How can we encourage the ethics of caring?

I am writing this because I think people have a tendency to talk past one another when they talk about the ethics of social cooperation and caring. For example, some may think that I am denying the goodness of human nature and the importance of traditional ethical teachings when I support the view that the basis for social cooperation among strangers is a symbiotic relationship between the benefits of mutually beneficial exchanges and respect for the person and property of other people. (A lot of other people would not have any idea what I am talking about. It is quite simple. Trade between strangers is unlikely to take place unless both the buyer and seller benefit from it. If one party steals from the other, that erodes the incentive for trade. So, in order to obtain the longer-term benefits of a trading relationship, each party has an incentive to respect the rights of the other and so assist the development of norms of respect.)


The other side of the picture is that if I were to advocate loudly that society should become more caring, some of my friends might be concerned that I might have in mind government policies that would put incentives for wealth creation further at risk. The problem is that talk about society becoming more caring often seems like code for taking more income away from people who earn it and giving it to people who do not deserve it.

It would be strange if our ethics was unable to recognize that to respect the rights of others out of regard for own self-interest is ethically superior to failure to respect their rights, while also acknowledging that feeling empathy towards them as fellow humans is ethically superior to just respecting their rights. We know that humans are normally motivated to some extent by narrow self-interest, but we also know that they normally feel some empathy towards other humans.

Robert Nozick suggested that we should think of ethics as consisting of four layers, with the pursuit of higher layers building on the norms of lower layers rather than violating them (or violating them to a minimal extent). It may be helpful to think of the layers as depicted below.

Nozick’s Layers of Ethics

The most fundamental layer - the ethics of respect - mandates respect for the life and property of other people.

The second layer – the ethics of responsiveness – mandates acting in a way that is responsive to the inherent value of others, enhancing and supporting it, and enabling it to flourish.

The third layer – the ethics of caring – ranges from concern and tenderness to deeper compassion, ahimsa and love to all people (perhaps to all living creatures).

The top layer – the ethics of Light – calls for being a vessel and vehicle of truth, beauty, goodness and holiness. Few people have attained that level.

As far as public policy is concerned, the important issue is the extent to which any level of ethics should be enforced or imposed. It is easy enough for people to agree that every society should demand adherence to the ethics of respect and that it is not possible for any society to demand that everyone should behave like saints. To varying extents, modern societies require individuals to act in ways that are responsive to the inherent value of others e.g. by paying taxes to provide better opportunities to those in need of help.

In his discussion of these issues in ‘Invariances’, Nozick argued that the ethics of respect was the most important level because it was necessary for non-violent relations. On that basis, he argued that rights of non-interference should be ‘most strongly mandated and enforced, thereby preserving room for people to pursue their own ends and goals’ (p.282). In this book, however, Nozick seems to have refrained from making the point explicitly that the use of the coercive power of governments to impose the ethic of responsiveness involves violation of the ethics of respect.

It would be difficult for anyone to maintain that governments should never under any circumstances violate the ethics of respect. There may be nearly unanimous support for requiring people to pay some taxes additional to those required to support the core functions of the state in order, for example, to ensure that all children have certain minimal opportunities to flourish.

However, such ethical considerations cannot explain much of the redistribution that governments undertake. In my view governments tend to pay too little attention to the ethics of respect in taking from citizens and too little attention to the ethics of responsiveness in the way they distribute what they take. Hopefully, one day our politics will focus more effectively on how existing redistributions should be modified to enable more children to be given the minimal opportunities they need to flourish.

What purpose is served by an exchange of gifts?

I had thought about writing something about gift giving before Christmas, but it might have looked as though I was complaining about how difficult it can be to buy gifts for people who seem to have just about everything they need already. (Perhaps I might even now be wandering into dangerous territory.)


In the past, economists have had some difficulty in understanding why people exchange gifts. The reason is that since the satisfaction that a person obtains from consumption spending is determined by her or his personal preferences it is difficult for anyone else to know what she or he would like. (I hope this is getting me out of trouble rather than digging a deeper hole.) Thus, some people end up with gifts they don’t want. (Fortunately, this rarely happens to me!) The remedy some economists have proposed is predictably crass: give money not goods. Neerav Bhatt has provided an entertaining discussion of this view here, including a clip from an episode of Seinfeld showing Elaine’s reaction to Jerry’s gift of cash for her birthday.

