Michael Munger on Cultural Norms
Aug 31 2009

Michael Munger of Duke University talks with EconTalk host Russ Roberts about cultural norms--the subtle signals we send to each other in our daily interactions. Mike, having returned from a four-month stint as a visiting professor in Germany, talks about the challenges of being an American in a different culture with very different expectations on how people will interact. Our speech patterns, how we wait in line, how we treat each other at the grocery, the interaction between a teacher and a student, how we drive, how we tip for services rendered, even how we listen to music all emerge from our culture and are often different in different countries. The listener will learn what Ted Williams and Joe Dimaggio have to do with the Book of Judges along with the relative merits of Williams and Dimaggio performances in 1941.

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Explore audio transcript, further reading that will help you delve deeper into this week’s episode, and vigorous conversations in the form of our comments section below.


Arend v. Reinersdorff
Aug 31 2009 at 10:00am

Fascinating episode, thanks a lot!

I never realized that simple biking and shopping could come with such trapdoors.

For the opposite perspective, I recommend Scot Stevenson’s (German) blog USA Erklärt, where he explains American culture to Germans.

For example in my favorite entry “Why Americans don’t say what they mean” Scot argues that Americans consider a direct “No” impolite and try to use more indirect language. Which is usually lost on the more direct Germans:

In a discussion with Americans “I wonder if this is really the best solution” means “No”. “I’m wondering if we might need more time” means “No” and “We might want to review some parts of the project” means “No”. Americans are confused (or simply annoyed) if after such statements Germans think for a moment, say something like “I think, it looks good like this” and continue. From the American’s perspective it was a clear “No”.

America must truly be a strange and exotic place 😉

Market Urbanism
Aug 31 2009 at 1:20pm

here’s a great video of an intersection in Cambodia without signals


[N.B. The video at the marketurbanism blog does not play on any of my browsers. Perhaps others will have better luck.–Econlib Ed.]

Market Urbanism
Aug 31 2009 at 3:04pm

thanks. I think I’ll move it to youtube and let you know…

John Strong
Aug 31 2009 at 3:27pm

Professor Munger, I Googled “non-specific reciprocity” and searched on Wikipedia and did not find much. Could you suggest a reference?

I have not heard that particular term, but I am very familiar with the Shame Culture VS. Guilt Culture dichotomy, and I think it is very significant. You often hear social scientists say that Piers and Singer “proved” that the distinction is false, but I own the little book Piers and Singer wrote and to my mind they did no such thing.

The Shame/Guilt dichotomy ought to be an interesting topic for Cafe Hayek, for two reasons:

(1.) I think the degree to which a culture is guided by a guilt morality rather than a shame morality is correlated with how LIBERAL it is. Guilt culture is a necessary (though probably not sufficient) condition for liberal culture.

(2.) A significant bit of Hayek’s intellectual ediface rests on the notion of spontaneous order. I find his arguments in Law and Legislation about the inarticulate abstractions that are our social patrimony to be profound and completely persuasive. However, he does not quite explain why there are so many spontaneous orders that are profoundly anti-liberal. Shame culture, in particular, is antithetical to liberalism and it is the norm throughout human history. Guilt culture is the exception.

Professor Roberts, I especially like your interviews with Mike Munger, even more than the interviews with Nobel Laureats. If he is inclined to talk about Guilt, Shame and Liberalism, please invite him back and give him a green light. He boasts that he is talkative. I wonder if he can talk for a full hour about that.

Aug 31 2009 at 3:40pm

In case you ever go back, here’s the correct way of tipping in Germany:

Assuming the bill comes to 17.50, and you are going to give a tip of 2 Euro (rounding to a full Euro is more common, but in “edge cases” like these this method is acceptable), when you hand over the 20 Euro bill, say: “Let’s make it 19.50.”

I think it’s not about giving change, it’s about making them search for the appropriate coint and then handing them back which is inefficient – and Germans are at heart, in their very own, complicated way, a very efficient people.

That said, tipping culture varies widely across Europe. In England, tipping is institutionalized to a high degree, often to the point where the 12.5% are included in your bill total.

Market Urbanism
Aug 31 2009 at 3:48pm

I moved the Cambodia video to youtube.

Hopefully it works better now. (sorry for the duplicate – feel free to remove the one with the bad link)

[Duplicate removed. Thanks for moving the video.–Econlib Ed.]

Bo Zimmerman
Aug 31 2009 at 5:24pm

I missed the guilt/shame culture reference in my first listen through of this podcast, but John Strong makes it sound so interesting, I just wanted to Second his request.

Screen Sleuth
Aug 31 2009 at 6:49pm

I’ve always felt tipping for merit was the right way to tip, regardless of culture. If a waiter does a lousy job, they aren’t getting a tip from me, sorry.

Aug 31 2009 at 9:01pm

Great podcast as always. I really enjoyed the parts about behavior in the airport, movie lines etc.

Here in Washington state, we have several islands that are around the Seattle area of which most property is recreational (weekend visits and summer holiday etc) and as such there are frequently long lines and wait times for ferries on weekends and especially on holidays. The conduct can get so bad that the state police now have officers posted at the ferry lines to help keep the poor manners from getting out of hand.

I grew up going to one of the islands (Whidbey) and saw many incidents of people cutting in line (with their car) and the sometimes heated conversations that follow from the drivers around and behind the rude driver. This has escalated upto and including the threat and/or beginning of letting air out of tires to motivate the cutting party to move.

