More than our fair share

Last week, at his party’s annual conference, British prime minister David Cameron made as the subject of his speech a return to ‘fairness’ in society when announcing some painful fall-out as a result of the new government’s drive to reduce the country’s enormous budget deficit.  Child benefits for the better off were to be axed, and welfare benefits were to be curbed for those fit to work.  Since that time, commentators have been busy attempting to define what exactly is fair.

 “Fairness is about reciprocity and contribution,” wrote a blog by the Fabian Society last Wednesday.  “The ’something for something’ conception of fairness, which the government seeks to appeal to with its welfare reforms, also includes the idea that those who do put in to the common pot should get something back”.

 I would add that I don’t think that human beings require a definition of fairness.  The latest scientific evidence shows that fairness is hard-wired within us, and in fact, a sense of fairness matters more to us than self-interest.

 A new study recently published by Nature magazine demonstrated that portions of our brains linked to reward respond most to situations where people are treated equally, even if fairness comes at a personal cost.

 A fair bonus

In the study, psychologists from Rutgers University handed a pair of young men $30 apiece and then randomly selected one of each pair to receive an extra $50. 

 The researchers then scanned each young man using a functional MRI, which measures brain activity in real time, while asking how they felt — first if the bonus went to them, and then how it would feel to have it go to his partner.

 In every instance, areas of the brain associated with reward lit up in the partner when asked to think about his feelings about getting the extra money, but they also lit up when he thought of his partner getting it.

 The researchers who carried out the study believe this is further evidence that fairness has a biological basis, particularly, as co-author Elizabeth Tricomi noted, “Fairness helps us to work together, which can benefit everyone.”

People are so resistant to inequity that they are willing to give up their own material pay-off if that will bring about a more equitable outcome for all. In our hearts we’re okay with a smaller piece of cake so long as we know it’s going to mean that everybody else gets a slice.

Fair employers

Swiss economist Ernst Fehr himself discovered such a natural impulse in human beings when investigating how groups of people behave when securing employment contracts.  In one of his studies, he gathered together a group of college students interested in making a little extra money and divided them into a group of ‘employers,’ with the larger share of the group ‘the employees’. 

He arranged that the employers would make a contract with their employees to provide a certain amount of effort, for which they’d be paid a set amount.  However, the employees would be paid their contracted amount, no matter how much effort they put in, so the employee wouldn’t suffer any penalty if he didn’t abide by his contract.

Furthermore, each employee was only contracted to play the game once with a given employer, and all identities were concealed, so there would be no stigma attached if the employee reneged on his deal. 

If either party were entirely self-interested, the employers would be expected to offer the minimum wage, and employees would only respond with minimal effort.

In practice, this almost never occurred.  Both parties were usually generous, and the more generous the employer, the greater the employee’s effort. In fact, the employers mostly assumed that their employees would work hard and so were bounteous in their wage offers.  Nevertheless, only 26 per cent of the employees delivered the full effort they promised. 

More for more effort

So in the next round of games, the employers were allowed to respond to their employees’ effort by paying more for higher effort.  In this case, employers also showed an exquisite sense of fairness.  More than two-thirds of the time, they rewarded employees who did more than they were contracted for, and nearly half gave rewards to their workers simply for fulfilling the contract.  Nevertheless, when contracts were not fulfilled, this time two-thirds of the employers meted out punishment.

On the employee’s side, with a reward for effort now in place, most did more than their fair share. Underachievement on contracts fell from 83 per cent to 26 per cent, and overfillment of contracts rose tenfold.  Most significantly, allowing the bosses to reward or punish their workers according to effort increased the ultimate payoff to both bosses and workers by an average of 40 per cent.  This study reinforces the idea that we have developed a strong internalized sense of fairness and responding in kind, even when there is no threat of a drop in income from behaving selfishly.

Part of our trouble today is the fact that fairness is so well embedded in us that we know, deep in our bones, how deeply unfair the society is that we have created – to each and every one of us. When life is fair, all of us do more than our fair share.