The Fourteenth Banker Blog

June 4, 2010

The Biological Imperative for Prosocial Sanctions

Filed under: Running Commentary — thefourteenthbanker @ 7:45 AM

Dan Ariely in this post describes a the human desire for vengeance as illustrated in a research experiment known as the Trust Game.   The original experiment demonstrated that people will go to significant personal expense to exact revenge after they have been betrayed.  The really interesting thing though, is that now it has been proven that this is not just social conditioning.  It is wired into our brains, which means that it is evolutionary.

The experiment showed that many of the people who had the opportunity to exact revenge on their partners did so, and they punished severely. Yet this finding was not the most interesting part of the study. While making their decisions, the participants’ brains were being scanned by positron emission tomography (PET). This way, the experimenters could observe participants’ brain activity while they were making their decisions. The results showed increased activity in the striatum, which is a part of the brain associated with the way we experience reward. In other words, according to the PET scan, it looked as though the decision to punish others was related to a feeling of pleasure. What’s more, those who had a high level of striatum activation punished others to a greater degree.

All of this suggests that punishing betrayal, even when it costs us something, has biological underpinnings. And this behavior is, in fact, pleasurable (or at least elicits a reaction similar to pleasure).

So I am not endorsing revenge in general.  Too often it is violent and perpetuates a cycle of further vengeance, drawing innocents into its devastation. But, if biological and evolutionary, we must ask what is its purpose?  It is to prevent betrayal and protect the survival of the society.

Ariely speaks of the anger and desire for vengeance of the population against the banks.  The further question is whether society should levy sanctions against the banking system to safeguard the survival of the society rather than the survival of the system.  The Congress will be convening the FinReg Conference Committee soon and the policy questions have been debated endlessly.  Perhaps the Members should ask this question, “Is the intensity of the desire for vengeance evidence that society as a whole feels threatened by forces which can wreak havoc on and even destroy the livelihood and security of the citizens?”  If the answer to that question is yes, then revenge is a legitimate course of action and the break up of TBTF institutions is their democratic duty.

Is there even more to fear from such a course of action?  The Bank of International Settlements says no.

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3 Comments »

  1. “The Biological Imperative for ProSocial Sanctions”

    Lol … Nice title. Over at Zero Hedge there are calls for blood (metaphorically speaking of course.) Pro-social sanctions being the civilized approach to restoring some proportion to the world of finance.

    Comment by tippygolden — June 4, 2010 @ 6:04 PM | Reply

  2. I heard yesterday that people are starting to avoid filling gas at BP gas stations. Sure it only hurts the poor gas station owners, but it is a critical shift in that people have gone from just criticising to taking actions, some action, any action. And shows that inaction is not acceptable any more.

    At some point we as a nation will get to that point where we will start to abhor our own inaction.

    That will be a good day!

    Comment by Vocalbanker — June 5, 2010 @ 6:23 PM | Reply

  3. […] How the Rich get Richer Filed under: Running Commentary — thefourteenthbanker @ 3:29 PM Presented in its entirety is a blog post from Bronte Capital. I have been reading John Hempton at Bronte for some time. This post is particularly interesting in that it discusses financial regulation from the perspective on one who makes it his business, among other things, to search out frauds. Here he analyses the Marc Rich saga and finds that regulation played a role in creating opportunity for fraud or something close to it. Certainly obvious from this is that people of no conscience have an edge in a capitalist society if there is no mechanism for what I referred to in a previous post as prosocial sanctions. […]

    Pingback by How the Rich get Richer « The Fourteenth Banker Blog — August 29, 2010 @ 3:30 PM | Reply


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