Later, as an adult and sitting in line myself I had this happen when the line moved forward a little but not everyone feels compelled to start their car and move forward ten feet. Thus, there sometimes gets to be a small car size space between a couple of vehicles. On this one day, I was two cars back from the vacant slot when a young woman driving along the line of cars (1/4 mile long) and seeing the little space hit the brakes hard and did a quick parallel park job in the slot. I waited a minute to see if the driver in front of me was going to say anything and to my disgust he did not.

I got out of my car and approached the truck in front of me and in a sarcastic tone asked “you weren’t saving that spot for her were you?” “No” was the reply. So, I went up to the woman and motioned for her to roll down the window and she did looking a little worried. I asked her to please leave the line in a very calm and polite mannor. She replied with “Oh, well Im new here and I wasnt quite sure how this ferry thing works.” Doing my best to be matter of fact I said, “Oh, well then let me explain it to you. See, all these cars with people in them backed all the way up the hill? They are all waiting for the ferry and have been for sometime. The way it works is, you go to the end of the line and wait your turn.” She was rather sheepish at this point and begain to make some other weak assurtion to which I raised my hand and said “get out of the line and go to the back.” She did, and I got many honks, thumbs up and thank yous from all the other people in the line who had seen the whole thing.

In the big picture, I see the point of discussion about what am I actually loosing by this but on the other hand, if the ferry was loading and she was the last car on and I had to wait another hour or more for the next ferry I am actually loosing something valuable due to her selfishness etc. Additionally, I could not let it pass due to the violation of the rules…. Social order would surely have broken down before my eyes had I let her stay in line.

Thanks again for ECON Talk, I listen to every podcast several times durring the week and look forward to the next book study when you have the time.

Best regards!


Sep 1 2009 at 7:32am

It’s always a pleasure to hear Mike and Russ chat; as usual it was a very entertaining and informative conversation.

I felt for Mike when he recounted his horror shopping trolley experience – we don’t have a coin deposit system where we live in Australia, so could imagine his shock at being accosted by an very cranky, elderly woman and a police officer for simply doing what he thought was a considerate, thoughtful deed!

We look forward to Mike’s next guest appearance on Econtalk and thanks again for another great podcast.

Mike Munger
Sep 1 2009 at 11:06am

Great comments!

John Strong: “Non-specific reciprocity” is my own summary of the argument made by Robert Putnam and others. Putnam, and many of the social capital / culture folks, argue that social capital works to the extent that it extends reciprocity beyond the specific, tit-for-tat, repeat play setting. The best foundation for this work, in my opinion, is Bob Sugden’s paper, “Reciprocity: The Supply of Public Goods through Voluntary Contributions,” Economic Journal, Royal Economic Society, 1984, vol. 94(376), pages 772-87, December.

Eva: I lived there for four months. I did figure out how to tip. But it consider two situations:
a. I have a bill for 17.25 euros, and say “Make it 19.25”. That’s a decent tip. The person would get pissed at having to make change.
b. I have a bill for 17.25 euros, and say “Make it 18 even.” The person would be happy.

In fact, waitrons appeared happier with b than with a. I think that is odd. They find making change demeaning.

Bshupe: Great ferry example. But still, you say Additionally, “I could not let it pass due to the violation of the rules…. Social order would surely have broken down before my eyes had I let her stay in line.” You are kidding, of course, and the jest is a good one. But you SECRETLY BELIEVE THAT THIS IS TRUE! And so you provided the public good of enforcement. The chance of you being the first car NOT to get on the ferry is negligible. There is really NO good pure self-interest reason for what you did, unless one accounts for the role of emotions. Yes, that makes it “rational” to enforce norms, but only in a tautological sense. Without emotions, you would have said, “She broke the rules. But it did not harm me, so I will sit in my car and listen to Vampire Weekend.”

Sarah Natividad
Sep 1 2009 at 11:07am

This was an excellent podcast! I wanted to comment on the discussion of “sociopath”/”homo economicus”. As a parent of two children with Asperger’s Syndrome, I can testify that people with Asperger’s Syndrome (a disorder related to autism) also often have this same disregard for societal norms, but are not sociopathic. In fact generally they do care how they interact with people; they just can’t figure out in what way people want to be interacted with, or they lack the ability to “read” social signals accurately and thus can’t tell when they’ve crossed a line with their jokes or behavior. This makes them closer to “homo economicus” than your average person, but without being sociopathic. So if you are looking to observe a group of people who disregard social norms but do not do so out of indifference to their fellow human beings, you might want to take a look at Aspies. For a great introduction to Asperger’s Syndrome I recommend Look Me In The Eye by John Elder Robison.

Sep 1 2009 at 12:52pm

A Note on the Mitchell/Pigou Story. I recall a joke that is based on a similar premise:

Out in the old west, a traveling preacher stops at a ranch to give the cowhands the Good Word. He makes the announcement at the mess hall that on Sunday morning he will be giving the sermon for those that want to hear. He is largely ignored by the dozens of ranch-hands.

Undeterred, he sets up his podium near the cattle corral, and come Sunday morning, he readies himself to lecture. One cowhand lopes in. After a few minutes, it becomes clear that no one else is coming, so the preacher steps down from his podium and walks over to the hand.

“Son, I see that many of your friends aren’t coming. But I don’t want to send you away without service. What do you think I should do?”

The hand muses for a moment. “Well, sir, I’m a cow man. All I know is cattle. But I do know that if I took a whole load of hay down from pasture, but I only had one cow come to feed…well, I’d feed him.”

