Stuffing Envelopes.

• Author: Landsburg, Steven
• Position: Altruism and economics

Does recent research prove we're altruists--or does it suggest something darker about us?

This is a story about some economists who set out to study altruism and ended up discovering something very frightening about human nature.

Altruism itself has, at best, a mixed reputation among economists. Adam Smith famously observed that "it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner but from their regard to their self-interest. We address ourselves not to their humanity but to their self-love." In other words, who needs altruism when we've got greed?

In fact, greed can be far more efficient than altruism. An altruistic butcher can't serve his neighbors well unless he knows how many want beef on the table and how many want chicken. How does he get that information? Ordinarily, butchers learn about demand by observing prices: Other things being equal, the higher the demand, the higher the price. But in a world of pure altruism, there would be no prices to observe.

If you happen to like this article so much that you decide to buy a lifetime subscription to REASON, some Asian farmer has to grow another linseed plant. That's because the ink in this magazine is made from linseed oil. How does the Asian farmer know you need more linseed? Because rising subscription numbers set off a chain reaction: They raise the demand for ink, which raises the price of ink, which raises the demand for linseed, which raises the price of linseed. The farmer knows someone needs more linseed when he sees the price go up. Without prices, he'd have to guess at your preferences and might plant rutabaga instead.

Despite such efficiencies, of course, there are obvious advantages to living in a world where people care about their neighbors, and economists spend a lot of time theorizing about both the prevalence and the consequences of altruism. Enter Vernon Smith. Forty years ago, as a young assistant professor of economics at Purdue University, Smith championed the then-unheard-of notion that economists who theorize about human behavior could learn something useful by actually observing some human behavior, preferably in controlled

experimental settings. Today, Smith presides over the renowned Economic Science Laboratory at the University of Arizona, where he and his colleagues recently set out to study altruism--and ended up discovering something dark and disturbing about human nature instead.

Here's one of Smith's...