Continuing Conversation... Russ Roberts and Mike Munger on How Adam Smith Can Change Your Life

EconTalk Extra
by Amy Willis
Russ Roberts and Mike Munger o... Luigi Zingales on Incentives a...

There's a new sheriff in town!This week, there was a new sheriff in town! Russ Roberts was the guest in this week's episode, while EconTalk fave Mike Munger stood in as interviewer. The subject was Roberts's new book, How Adam Smith Can Change Your Life. Whether your life changes have already happened or are still pending, we want to hear from you.

Use the prompts below to share your thoughts in the comments, use them as a classroom assignment, or use them to spark conversation at a cocktail party. But do let us know your thoughts; we love to hear from you.


Check Your Knowledge:

1. How does Roberts distinguish between selfishness and self-interest, and what role do these concepts play in utility theory?

2. What is the "real punchline" to Adam Smith's story about the Chinese earthquake, according to Roberts? To what extent do you agree with his interpretation?

Going Deeper:

3. Munger makes the bold assertion that "homo econonomicus" is a sociopath, What does he mean by this, and to what extent does Roberts agree? What does Roberts regard as Smith's main contribution regarding the individual's conscience?

4. Would you confront a stranger "behaving badly" in the street? (Both Roberts and Munger share their own personal experiences.) If so, on what basis do you determine the level of action that warrants doing so? If not, for what reason(s)? Finally, how would Smith explain your actions (in either case)?

Extra Credit:

5. Roberts and Munger point to several examples of behavior the social norms governing which have changed dramatically over time, such as littering, smoking, and corporal punishment. What can The Theory of Moral Sentiments tell us about the evolution of these (or other) modern social norms? Use examples from Smith's text to support your explanation.

6. Compare and contrast Smith's impartial spectator with Kant's categorical imperative.

Comments and Sharing

TWITTER: Follow Russ Roberts @EconTalker

COMMENTS (13 to date)
Gavin Sullivan writes:

Re: Heath Ledger

Per Wikipedia:

'...on 6 February 2008, the Office of the Chief Medical Examiner of New York released its conclusions, based on an initial autopsy of 23 January 2008 and a subsequent complete toxicological analysis...'

'It states definitively: "We have concluded that the manner of death is accident, resulting from the abuse of prescribed medications."'

John Strong writes:

Concerning the Chinese earthquake, I am disappointed by the failure of most people to make the distinction between "self interest" and "self focus". Adam Smith is clearly talking about the latter in his Chinese earthquake example, as the context of the remark clearly shows, and yet everyone, true to form, falls in line with the narrative that Adam Smith taught us that "we are all basically selfish". Professor Roberts, always excellent, has nonetheless failed to clarify this distinction adequately.

Matt Harmon writes:

4. I would likely not confront a stranger behaving badly in public. If the stranger were doing something I determined bad, but relatively innocuous (spanking a child, littering, cutting line, etc.) I would be disgusted but would prefer not to get in an argument with someone I think has poor judgement. Usually that argument would involve them lashing out at me, I would feel worse, and it would not alter his/her long-term behavior for the better. If the stranger were doing something starkly bad (attacking someone, stealing, being publicly intoxicated), I would fear for my own safety and prefer to call the police instead of confronting him/her. I suppose in the second instance Smith would say my impartial spectator was called into action, even though I would prefer it the action be taken by an armed law officer. Smith might call my impartial spectator weak because of my preference toward inaction for smaller offences. He might say my preference for calm and avoiding conflict shows that I want others to think of me as a gentle person, even if that comes at the expense of not correcting potentially bad behavior.

Russ Roberts writes:

Gavin Sullivan,

I don't think the coroner's information is in conflict with Mike's claims about Heath Ledger.

John Strong,

I sometimes use the phrase "self-centered." But I do think the earthquake example is about self-interest as well. Not sure why you think the context suggests only self-focus. Happy to hear an alternative interpretation to my own. In my book I discuss it in more detail. Seems to me Smith wants to understand why anyone would recoil from the idea of killing millions to save their little finger, given that they feel more strongly about their little finger than the deaths of millions. That is about both self-centeredness (or self-focus) and self-interest, I think.

John Strong writes:

Prof. Roberts, I can usually rely on you to alert me to distinctions and subtleties I miss and don't understand why this one seems to elude you. I don't think Smith is puzzled by the contrast at all. He is drawing attention an extremely useful and important distinction between discursive (reasoned) moral judgment and our reflexive preoccupations. The latter are radically self-focused (a better phrase, btw, than "self-centered") whereas the former are very altruistic, and in fact, Smith not only credits human altruism with the proper response at the discursive level, he makes an astonishing, over-the-top comment to the effect that "Human nature startles with horror at the thought, and the world, in its greatest depravity and corruption, never produced such a villain as could be capable of entertaining it [the idea of sacrificing millions to save one's finger]" So (1) human moral judgment is not one thing. It operates at multiple levels, sometimes in tension one with another and (2) self-focus (unlike selfishness) is **NOT** the opposite of altruism. If it were then we would be "selfish" merely because we breath, and such an idea does violence to the English language (if not human nature).

