishment incentive (Elster, 1989b: 41; Taylor, 1987: 30): what incentives individuals have to monitor and sanction defectors when these activities are clearly public goods involving a new, second-order free-rider problem. In effect, such a problem may vanish as soon as one assumes, in the tradition of Smith's Theory of the Moral Sentiments (1759) that rational assessment is merely one of many inputs into the psychological reward mechanism and 'rational calculations often lose out to other, more basic forms of reinforcement' (Frank, 19X8: 197). Thus, vengefulness is an emotion that may easily drive persons to punish defectors even at a significant positive (short-term) cost to themselves, particularly so if they are deeply (morally) shocked. Emotions can indeed be viewed as commitment devices which have the effect of breaking the tight link between utility-yielding goals and the choice of action (See, 1985; Frank, 1988).
It is also useful to recall that the monitoring problem does not even arise if moral rules are backed by religious beliefs according to which God knows everything about all our actions (and thoughts). In these circumstances, co-operation can be sustained even in the presence of high costs of fraud detection since a free-monitoring device is actually available. It may be further noted that, in so far as religious beliefs imply the hope that eternal life (or a better future life) will be accorded to all righteous people, the latter not only tend to feel guilty when they defect (especially so if others cooperate), but also they are not easily discouraged by bad experiences. In other words, believers continue to adhere to the moral code (co-operate) even though they have possibly been 'stickers' on repeated occasions. By continuing to behave morally despite unpleasant experiences, they may even be convinced that they deserve special attention from God. When such religious beliefs do not exist or are not shared by a significant majority of people, it is all the more important that moral norms should be regularly reinforced by other agents of secondary socialization or by role models (such as political leaders) lest they should gradually erode leading to a vicious circle of unravelling co-operation.