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Leontief Prize

Remarks by Nancy Folbre
on occasion of her receipt of the Leontief Prize
at Tufts University, on April 8, 2004

Thank you so much. It is a great honor to be here with such fine company and I really look forward to the chance to share some ideas and engage in some back and forth about them today.

In our search for a common theme for this event we settled on the metaphor of the Rat Race, and my particular task is to talk about what feminist economics and ideas about gender and care might add to our understanding of said Rat Race.

I thought I would start with what I consider to bey the coat-of-arms of my economics department at UMASS UMass Amherst. We do a department T-shirt every year and I am usually the person in charge of the T-shirt design. This is the one that best captures the spirit of our enterprise. You may have heard the expression before “de gustibus non est disputandumbutandem.” Sorry, my Latin is not top notch, but what that saying means is there is no arguing about tastes. It’s a motto that really expresses in my opinion the limitations of standard mainstream economics, which often takes tastes and preferences as a given rather than asking where they come from or what their implications are. So the alternative slogan at UMASS Amherst is “de omnibus disputandumdis butandem” -- which you don’t need to know too much Latin to figure out that means argue about everything. Which is really what we try to do and also try to advance the tradition of thinking about the invisible heart, multi-cultural diversity, and bread and roses all in one fell swoop.

What I am going to do today is address four questions. The first overlaps substantially with what Bob is going to talk about but I thought I should give you my take on it so you can kind of calibrate the two of us. The second one, a little intellectual history, maybe a little competitive itself, who thought of this first? I think there is a long and interesting intellectual history here that we need to honor and respect and appropriate. Then I’ll talk a little bit about how gender affects competition. I am interested here in some ideas that many feminists would consider somewhat renegade ideas. Thinking a little bit about evolutionary biology and what it might tell us about these dynamics and how it fits in with game theory which is, as you may know, very fashionable today in economics. Finally, what are the implications for the care sector of the economy? By the care sector I mean the work that involves worrying about other people and caring about their welfare and interacting with them in a personal or emotional way.

Okay, why shouldn’t rats race? Well, I of course had to do a Google image search on the rat race to see what I could find. I found a great image from a behavioral neurologist in Britain who stole this cartoon from somebody and I’m politely borrowing it from him. It is this really nice image of what we mean when we talk about a rat race, which is sort of getting caught up in this idea that happiness is just around the corner. Just work a little harder just, earn a little more money. We’re not happy yet but we’re almost happy, we’re on the verge of being happy. There’s happiness, where is it? Oh, keep going! It is just a sense that the final destination does tend to elude us. I found an image that better conveys the sense of anxiety that we sometimes worry about in our society,; in which, economic competition really has become a kind of arbiter of personal success in ways that many people find culturally troubling. I think Bob Frank was really in the vanguard of efforts to call attention to the psychological dynamics that might be underway here. Lately this idea has really caught on. Greg Easterbrook, a very mainstream journalist, writing for Newsweek has a new book out about the evidence that money doesn’t buy happiness. William Grieder, in his new book “The Soul of Capitalism,” which I think is a very good book, addresses this issue at length in an interesting way.

To me the economic event that is real, calling attention to some of the apprehensions we have about the rat race, is the concern about outsourcing of the jobs of highly educated professionals and managers. We’ve been seeing job losses in the manufacturing sector of the US economy as a result of intensified international competition for many years, but we’ve all thought that we’ve inoculated ourselves against this by obtaining a higher education. Basically, affluent, well-educated, individuals haven’t had to worry too much about international competition until recently. There is a slight sense of panic now that has emerged that is best appreciated by watching Lou Dobbs on CNN. I don’t know if any of you have picked up on this; but a Republican, mainstream news analyst is now obsessed with the idea that competition is worsening the bargaining position of highly educated American workers. I think this is a really interesting indicator that I think concerns about the effects of competition are very much coming into public debate and are going to continue to be there.