The preacher nods, then steps back up to the podium. He proceeds to give the lone hand a two-hour-long sermon, focusing on the whole of the Gospel as it can be found in the laws of Leviticus. The hand mostly pays attention, and the preacher finds himself admiring the man’s staying power. At the end of the sermon and the prayer, the preacher steps off the podium and approaches the man again.

“Well, son, what did you think?”

The ranch-hand muses for a few moments before he answers.

“Well, sir, I’m just a cowhand, and all I know is cattle. But I do know that if I took a whole mess of hay down from pasture and only one cow came up, I wouldn’t dump the whole load on him.”

Sep 1 2009 at 12:54pm

Whoops! Mitchell = Marshall. Clumsy fingers and a wandering brain…

Sep 1 2009 at 7:27pm

it would b interesting to c if there r any principles that determine how motorists move thru the intersection.

maybe there arent any, but i would think a place to start looking is at the properties of individual motorists and the situations/encounters they meet as they cross/turn thru the intersection.

perhaps looking at motorists in terms of vehicle size, speed entering intersection, vicinity to nearest motorist (and size/speed/direction of nearest motorist), whether the motorist crosses or turns, etc.

maybe these properties can b used to construct rules of thumb for decision making as motorists cross the intersection.

who knows?

Sep 2 2009 at 1:56am

Chaotic traffic in Vietnam, India, greater Southeast Asia etc. moves a lot slower than traffic does in the U.S. You could imagine the slowdown it would cause if someone were to drive 40 MPH halfway between two lanes on an interstate, so my guess is that the chaos causes the reduced speed.

In China, the queuing/standing in line behavior is different in different areas. The “mob” is often the way things work where I live, but when I visited Dalian and Tianjin, I was surprised to find people actually lining up and waiting patiently at train stations and bus stops.

Another alternate mechanism for lining up in China is where you take a number and wait in a central sitting area for your number to be called. I’ve seen people ignoring this completely and lining up or mobbing anyway, but when it does work, I suppose it relies on embarrassment, since it would be pretty obvious if two people tried to stand up and use the same number.

Sep 2 2009 at 8:34am

An excellent podcast! It’s always a fascinating subject. A cousin of mine was in Brazil once, and when his waiter asked how things were, my cousin gave him the “OK” sign with his hand (where you put your thumb and forefinger together). Only in Brazil that’s apparently like flicking someone off…the waiter nearly dropped what he was carrying.

You both spoke of how we’re influenced by who raises us, but I wouldn’t put all or even most of that on the parents. We’re raised just as much by our peers and the people around us in the community as we are by our parents.

I really recommend reading Protagoras, Plato’s dialogue about the Ancient Greek sophist by the same name. It is all about how everyone in a community spends their time teaching everyone else what morality it. I’ve often thought that Protagoras’ insight could just as well be about language as about morality.

A more recent, and much more challenging, book on this subject that’s worth it if you have the time and are willing to put in the effort, is John Searle’s The Construction of Social Reality. It looks at how there are things that are what he calls “ontologically subjective” (they don’t exist the way that a rock or the sun exists) but also “epistemologically objective” (money is money regardless of whether or not you believe that it is; it has been established the same way that the pronunciation in Mike Munger’s example was established by each community).

In any event, great podcast!

Sep 2 2009 at 9:33am

As others have said, the podcasts with Mike and Russ are some of my favourites too! The other recent ones have been really fantastic and on diverse topics – keeps it very interesting. Thanks

Russ Roberts
Sep 2 2009 at 9:48am

Toward the end of the podcast, I mentioned that I wanted to bring up two more points, then forgot to mention the second one. It was that Hayek’s Law Legislation and Liberty discusses the interaction between norms, expectations and law. I’ve written about it here:


Sep 2 2009 at 12:49pm

Current language research suggests that language itself has a deeper reach into society’s culture that just setting its vocabulary.
To the German in particular, its nouns are assigned genders. That assignment influences how the speaker thinks about those nouns. “Bridge” for example is feminine in German – and Germans tend to describe it as ‘beautiful’, ‘elegant’, etc. While Spanish grammar considers this masculine, describe it as ‘big’, ‘strong’, ‘sturdy’. The word “Key”, however, is masculine in German and feminine in Spanish. So German’s describe it as ‘hard’, ‘jagged’ – while Spaniard’s describe it as ‘shiny’, ‘small’. So even though words can be translated across languages (often imperfectly) the cultural wrappers and connotations are infused or embedded and not so easy to resolve… often ending up as ‘lost in translation’.
(for authoritative discussion, seek Boroditsky at Stanford).

Thanks for another entertaining and thought provoking show.

Sep 2 2009 at 3:15pm


It would be great to hear you discuss Tom Vanderbilt’s book, “Traffic.” I think you and many of the listeners who enjoyed this podcast would really love Tom’s books/insights.

This is maybe the 4th EconTalk podcast where driving behavior was at least mentioned, and Tom has some cool things to say about why everyone should be a “late merger” and the success of minimalist traffic intersections (see Hans Mondermann and Drachten, Netherlands) that rely on emergent order phenomena.

Unrelated, except as a guest recommendation, I would love to hear you interview Art De Vaney about “Evolutionary Fitness.” He is an economist/mathematician who has some very provocative (and remarkable) views on nutrition/fitness, and has done some really cool work on movies and the economics of blockbusters.

Sep 3 2009 at 5:55am

I am an American living in Paris. The lack of accidents and smooth traffic flow around the Arc de Triomphe is more than just a cultural issue; it actually has something to do with economists’ favorite topic: incentives.

