Tuesday, October 25, 2016

Is Altruism Good for the Economy?

One would think that there is money to be made in the business of altruism. In particular, corporations or local businesses that do things that help the community, so long as they do so in a visible manner, benefit from the goodwill of the community. People are more likely to open accounts at banks or buy items from stores that have a public image of being generous. There are many examples of businesses and corporations that have invested in, and reaped the benefits of, public goodwill. And the explosion of artificial intelligence has included an emphasis on likeability: those robot voices that answer the phones of corporations say “Your call is very important to us” rather than “Wait in line, sucker.” Sometimes the robot voices even tell you your approximate wait time. Someday soon they might be able to identify you by your phone number, consult the list of music you have purchased, and create a tailor-made sound track for your wait time. I will know this has happened if I start getting all-Dvořák sound tracks when I am put on hold.

Increasingly, however, I have noticed that corporations and businesses are doing just the opposite. In many cases, corporations will do things that demean and frustrate their customers even if it costs them money to do so. They frequently entrap their customers or clients into making little errors for which they can be penalized. We can all think of personal experiences in which this has happened to us or to someone we know. This seems to be puzzling, both from an economic and an evolutionary viewpoint. Why would they do something that is not only bad but also decreases their profits?

Probably because it does not decrease their profits. Corporations know that if they keep us frustrated, one of our responses will be to buy more stuff, from junk food to vacations, in an attempt to make ourselves happy or to help us forget our frustrations. Banks, for example, know that if they keep us frustrated, we will spend money on shallow pleasures and stay in debt to them, for which they can charge high interest rates. A client who has an optimistic plan for the future will find actual pleasure in trying to become debt-free. The banks want to keep us depressed so that we will not try. And corporations that sell us stuff want us to buy everything now, because the item or service might not be available later; to wait is to lose. In short, many large corporations want us to be dissatisfied, even desperate, servants rather than happy customers.

Manipulating the lives of customers is not what evolutionary scientists call an “evolutionary stable strategy.” That is, this way of doing things is “invasible”: a business or corporation that people liked would soon displace the ones that people do not like, all other things being equal. However, all other things are not equal. The corporations that invest heavily in entrapping and demeaning customers are so large that they dominate the market. To convince yourself of this, just try starting a friendly corporation. I genuinely hope you succeed. Good luck! And remember, my call is very important to you.

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