How Money Helps Us Trust Each Other

First Posted: Aug 27, 2013 02:41 PM EDT
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Why money is essential for the functioning of modern society: An international group of researchers from Switzerland, Italy and the U.S. have shown through an experiment how money helps modern societies prosper by fostering cooperation among strangers.

As a species, human survival depends on cooperation, which our ancestors developed by banding together in small, close-knit groups of individuals who thrived by reciprocating help over time. But this evolutionary recipe for success seems at odds with modern societies, composed of millions of individuals who are strangers to each other.

Prof. Gabriele Camera and his colleagues devised a series of economic experiments to examine whether money affects human behavior in ways that help explain this seeming paradox. To measure cooperation in groups of strangers, participants from a group of undergraduate test subjects faced repeated opportunities to aid anonymous counterparts, at a personal cost. The choice to give help was based solely on trust that the good deed would be returned by another stranger in the future. To facilitate this cooperative process, participants could observe the behavior of the entire group.

Larger groups cooperate less

With cooperation isolated in this manner, the researchers then varied the group size and found that trust and cooperation decreased as groups grew larger. In larger groups subjects gave in to their opportunistic temptations and so cooperation significantly declined. This trend changed when researchers introduced intrinsically worthless tokens to the group. The participants spontaneously began to reward help with a token and to demand one in exchange for help. The exchange of tokens facilitated cooperation among large groups of strangers because participants trusted strangers to return help for a token, in the future.

Different types of trust

The experiment thus demonstrates that the lack of trust among strangers made money behaviorally essential. The exchange of symbolic objects sustained cooperation because participants considered tokens a form of compensation for their good deeds. «What is fascinating is that the use of money bolsters cooperation by replacing one type of trust with another, stronger, self-sustaining type of trust», explains Camera.

This cooperative scheme, however, displaced norms of voluntary help, which were strong and effective in small groups. As a result, the use of money sustained stable cooperation as groups got larger, but did so at the cost of reducing cooperation in smaller groups. According to the authors, the findings demonstrate how the influence of monetary systems extends beyond economic performance. -- University of Basel

Reference:

G. Camera, M. Casari, M. Bigoni, Money and trust among strangers, PNAS (2013) | doi: 10.1073/pnas.1301888110

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