According to my French colleagues if you are in an accident around the Arc de Triomphe, then neither party can blame the other and each person’s insurance covers their own car and their own medical bills in the accident. Therefore, all drivers have an incentive to avoid accidents.

John Strong
Sep 3 2009 at 10:52am

Not even The Economic Journal (original publisher) has the Robert Sugden article on line. You can only access it through JSTOR. Why do economists, more than any other group of scholars, choose to make their works inaccessible to the general public?

Sep 3 2009 at 4:32pm

Thank you very much for the nice talk.

Coming from Germany I would like to make some comments on some points (and at the same time excusing my poor spelling and grammar)

1. in most lectures I was during my studies, it was actually indicated that the lecture started at 15 past. Usually somewhere you will find a c.t. (cum temporae = with time) or the sentence: “all times are c.t. unless indicated otherwise” while lessons that start on the hour are indicated s.t. (sine temporae = without time). And in small university towns like Erlangen even some non university-related events like concerts or public talks could be indicated c.t. or s.t.

2. I was not very impressed with the crossroad section in cambodia. In Basel (Switzerland) one of the main innercity traffic junctions is completely without traffic lights with several car lanes and streetcar lines crossing each other without problems. Currently there are in addition some construction going on around this crossroad causing potential traffic jams. Therefore some policemen are available to regulate the traffic if necessary. Still even in rush-hour (which is not really bad traffic – I admit) most of the time the policemen are standing next to each other talking and they intervene only when they notice, that some cars are waiting too long or have problems crossing.

3. A nice example of the “s” vs. “sh” are people from Finland or of Finish ancestry. If you were raised in Finland, you will probably never be able to pronounce a “sh” while you probably would not notice this in someone with Finish ancestry. There are studies that indicate that children under 12 month are able to differentiate about 600 different consonant and vowels, during their learning phase, boil this down to about 50 – 100 letters and will not be able to even hear the difference of closely resembling consonants (and if you ever met someone from Poland explaining you the difference between s, sz, si, ‘s, cz …. you know what I mean). I am sorry but currently I do not find a link to the reference.

Sep 4 2009 at 5:04am

About the tipping in Germany.
Nobody there likes the search for nor the possession of the very little coins, so everybody likes “rounded off” amounts. That’s why the smaller tip can really be preferable.
Not tipping is considered rude or a sign that you are very unhappy with the service.

Tipping culture varies a lot in Europe, so don’t take it as a rule!

If you wished to take over a trolley, just give the person a euro. He/she will be happy that you saved him/her the walk back to the “chain”!

The jumping the line: Mr. Munger claims it only costs 20 seconds, a tiny inconvenience.
However, if 50 people have been overtaken, then the “damage” is 50 times 20 seconds, the gain for one person is the same amount.
That’s a tragedy of the commons : benefit for few, the burden spread on all.
You shouldn’t argue why someone makes you wait 20s longer, you should argue why “ALL OF US IN THE LINE” have to wait longer !

On absence of road signs, there actually are rigid rules and laws for that in Europe.
In developing countries the rule is simpler: the bigger vehicle wins, regardless of any law.

Sep 4 2009 at 3:52pm

I listened to this podcast right before I read Into Thin Air, a first-hand account of the 1996 Everest disaster. The podcast illuminated several instances in the book where adhering to social conventions decreased the welfare of individual climbers.

For example, the author, John Krakauer, who is an experienced climber, wrote that on the mountain it is an unspoken rule to always obey your guides. Even he felt uneasy about questioning some of their actions and mostly kept his objections to himself when acting in his own self-interest would have benefited himself and the group.

Thanks for making the book more enjoyable for me.

Mike Munger
Sep 4 2009 at 3:53pm

John Strong: Send me an email and I’ll send you a pdf of the Sugden paper. munger@duke.edu

Gecko: Fair enough. But still, it’s 20 seconds. It’s not like the last person line has to wait another hour. It’s just 20 seconds. Why does the NEXT person in line get angry, over the fact that the people BEHIND HIM have to wait? It’s emotions, not reason.

Arne: you are right, of course. The presumption is s.t., and it is not even stated, because everyone understands. Still, that is VERY odd to an outsider. Why not say what you mean?

Sep 6 2009 at 11:46pm

Homo Economicus may indeed by a sociopath, but in this podcast it became clear that a (not unrelated) species may be more worthy of study: homo economist.

Homo Economist is a highly evolved is a highly specialised species believed to have evolved from the common philosopher approximately 200 years ago. The species has a highly specialised methodology and terminology. These are needed in help him digest his (highly toxic) diet of compounding effects.

The cost of such specialised anatomy can be clearly seen when homo economist ventures outside of his normal habitat of university departments and large bureaucratic organisations. A starving Homo Economist that has accidentally ventured in to the habitat range of its various cousin species, such as the curious homo sociologist, it may try to feed mimic this animal and feed on its food source on this. Homo economist’s specialised digestive system may try to break down normally benign components such as proteins, starches or cultural norms into highly toxic components such as game theory, prohibitive transaction costs and externalities internalising mechanisms.

Most researchers believe that it is impossible for economists to survive outside of their current habitat for extended periods. However others report sightings of economists blogging, podcasting and assumed to be feeding on the above food sources for extended periods. If this is true, we may be witnessing a process of speciation.

Mike Munger
Sep 7 2009 at 9:27am

Netsp: I am pretty confident that you think you made some kind of point.