Russ Roberts writes:

John Strong,

I don't fully agree. I don't think Smith sees us as very altruistic. Here is the passage I am drawing on:

It is not the soft power of humanity, it is not that feeble spark of benevolence which Nature has lighted up in the human heart, that is thus capable of counteracting the strongest impulses of self-love. It is a stronger power, a more forcible motive, which exerts itself upon such occasions. It is reason, principle, conscience, the inhabitant of the breast, the man within, the great judge and arbiter of our conduct. It is he who, whenever we are about to act so as to affect the happiness of others, calls to us, with a voice capable of astonishing the most presumptuous of our passions, that we are but one of the multitude, in no respect better than any other in it; and that when we prefer ourselves so shamefully and so blindly to others, we become the proper objects of resentment, abhorrence, and execration. It is from him only that we learn the real littleness of ourselves, and of whatever relates to ourselves, and the natural misrepresentations of self-love can be corrected only by the eye of this impartial spectator.

Maybe you and I interpret self-love or altruism differently.

Anthony Perry writes:

I'm halfway through the podcast. I've been through the Wealth of Nations twice but not the Moral Sentiments even though I've had it in my Kindle for some time. You've got me interested from a personal standpoint. I'm a 76 year old doctor struggling with the idea of retirement which will give me at long last some time for myself and my wife. But especially with the luxury of being able to spend more time with my longtime patients the sense of helping and the feedback I get is hard to let go, even though financially at this point it's hardly worth it. An interesting aspect is the pleasure I get from being the "impartial spectator". I can tell people point blank in a caring way how they should behave and change their ways, and they listen and do not take offense. They get offended if their family or friends tell them the same thing. As I've become mature and more of a father figure I'm much more aware of that aspect of what I do, and surprisingly it's pleasureable because "I'm doing it for their own good" and that's the truth.
I look forward to the rest of the podcast and finally reading the book. And probably yours too.

Amy Willis writes:

@Anthony, what lovely (and tricky) comments. Even though you have it on your Kindle (great!), you can also read Theory of Moral Sentiments online!

Ayman writes:

I just finished listening to the Adam Smith episode and would like to quote Russ Roberts quoting Adam Smith – People want to be loved and be lovely. Now reflecting on the Piketty discussion, I wonder if the chasm between the 1% and the rest continues to grow at the current rate wouldn’t that create problems as people value themselves in relative terms? For instance will it start to be difficult to feel loved when you are standing in the Shadow of a super elite class that take the lime light, further will it start to become difficult to be/feel lovely if the super elite become our working definition of Lovely?

Amy Willis writes:

@Ayman. Smith is regarded as an "analytical egalitarian." Does this famous passage about the street porter and the philosopher shed any light on your question? Admittedly, this is from Wealth of Nations... It seems, however, the being lovely is indeed contextual, but perhaps not in the sense you suggest above.

Russ. I've heard you discuss the book in a number of places, now, but this was by far the most interesting discussion for me. No doubt largely because MM (great initials he has) repeatedly raised the biological dimension. I strongly disagree with you; and very much agree with Richard Alexander. There is no altruism which isn't selfish (though, of course, these processes are entirely unconscious and sometimes quite convoluted). If you're interested in exploring this area more deeply you might look at the work of Robert Trivers, The Folly of Fools or, though Trivers is a superstar, I think a better book, Robert Kurzban's Why Everyone (Else) is a Hypocrite. I think they'd give you some valuable insight you're missing by focusing on Smith. Smith was amazingly insightful for the resources he had, but the ones he lacked limit the value of his contribution today.

And, also, I'd strongly suggest you have Kurzban on as a guest. He has a new book, I'll put the link below. I think you'd find it right up the alley of EconTalk, and relevant to many of the questions you raise in your own new book.

The Hidden Agenda of the Political Mind: How Self-Interest Shapes Our Opinions and Why We Won't Admit It


Ayman writes:

@Amy Willis
Thank you! As a knowledge check:
Are you suggesting that feeling lovely is analogous to other members of society wanting your productive output? And feeling loved is analogous to having other members of society transferring their productive output to you?
If so, is this a fair summary of the fundamental point that Russ is arguing against Picketty et al: Russ posits that so long as members of society retain their satisfactory amount of the economic pie through feeling loved and lovely (as described above), it doesn’t really matter that a greater proportion of the economic pie accrues to a few elites whom have come to massive wealth accumulation through entrepreneurship. After all, entrepreneurs by definition are net wealth generators, not simply individuals who profit by taking a transaction fee during transfers of wealth. And Russ is against, as are most sane people, wealth hording through undue influence (ie bailed out Wall Street bankers).