Greg Mankiw provides a good economic explanation of gift-giving in terms of signalling theory. If a person is able to provide a thoughtful gift - despite the difficulty of discovering what the receiver would really like - this sends a signal of the feelings that the giver has toward the receiver.

I suppose that is how gift giving helps to strengthen bonds. It can be wonderful when that happens. (In my experience it is most likely to happen when the potential receiver of the gift is willing to send some signals by dropping a hint or two about what she might like.)

The exchanges of gifts among members of social and business organizations at Christmas functions etc. is presumably also intended to promote bonding. One approach, which is probably fairly common, is for everyone attending such functions to buy and wrap an inexpensive gift, with all gifts being distributed randomly at the function. A member of a club that I belong to recently proposed a different approach: the names of all members would be put in a hat and each person would draw out a name and buy a gift anonymously for that person. This might have resulted in more people being given things that they might appreciate and might have helped to bond individual members of the club to all other members. It seems likely that if you know that the person who has given you a gift that you appreciate is a member of the club, but you don’t know who it is, you might have good feelings towards all other members. (As it happened, the club decided to continue with the practice established a couple of years earlier of donating gifts for children to a local charity rather than exchanging gifts between members. It would be interesting to know if the proposed method of gift exchange has been used elsewhere and what the effects have been.)

While bonding helps explain exchanges of gifts between close friends and members of some organizations, does it is also explain exchanges of gifts between people who don’t know each other well? Exchanges of gifts between people in different organizations in the modern business world can be viewed as gestures of goodwill (albeit often tax deductible). Some anthropologists and archaeologists have encouraged the view that such exchanges of gifts to establish goodwill were much more common in tribal societies. According to this view, people in pre-industrial economies exchanged gifts to cement relationships, but people in modern economies trade with each other to make profits. Matt Ridley suggests that is ‘patronising bunk’ (‘The Rational Optimist’, p. 133-4).

As Ridley suggests, there is no reason to suppose that traders in all cultures have not always been acutely aware of the desirability of getting a good bargain for the valuable items that they are exchanging. There is some evidence that money can change the way that people perceive exchanges, but this seems to me to be based on misconceptions about money. An exchange of goods with strict reciprocity (barter) might appear more like an exchange of gifts than a commercial transaction, but people are fooling themselves if they think it is different in important respects (other than possible tax avoidance) from an identical exchange facilitated with the use of money.

What is my purpose in blogging?

I have recently been invited by another blogger, Thought Bubble Ten (TBT), to participate in a self-interview on my blog. There is nothing wrong with the suggested list of questions and I was interested in the answers that TBT gave. But I don’t want to attempt to answer the questions on my blog because it isn’t actually meant to be about me.


While I was thinking about this last night I had imagined that one of the questions in the list was, ‘What is your purpose in blogging?’. That question isn’t actually on the list. I probably confused myself because I have been observing Jim Belshaw go through the process of reviewing what he is seeking to achieve through blogging.

Jim takes blogging a lot more seriously than I do, but it would not do any harm for me to review my purpose in blogging. When people have asked me this question in the past my answer has been that I am interested in issues related to liberty and happiness. I read a lot of material related to those issues; I write about the things I read because that helps to focus my mind; and I publish what I write on my blog because my views might be of interest to some other people. After I explained this to a friend he said something to the effect that I must have to have a fairly big ego to think that other people might be interested in my views. I agreed.

However, I don’t think the purpose of my blogging has a great deal to do with my ego. While I am interested to see how many people are visiting my blog and what they are reading, I do my best not to unduly influenced. I would get some satisfaction from having a more popular blog, but I keep telling myself that the main purpose of the blog is to help me to straighten out my own ideas.

I know a good interviewer would not be satisfied with the answers I have given so far. She would probably ask: So, why are you concerned about issues related to liberty and happiness?

My concern arises because I think our liberty is increasingly under threat from people who want us to be happy.

Around 250 years ago, Adam Smith wrote:

‘Every man is, no doubt, by nature, first and principally recommended to his own care; and as he is fitter to take care of himself than of any other person, it is fit and right that it should be so’ (‘The Theory of Moral Sentiments’, p 82).