But I surely have no idea what it is. You are hiding behind jargon. If your point NEEDS to be hidden, then no one could possibly blame you.

On the other hand, if you have an actual comment, I’d be happy to discuss it!

As for species, I myself have been a Political Scientologist now for nearly 25 years. I think some people believe that this is the larval stage of the Homo Economist. Which raises an interesting question: does the caterpillar KNOW it will become a butterfly? And when will I form the pupa that will allow me to make the transformation?

Sep 7 2009 at 8:14pm


I think that I may have offended. That was not my intention. It may be just bad writing (& worse proofreading). I wasn’t hurling any shots.

I just meant to comment with a silly analogy on how it seems from the outside when economists speak about issues to which the language of economics is not adapted. I certainly don’t mean that economists are incapable of insight in these areas. The insights are the reason I listen (almost) every week.

The funny part is how the (homo) economist marvels at occurrences such as culture. In some cases, it is marvel at sophisticated solutions culture has found for complex economic problems (old ladies with umbrellas). In others, it is at the lack of solution when an obvious one is available (biding for a place in the queue).

The reason I use the example of ‘transaction costs’ is that it is a cliché for a reason. When heard, it may mean you have found such a marvel. In fact you two pointed out where an economist might hesitantly insert that inadequate explanation.

As I said, I am not hurling any shots. I know that economists (well, the good ones…) are not dogmatic or simplistic. They know, for example, that homo economicus is not some first principle from which you can predict the world.

I enjoyed the show.


Sep 8 2009 at 2:25pm

I strongly related to Mike’s story about the movie line. However, the linejumper didn’t cost society twenty seconds. She cost EVERYONE in the line twenty seconds. I had a similar experience where the linejumper cost was even higher a few years ago.

An interstate was having construction and three lanes went down to one. There were signs indicating the construction for at least a mile and a half. I saw the traffic slowing and queued up about a half mile from the pinch point. It took ten minutes to traverse that half mile. During that time a number of folks raced up to the pinch point and were let in. They not only cost 100+ cars a few seconds each, they forced those cars to STOP and WAIT, slowing the PROGRESS through the pinch point. Had everyone queued up, it would have only taken a minute or two. Perhaps Heinlein had it right — there was a scene in one of his novels where a character arrived late after acting as a juror in the capital crime of linejumping.

Enjoyed the show as I usually do.


Bob Calder
Sep 8 2009 at 4:35pm

Russ and Mike; Next time you talk, would you consider discussing the following?

Privacy is socially constructed in such a way that expectations of security are different in many communities. For instance we have communities where people have one lock on the door while others have steel on windows and doors designed to withstand a physical attack. Actual breaking and entering rates can be about the same in both communities.

Internet privacy is scale free to the extent there are no local expectations and privacy can only be attained by building the equivalent of Fort Knox around a device. The vast majority of people are content to reinstall/rebuild after invasion and to take their chances with identity theft.

Given the vast number of people involved, how can we establish norms (using norms, laws, or laws & code) that grant reasonable security in order to allow commerce to thrive?

Sep 8 2009 at 8:32pm

Bob Calder,

I think those is a fascinating areas. On the expectations of security, I think one way of looking at it is the effect of preventative measures (locks, bars) on our perception of danger. Naturally, our perception of danger does not come directly from our personal experiences. Many of us have never experienced a break in.

Let me give an example. In many places, motorcycle helmets are mandatory and have been for a long time. You never see anyone without one. If you do, it seems crazy. People comment on it if they see it. Almost everyone. This is true even if the rider is going slowly on a small suburban street.

On the other hand, if we see a rider speeding or riding in bad weather, we do not experience the same feeling. The rider is not crazy, just a little on the reckless side.

If you put these two observations in front of someone from a country where helmets are non-mandatory, they will rank riskiness differently.

Mads Jepsen
Sep 11 2009 at 1:12pm

Great podcast as always.
I think you are wrong about the origin of the “academic quarter”. We have it as well in Denmark, and here it is usually explained like this: Years ago most peoples only way of knowing what the time was, was the church clock. Therefore when the church bell sounded every hour, they would know it was time to get to class. The class itself starting some 15 minutes later.

Richard Sprague
Sep 12 2009 at 6:28am

I’m a long-time Econtalk fan who recently moved to Beijing China, and in the commotion of getting my family settled I am a bit behind on my podcasts, so please excuse the late entry.

Re: traffic, I can say that nothing beats the seemingly random (and to Americans, shocking) driving habits of Beijingers, but if you visit you’ll be amazed that in spite of very regular “close calls” you almost never see cars with dents or evidence of fender benders.

I was told this is because the apparent random motion is not really random: that to succeed you should think of yourself like a drop of water and go with the flow. Just as a drop of water would never stop suddenly, or give the right-of-way to another drop, everything works as long as all drivers just continue moving at predictable speeds, around whatever barriers appear (bicyclists, other drivers, ox carts, etc.)

Sep 13 2009 at 7:21pm

Great podcast.

I was thinking the other day as to why many countries like Germany make you put in a euro to get out a shopping trolley (which is returned when you bring it back), whereas other countries employ someone to go and get your trolley. I wonder if this is linked to minimum wage. In countries where there is a high minimum wage the cost of hiring someone to go pick-up and store the trolleys is too high. They have been forced to innovate, whereas the opposite is true for low minimum wage countries. Although surely the cost of hiring someone will always be greater, why havent all stores adopted the same practice as Germany?

Mike Munger
Sep 14 2009 at 7:57pm


I think all of us found your story amusing, and it was perfectly well written.

