Norm alludes to the thesis that there is no such thing as human nature. Coincidentally, though, two recent papers suggest that a common nature might contain fewer features than generally thought.
First, Joe Henrich and colleagues show (pdf) that there is significant variation in behaviour across peoples. For example, whereas Americans are prone to the Mueller-Lyer illusion - which line is longer in my picture? - foragers in the Kalahari are not. Also, results of ultimatum game experiments differ hugely across tribes, with Americans making much higher offers than the Hadze in Tanzania or Tsimane in Bolivia.
In many ways (not all), he shows, our idea of what is “human nature” is in fact drawn from a very unrepresentative sample of “weird” (western, educated, industrialized, rich and democratic) people.
Secondly, this paper (pdf) by Roberta Dessi and Xiaojian Zhao contrasts North Americans to Japanese. North Americans value self-esteem and are prone to overconfidence, whereas the Japanese are much less so. To the Japanese, shame plays a bigger role than it does for North Americans.
But here’s the thing. These different attitudes can both be efficient, depending upon the type of economy one has.
This is because there are costs and benefits to overconfidence. The benefit is that overconfident people are more likely to engage in new ventures - to change jobs, start new businesses - because they exaggerate their chances of success. The cost is that such people under-invest in self-improvement: why bother with learning and practice when you‘re so smart and talented anyway, and when your so-called failures were just bad luck?
This implies that overconfidence will be a virtue in a dynamic economy, when there is high labour turnover and lots of changes of ownership of companies - because there‘ll then be lots of new ventures. It will, however, be a vice in more stable economies where incremental improvements are necessary.
And here’s a coincidence. Traditionally, the US has had more turnover - shorter-lived jobs and ownership - than Japan. Its tendency to overconfidence is therefore a benefit. By contrast, if there are jobs for life, shame is efficient - as the fear of looking bad stops people shirking and encourages them to self-improve on the job.
In this sense, the US and Japan have both been efficient equilibria - overconfidence works well in a dynamic economy; shame works better in a stable one.
It is, however, an open question as to whether the economy adapts to character or character to the economy, or both.
Here, though, lies a thought. Could this be a reason to hope that the US can escape Japan’s “lost decade(s)“ fate?
What I mean is that banking crises require economies to become dynamic. They require capital and labour to shift to new uses, and radical policy changes from government and corporate management. Could it be that the Japanese lack of overconfidence prevented this, whilst Americans’ overconfidence will facilitate it?