Ron Toms writes:

I just finished reading this book. it was charming and enlightening and a good read. Thank you Russ Roberts!

I was going to email Mr. Roberts a brief note, but out of respect for his time decided to post my thoughts here instead. Interestingly, the prospect of my words being publicly observed changed the content of my note considerably. There was nothing wrong or un-civil with the original note, it just seemed a little too personal in the light of an army of invisible observers.

Ironically, message boards all across the 'net are full of people who don't seem to care that the whole world is watching. In fact, they often seem to relish in it. I wonder how Smith would react to that?

The notion of your peers looking over your shoulder is probably not unique to Smith. For example, this quote attributed to Thomas Jefferson-
"Whenever you do a thing, act as if all the world were watching,"
suggests to me that the idea was more widespread in Smith's time.

But here's a TED talk that makes a pretty strong argument against that idea and suggests privacy as a fundamental requirement for liberty.

I believe both philosophies are important and necessary to the individual and to a society. But how can two contradictory and opposite philosophies be simultaneously true and necessary? The simple answer is that we are not one people, and we are not one moment. It takes all kinds of people to make a society-- students, consumers, leaders, exploiters, entertainers, workers, etc. etc. etc. and we do many different kinds of things within our days and in our lives. For each specific instance, a different mindset is optimal. Being creative requires a different mindset than being productive. Being a leader is different than being a parent is different than being an employee, etc.

Regarding "Homo Economicus" being a sociopath, perhaps that's a requirement for the job. --
"The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man." and, "Remember that the progress of the world depends on your knowing better than your elders"
-- George Bernard Shaw

Do we know better than Smith? Certainly some do. Some have the power to force inferior products onto the public and make them prefer it. If you can do this with a product, can't it also be done with an idea, a political candidate or a policy? (There is a strong correlation between the winners of the past ten presidential elections and the money spent on their campaigns)

We are not all "Homo Economicus." We are not all motivated by the same ideals or interests. We often willingly and knowingly make choices that are not in our own self interest (such as charity, etc.) Our individual motivations are generally emotional and highly dependent on context. We make emotionally driven decisions (easy) over logical or informed decisions (hard). Any political campaign is proof enough of that. The fact that inferior products win in the marketplace simply because they have a prettier box or a more pervasive message is also useful evidence. I recommend Russ Roberts read and review the book The Power of Habit by Charles Duhigg.

Regarding public disapproval of bad behavior-- there have been many studies and papers written about backfire effects, how challenging a belief can reinforce it, how facts do not change people's minds, etc...
For public shame or public praise to work, there has to be an underlying culture of fitting in. In a culture of strong individualism, shaming someone publicly could be ineffective or counterproductive. Instead, it confirms their individuality.

But we must live by a common culture. The real question is, at what level? There are super cultures and sub cultures that all constantly morph and shift. Each individual lives by its own ideals and dove-tails them into the local group. The local group fits like a piece of a puzzle into the bigger picture. No two pieces are exactly the same shape and color.
Unlike the pieces of a puzzle, we can belong to multiple groups simultaneously, exhibiting different colors and shapes depending on what is needed, whether we are being a leader, a supporter, a creator of new inventions and art, or a cog in the machine of industry. We are not the same person among our co-workers as we are with our sports buddies or our lover or our kids or when we are alone working on a project. Which context requires privacy, and which benefits from an unseen observer? Surely there have been other books written on that subject. Adam Smith was a genius in his time, but is probably not the current authority.

When Noam Chomsky was asked what part of his works he expected to be relevant in a hundred years, he replied "none of it." Unfortunately, I don't recall and can't find the exact quote (I think it was in the documentary film version of "Manufacturing Consent") But essentially, once an idea is out there, it begins to evolve and be adapted to an ever changing culture that almost immediately renders the original idea inadequate.

What's my point in all this? It's a complex world, and not getting any less so. I admire Smith and Roberts and countless others. But the past is not a path to the future. It merely indicates the trajectory of progress-- a trajectory that can and does change direction and is stubbornly resistant to accurate prediction. I think this is the most interesting part of Smith's work, which Roberts discusses at several points. We live in more casual times, but talking about our mistresses is no longer appropriate! What will the culture of tomorrow be, and what ideas are more likely take us there? What do we want the world of tomorrow to be? As Russ describes in the last chapter, it's up to us to decide.

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