Seriously, I just thought that there was perhaps a deeper point.

Making fun of economists is something I am ALWAYS ready to help out with.

Hugh: The use of a deposit, or “pfand,” is much more common in Germany, and in Europe. And, this does make the grocery carts much more expensive. MUCH more expensive.

Still, I bet they lose fewer carts. And even the cheap carts are expensive (here is a quote for $96 each, with a discount: https://uniqueweb.cart32.com/cgi-bin/cart32.exe/PREMIERQUOTE-AddItem ) Wouldn’t have to lose many carts to make up the difference in price. Still, Hugh, your marginal cost argument is intriguing. Doesn’t have to be wages, of course, but rather total cost of employment, including benefits and unemployment insurance.

Bob Calder: You have said everything, and more, that I could think of on that topic. I think YOU should talk more about it, and *I* will listen.

Sep 14 2009 at 11:24pm

So many great comments to a great episode, like Richard I apologize for the lateness….

Mike’s rumination on the level of emotion relative to the actual cost of an infraction ( ticket line, traffic merge, etc… ) resonates with thoughts I have about the true fragility of the social order(s).

We have developed norms as a society to reduce the tensions, risks and uncertainties attendant to the alternative need to negotiate and defend every position, intention and process on our own, individually. That would land us back to survival of the fittest, law of the jungle, etc…

I think some of the seemingly overwrought emotion we feel must come from the intuitive appreciation of the substantial risk that would result from the loss of these norms. And though we may only observe one person violating the “agreement”, we also know intuitively how easily “mob mentality” can spread, even in simple self defense.

So threats to order can inspire a primal fear of total loss, and the scale of our reaction is influenced by this rather than only by the direct loss potential for the specific event, which may have little impact on our lives.

Sep 21 2009 at 7:21pm

As an amateur sociologist and very novice economist, I very much enjoyed this podcast.

To Netsp’s point, I always find it amusing (in a very pleasant way) to listen to economists riff on matters traditionally dealt with by psychologists and sociologists. The simple act of examining old questions under new light creates insights. We need more interdisciplinary economists…por favor.

Two other things:

1. I find this notion that Homo economicus is who we are when stripped of socio-cultural norms to be really fascinating. I think we need to replicate some classic behavioral economics experiments with sociopaths to see if their behavior conforms better to traditional economic theory/models than what is generally observed using “normal” people.

2. To add to Russ’s point on major/minor keys and our emotional responses, even stranger things have been observed. And in most cases due largely to the history of development of local instruments. In SE Asia (Thailand, Cambodia, Burma, Laos, etc.), for example, much traditional music played on traditional instruments actually sounds horribly out-of-tune to western ears. It is nearly unbearable to us but rather pleasant to them. So it is rather unsurprising that some cultures find music written in a minor key to be “happy.”

