Social psychologists have shown in the laboratory that it is extremely easy to create group divisions, according to which subjects divide. Themselves between us and them. We show favoritism toward us and bias against them.
Most economists don’t like these stories of psychological feedback. They consider them offensive to their core concept of human rationality. And they are dismissive for another reason: there are no standard ways to quantify the psychology of people.
Politicians are one significant source of stories, especially about the economy. They spend much of their time talking to their public. In doing so they tell stories.
In successful marriages the couples create a shared story. They develop a story around a sequence of shared memories. They interpret their caring for each other and the values embodied in the marriage in light of this story.
Each of us has only the foggiest memory of the details of his or her own childhood or, for the older among us, of our own early adult years. Yet we keep in mind a story of those memories, a story that helps define who we are and what our purpose is.
In turn, much of human motivation comes from living through a story of our lives, a story that we tell to ourselves and that creates a framework for motivation. Life could be just “one damn thing after another” if it weren’t for such stories.
All public corporations involve the managing of other people’s money. There is therefore always the opportunity for the managers to pocket the money and run. But the opportunities are not always equally big. When they are big, we see consequences for the whole economy.
Corruption scandals are always tremendously complicated. Yet they are also tremendously simple. They are simple because they always involve the violation of elementary principles of accounting regarding how much money can legitimately be taken. They are complicated precisely because the participants seek to shroud in complexity the violation of these simple principles.
According to the vignette, there has been a snowstorm, and the local hardware store has increased the price of snow shovels. Is that acceptable or unfair? According to elementary economics such a distinction would be irrelevant: the rise in demand (because people now have to shovel out their driveways and sidewalks) should entail a rise in price. But 82% of the respondents thought that an increase in the price of snow shovels from $15 to $20 in the wake of a storm would be unfair. The hardware store, which had experienced no increase in its own cost to purchase the snow shovels, would be taking advantage of its customers’ hard luck.