The Kindness of Strangers

Economist Mario Rizzo managed to attract intense derision from Brad DeLong for this:

Why am I tipping the cab driver whom I shall not see again? I tip cabdrivers very small amounts... they really don’t do anything more than drive... they don’t know where things are... there are now all sorts of surcharges... even a tax to support the inefficiently-run mass transit system that I am not taking.... I would really like to not tip.... I often do simply because drivers sometimes say nasty things to you if they don’t get a tip. It is a failing of my psychological make-up to let that bother me. Am I being selfish?... I am not being selfish any more than the driver who wants a tip. The real issue is for me: Is this the best use of my money?... You are not a bad person if you don’t tip taxi drivers much or at all. Just be prepared to tell the voice in your head that it is wrong. And don’t let any possible cab-driver annoyance spoil your day.

Brad thinks this makes him a psychopath but this could be overkill - it's not like he was celebrating mass murder, say. He does seem like a schmuck, though. ("Schmuck", btw, is one of those delightful Yiddish words of colorful (or off-colorful) origin).

More interesting to me was this study, which found:

Around 10,000 years ago, residents of large farming communities had to learn to make fair exchanges with strangers and to retaliate against selfish exploiters, researchers propose in the March 19 Science.

Before the rise of modern agriculture and resulting trade, the researchers contend, people rarely had to behave this way with strangers. During Stone Age days, members of small hunter-gatherer groups exchanged favors only with those they knew.

“Cultural and institutional evolution harnessed and extended our evolved psychology so that we could cooperate and exchange goods in vast communities,” says anthropologist and study director Joseph Henrich of the University of British Columbia in Vancouver.

Markets don't work well without a certain amount of trust. Without that trust, there is too much "friction," as everyone struggles to avoid being cheated. If most people are trustworthy, and cheaters (like Mr. Rizzo) are punished - at least by public obloquy, markets can freely function. There is a certain irony in the fact that those most approving of gaming the system seem to be market worshipping libertarians.

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