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Podcast Episode Highlights
0:36Intro. [Recording date: August 21, 2009.] Culture: the way people interact on a daily basis with each other. Came up with topic after Munger taught graduate classes in Europe at Friedrich-Alexander University in Germany. Munger doesn't speak German. When business people travel, they seek and are advised in advance how business customs differ: how people shake hands, bow, etc. in different cultures. Hand gestures can differ; tipping customs differ. Subtler cues and behavior. George Bernard Shaw: "Manners is the art of offending no one unintentionally." If you want to offend someone, it has to be on purpose. Bad manners, you don't know it. Ancient tradition in Europe and in Germany called the "academic quarter." Presumption was that academics were so confused that they were not likely to be able to find their classrooms till at least 15 minutes after the supposed start time. Munger had a class to start at 6 p.m.; as is his wont, he got there at 5 minutes to 6; and waited. A few people after there at 10 after 6; started class; remarked to latecomers that he expected timeliness. Germans, after all--expect timeliness! May be a stereotype; flagrantly wrong. Second class, same thing. "Maybe you have a class beforehand or a train to catch. Let's start at 6:10." Kid raises hand, "So you mean start at 6:25?" No! Finally explained that you add 15 minutes to the written-down start time. No problem so long as people's expectations are consistent. Finally began starting class at 6:15 and it was all fine. Opposite of "Vince Lombardi time"--if the meeting was called for 6, you showed up at 5:45. If you showed up at 5:50 you were late--disrespectful. Taught class in English, there as an avatar, exemplar, of teaching in America. Any differences in behavior of students? The students were outraged that Munger assigned readings. Expected them to have read before class, but can't expect the students to read materials, or to talk. It's a lecture. Not just quantitatively less, it's qualitatively less. It's nothing. Doug North, Nobel Prize, Robert Fogel before him answering the question said "I could talk about this for hours," and North jumped in and said "And if nobody stops him, he will!" Happy to talk for hours.
7:40Legendary story, Pigou and Marshall. Pigou signs up for a class with Marshall, one student in the class, goes to front of room, one student, takes notes. Classroom demeanor is different. Bicycle Munger rode around different. What about shopping, other things? Expectations of what is rude, Japan. Come to stoplight as a pedestrian, look both ways, then cross, even if there are no cars coming, people will yell at you. Sister living in Kyoto crossed against the light once, little grandmother came out with an umbrella and tried to hit her for violating the social order. Didn't matter that there were no cars coming. The light was red. In U.S., occasional--got a ticket in D.C. once for jaywalking, but very rare. Taxis in NYC enforce this--they'll hit you. Erlangen, 20 kilometers north of Nurnberg, rough population 60,000, medieval town, Siemens research facility, egg-headish. Believe it has highest concentration of bicycles per automobile in all of Germany, top three; almost all the traffic is bicycle. From the South of the U.S., always try to let a bicycle in, slow down a little bit to let in a pedestrian in a place where there is no other reason to slow down; but causes accidents in Germany. What do you do if a pedestrian is crossing and it's pretty crowded and you are riding a bicycle? Answer in Germany is: Aim at them, under the assumption that they'll continue to walk. If they are an American, they might stop, and you'll hit them. If it's an American riding his bicycle, he might stop. But if they are all German, the German bicyclist knows to ride directly at the pedestrian, who will take two more steps in the intervening time, and you'll go just behind them. Found that out by watching; caused significant accident, sitting on bench with sore legs, asked people. Took people time to answer the question because it was so obvious to them. To be fair, it makes perfect sense; Munger was doing what he thought was polite, but he was the one being rude. Two more examples: In California in the Bay area, particularly on the campus of Stanford, you stop for a pedestrian in the middle of the block. As a pedestrian, you come to be pretty aggressive. Car drivers act extremely passively, including at stop signs. In New York, "I was there a millisecond before you, I'm on the right, I'm going." In Stanford, for a visitor there as a driver it's different. In D.C., first moved there, thunderstorm, power out in Montgomery County and stoplights out. In general, if stoplights out, some, maybe not most, people's expectation is pretend it's green on a less busy street, and on a busy street pretend it's red or that there is a stop sign. As a driver on a busy street, slow down coming into an intersection slowing down can cause an accident. Like any coordination game, problem comes from the mix of expectations. Intersections in Asia where people go at full speed without a stoplight or stop sign; then other side gets the edge. Sort of works out. Video at Arc de Triomphe. Heavily congested circle with no lanes, but they figure it out. People on the outside want to get out; people on the inside want to get off the circle; the other ends up stopping. Suppose a bunch of people who want to go straight; no way for these circle continuers to break in. But then there is a break and the circle continuers start to go and the ones who want to get off have to wait. They manage to figure it out without any lanes or signals. Manage to figure it out. Would hate to drive it.
17:35Move away from traffic, example where decisions being made spontaneously, real time; issue of stability and rudeness. What happened at the grocery? Not an expert on civility, prefer not to offend people intentionally. See woman coming up with shopping cart, might offer to take it for her the rest of the trip. In Europe, laughing: to get a shopping cart, have to pay a deposit of a euro--a coin, something like $1.40; put it into a slot, get a shopping cart and when you return the cart to the slot later, the euro pops back out. Just a deposit; makes sure the cart returns. That's the custom there. Didn't know this. Apparent familiarity of the situation--"I know how to act in the grocery store!"--old lady faked left, right; started screaming. Didn't know what was wrong. Policeman running. What in the world is going on? Yelling in German. "I'm sorry, I don't speak German." Policeman: "What are you doing?!" Corners of mouth start to turn up; asked for ID; mentioned his nephew had gone to Duke University; almost smiling, says "She's still looking, isn't she?" She wants justice to be done; he pokes finger into his chest; "She doesn't speak English; if you just nod our business here will be finished." Excellent police work. Nods; he walks back to his car, she walks back to her car. Try to steal a euro from an old lady. For the next week or so, tried to carry stuff in arms, too psychologically damaged. Once you learn what has happened, no big deal. Gray area: areas where there is some nuance. Interesting in real life the subtlety of signals. People basically don't tip in Germany. If you pay for something, you go up to the next euro, consider it annoying to have to make change. Give the bill, say, Euro17.50; give them a 20 Euro bill and wait for change and then give a 2 Euro tip--that's what would do in the United States. That would be a big tip--at most 10%--"service wasteland"--so giving an American size tip; but it was just demeaning to have to make change. Why would that be? Answer is: No one does it. Why would you make someone do that? Like throwing something on the floor and wanting someone to pick it up.