At the time Smith wrote that, the idea that everyone is fitter to take care of himself or herself than any other person was becoming widely accepted. Such thinking was influential in the recognition of ‘pursuit of happiness’ as a right of individual citizens in the drafting of the U.S. Declaration of Independence. Doubts were expressed by some people even at that time about how successful individuals might actually be in pursuing their own happiness, but few would have suggested that it might be ‘fit and right’ that governments should assume responsibility for caring for us all.

Over the period since then, happiness has become a government objective. Our political leaders may not use those specific words -they are more inclined to state their objectives in terms of well-being and welfare rather than happiness - but the meaning is the same. In addition to concerns about health, education, care for the elderly etc, governments are increasingly being urged to take account of the findings of happiness research and behavioural economics to develop policies that will make people happier.

Does this mean that we are heading toward some kind of brave new world where individual freedom will be totally sacrificed in the interests of making people feel happier? I’m not sure. When people debate public policy issues it is natural to consider how the well-being of particular groups and the broader community might be affected. The problem is that in attempting to solve immediate problems for particular groups I think we have tended to overlook the longer term implications of reducing the responsibility of individuals to care for themselves. It is worth thinking long and hard about the implications of growth of government for the personal development of individuals as well as for norms of behaviour that are fundamental to peace and prosperity.

So, why don’t you write a book about this?

That is a good question. As my thoughts become clearer, the idea of writing a book about the links between liberty and individual flourishing becomes more appealing.

Are big bonuses counter-productive?

The usual argument against high remuneration of senior executives is that it is often undeserved. I have some sympathy for that view. It is particularly difficult to understand how a person who is given a promotion to the top job can actually be worth substantially more than a competitor who narrowly missed being given that job. The person who is given the promotion will not necessarily add anything more to the profits of the firm than would the person who missed out. In many cases the prestige of the top position would be adequate compensation for the added responsibilities involved.

Nevertheless, it is possible to view the recipients of such unmerited rewards as the lucky beneficiaries of a system that generally produces good results for shareholders. Tournament theory recognizes that high remuneration for senior executives can be in the interests of shareholders for much the same reason as high prize money for winners of tennis and golf tournaments is in the interests of the spectators. The prize money is there to attract the top players and to encourage them to perform well during the tournament. Providing part of the remuneration in the form of a bonus helps to ensure that the interests of the chief executive are aligned with those of shareholders.

In his recent book, ‘The Upside of Irrationality’, Dan Ariely suggests, however, that big bonuses can actually be counter-productive. He argues that very high bonuses ‘can create stress because they cause people to overfocus on the compensation, while reducing their performance’ (p. 47). The general idea is that people (and other animals) tend to choke when exposed to very high incentives and social pressure.

I suppose readers would be most familiar with examples of choking from professional sport. Greg Norman’s habit of choking at the end of major golf tournaments is legendary. Rather than being remembered for the tournaments he won, he is more often remembered for not winning tournaments that he led until the last round. (Interestingly, this has not prevented the Great White Shark from becoming a successful businessman.) Several books have been written about choking and how to deal with it. Henry Scuoteguazza has recently reviewed three of them here.

The experiment that Dan Ariely reports that seems to me to be most relevant to payment of big bonuses involved payment of different levels of rewards to people participating in various cognitive games. The bonus rates ranged from equivalent to about one days pay to about five months pay. (To make the experiment affordable it was conducted in rural India.) The participants who stood to earn the most had the lowest level of performance – they choked under pressure.

How relevant are such experimental results to the world of business? Ariely tells us that when he presented his findings to a group of bankers they maintained that they were super-special individuals who work better under stress. I suspect the bankers were probably about half-right about themselves. Their work environment would have tended to favour people who are able to cope well with the stresses associated with high-powered incentives. At the same time, in my view events of recent years suggest that many bankers are affected by a herd mentality – too willing to follow their colleagues into risky territory and then to join the stampede when danger becomes obvious.

Coming back to tournament theory, the critical issue is not whether the incentive provided by the bonus system actually causes the chief executive to work more diligently and effectively, but the effect it has on the profits of the whole firm. Even though chief executives, like sports professionals, may sometimes have difficulty in coping with the pressures associated with huge rewards, a bonus system providing such rewards could still be in the interests of shareholders. Then again, ... !