25:21Another gray area: Gouging podcast discussion, maybe: if you are in line, waiting to board plane at the airport and they call Group 2, there is a certain dance that emerges at the gate. Don't always line up. Southwest, cattlecar you. Semi-circular group around the gate. If others have gotten up and you haven't, it's not okay to put yourself ahead of those ahead. Racing to get on, but same airline. Carry on space does disappear. Checking your bag might mean losing your bag. Computer bag heavy. If they call Group 2 and a Group 3-er cheats, the gate person sometimes waves them through; other times says they have to wait. Grocery store--against the rules to cut in line, elbow your way to the front. Also would be considered unbelievably gauche to act like an economist and say, "Folks, I'm kind of in a hurry; I wonder if I could give each of you $2 if I could cut in front." Standard answer for why that doesn't happen is transaction costs--someone would do it for $4, bargaining process. But it's more about custom. Risk that people will lie. Julian Simon created a way to let people cut in line when not enough seats on a plane; little mini-auction on the spot, with transactions costs, but it works out well. Who's willing for a free round-trip ticket to go on a later flight. Overbook on purpose; solve it beautifully. Sometimes it's okay to use money when it's institutionalized; but when you try to do it on your own, raised eyebrows, pretend you aren't talking; people embarrassed for you. Culture seems like it's hard wired. Example: In United States, physiological response to seeing someone else breaking the rules; more likely to provide the public good of norm enforcement. A lot of times violation of norms doesn't harm us. Little old lady in Japan. Emotional and physiological response, biological and evolved way of solving the collective action problem; anger inappropriate. Not rational to teach someone a lesson if they cut you off when driving. Benefits shared; individually you bear all the costs. Waiting in D.C. for a movie, about ten minutes more; someone cut in front of him while he was turned around; large woman cut in front of him; he's also large; she threatened to call the police if he complained; but it cost him at most 20 seconds. We respond irrationally to seeing violations of cultural norms by providing more norm enforcement. If it had been a guy, might have had a fight. If instead helped her and come back, no problem--still would have taken a few minutes of time.
34:27Right experiment: doing a good deed. Adaptive, group response. Two components: black box, inherited culturally determined norms. We didn't decide on them. If raised in China, not the norm of lines, people just crush in. All humans have physiological response to seeing the laws of that black box broken. Example: Shibboleth, story from Bible, Judges, Chapter 12. Shibbolet, no "th" in Hebrew, and different accent--it is either an ear of corn or wheat, or a freshet, a stream. Two Hebrew tribes had a war--the Ephraimites and the Gileadites--1200 B.C., more than 3000 years ago. Gileadites had lost, set themselves up on the Jordan, trying to find out if any of the Ephraimites were disguised as refugees. The Gileadites would ask "Are you an Ephraimite? Say ye 'Shibboleth'" and slew anyone who couldn't pronounce it their way, with an "sh" sound at the start. Trust but verify. Culture is inherited from the people who raise you. Pair of Ephraimite twins, one raised with Ephraimites and the other with the Gileadites. Pre-exhilic Hebrew had a number of dialects. Some languages have the "sh" sound and some don't; all children can say it if they learn it before a certain age. Person who cut in line, sociopath--usually slightly more heinous kind of behavior. Line cutter is example of homo-economicus--economic man or economic woman--who took advantage of own self-interest, felt no shame or guilt. You don't tip a bank teller--they'd think you are a fool; but in a restaurant if you don't tip you are considered gauche. Every good economist understands that acting in your own self-interest is not always what people do. Rational economic man gives blood, doesn't cut in line. If you did not get raised with those norms--Jennifer Robach Morse's book Love and Family--you can become homo-economicus and be an unpleasant person to be around. Thesis: Homo-economicus is a sociopath if what you mean is I get away with everything I can get away with. More than caring. In general people who behave that way get a short run benefit but a huge long run cost, trouble finding business partners, people to contract with; hard to get married. P. T. Barnum gets a bad rap for his quotation "there's a sucker born every minute"--but he created the circus by creating the honest circus. Before he came along, people would stand in crowds and watch the acts, and the owner would circulate pickpockets. Barnum said he wouldn't do that; wrote a book; honest dealing is the road to profit--if you can capture the reputation.
44:37Shame vs. guilt: guilt is I have a sense that I will feel bad if I do something perceived as wrong. Shame is that other people will think I've done something wrong and it will look bad for my family. We care about our families. Butting in line would make me feel terrible. Trust--can't specify all the contingencies of contracts. In a repeat setting reputation internalizes what would be external costs. Gray area of what's allowed and what isn't allowed. Rental contract: rent a place on vacation, put down a deposit; showed up, gave the other half. The wife reminded Russ that it wasn't just supposed to be the rental, but an additional deposit against damages. Standard procedure; looked at Russ and said not to worry about it; face to face might have felt embarrassed to ask for the money. Also forgot to ask for the cleaning fee, which Russ volunteered the next day. Would feel bad if later he didn't pay for it. Idea of damages is so vague--tracked in dirt, could have torn something, scratched the wall. Kids could have done something and hidden it; landlord could have thought something was damage even if Russ didn't. Landlords get references on tenants; usually tenants don't get references on landlords. They could; if it was the tendency of landlords to always keep the deposit they would. Has to be some expected level of damage. When you sell a house, what condition do you leave it in? Boilerplate in the contract, but unpleasant to sue; the way that gets settled is through a norm of what you can leave around. You'll never see the person again. The norms emerge and get passed on. Nonspecific reciprocity--seems like a contradiction. Means I expect other people to treat me that way.
50:35Should always talk about baseball. Cultural shibboleth--the word has come to mean a password, not a word you can't pronounce, like "swordfish"--Marx brothers reference, Horse Feathers. WWII, Battle of the Bulge, SS division that was going up north and had made considerable progress. Sent ahead some scouts who had been raised in the United States and who spoke perfect English. Idiomatic, unaccented American English. Sent to blow up things, change signs. Operating 50-75 miles behind the lines trying to make things more difficult. How do you discover someone, if their English is that perfect? Answer: hold at gunpoint and ask who led the American league in home runs in 1941? Worked almost perfectly. Some Type II error. Didn't shoot them. Caught almost all the Germans who had been back in Germany the last few years. Baseball is the American shibboleth. Even if the person had been taught the answer, say Ted Williams, could go on and ask what he hit. Can press the cultural questions further.
54:00Talked about how cultural norms are inherited from your parents. Book on music: read that major and minor keys--Happy Birthday vs. a mournful dirge--in America major keys mean happy and minor keys mean mournful. But in other cultures it's the opposite--they get happy over things we would hear as sad. That has to be taught. Would have thought that would be hard-wired. Could be false, but it was said to be true. Hard to believe. Sad music can make you cry--how can that not be hard wired? Closing thoughts: It was Ted Williams, slugging average of 735 in 1941; on-base percentage of 551; that was the year he batted 406. Highest on-base percentage before Barry Bonds. He did not win the MVP that year. Dimaggio that year. 56-game hitting streak will be broken some day. Baseball as a shibboleth and a religious experience--a beautiful game.

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