If I were going to summarize my answer to this question, I would say that there is actually nothing wrong with a race. I think races are good and that a certain amount of competition is very healthy. But, there are a lot of reasons to believe that the level of competition, if becomes too intense, in certain circumstances can have very adverse effects. Here are the reasons why. People can misperceive the costs and benefits. They can get so caught up in their position vis-à-vis other people that they become less mindful of what really is in their best interest in terms of becoming happy people. The traditional confidence that economists have that people know what they want and all they have to do is figure out how to get it, is being shaken by a lot of interesting results. Not just surveys but also experimental results that show that in fact, there isn’t a very strong link between money and a sense of subjective well-being. There are also some really big coordination problems that emerge irrespective of what you think about the behavioral psychology involved. People all competing with one another can lead to outcomes that leave everybody worse off. The simple example is, everybody at the football game stands up, they’re no better off then when everybody was sitting down, but you can’t sit down because everybody else is standing up. I can’t say more about this because Bob is much better at talking about this issue than I could ever hope to be. The idea is that winner-take-all outcomes and competitive games can be socially inefficient.

The ideas that link to this that I am more engaged with have to do with the relationship between extrinsic rewards, which are usually what competition is about, and intrinsic motivation. Economists have always recognized the importance of these two types of motivation but pay a lot more attention to the extrinsic part because the intrinsic part is that part that is embedded in tastes and preferences in the utility function. What it is that people really want, economists have not really thought about a lot. But there is this really interesting literature in institutional economics in examining the technical characteristics of certain jobs that require intrinsic motivation. Where it’s really hard to monitor the performance of a worker, where it’s hard to tell who is winning and who is not, or where a team is playing rather than an individual and it’s hard to tell which of the players deserves the credit for the team’s success. These are all situations where intrinsic motivation turns out to be much more important than extrinsic motivation. In care work that involves taking care of little kids, or elderly people or people who are sick or are unable to protect themselves, to defend themselves and don’t have consumer sovereignty; that intrinsic motivation is really crucial. A lot of forms of competition for extrinsic reward can have, that don’t always have but they can have, the effect of undermining or weakening that intrinsic motivation. That is something we do need to be concerned about. But, let’s not put the whole argument in instrumental terms. I think intrinsic motivation also has intrinsic merit. It’s something that we believe in as part of being human, to have not just preferences but values and to act on those in healthy ways.

Now, a little bit of a detour into intellectual history, because these are the ideas that got me interested in political economy in the first place. The early socialist feminists, sometimes mistakenly called the utopian socialists, were really very much onto the idea that the emerging capitalist system was setting up some competitive dynamics that had some adverse effects. This is precisely why they were so interested in setting up and experimenting with alternative community forms and trying to understand the laws of motion of capitalism as a system. Now my favorite of these is a somewhat obscure fellow, William Thompson, who wrote a brilliant feminist tract in 1825 “Appeal of one half the human race Women against the pretensions of the other half, Men to retain them in political and thence civil and domestic slavery” the title of which tells you pretty much what the analysis was. But it was not just a brilliant attack on the liberal theory that the interests of women and mothers were perfectly represented by their fathers and husbands, it was much more than that. It was more an analysis of how an economic system based on individual competition was always going to penalize people who couldn’t fend for themselves. Children, the elderly, the sick, the indigent, and anybody who took time-out from the rat race to care for them would also be penalized. That was really William Thompson’s vision of what the limitations of the capitalist system were. This is the vision that Robert Owen and the later socialists really built on, often I think in misguided and mistaken ways, but guided by this kind of vision of the connection between competition and care.

It’s not just the Marxist tradition; there is a great institutionalist tradition. If you look back at the work of two best economists the United States ever produced, Thorstenon Veblin Veblen and Charlotte Perkins Gilman. They were both fascinated with what they saw as excessive consumerism and competition and emulation.

VeblinVeblen believed that a group of highly educated professionals would finally lose patience with an economic system that didn’t really value quality and craftsmanship but was purely driven by market dynamics. I think if Thorsten Veblin Veblen were around today, he would be cheering on the software engineers and computer science graduates who are on the rampage about the impact of international competition on outsourcing. It’s very consistent with his concerns.

Charlotte Perkins Gilman is so ignored by economists but her book “Women and Economics,” published around 1900, is just a very incisive analysis of gender and the economic system. Gilman was also very much influenced by Darwin and wrote a lot about what the implications of evolutionary biology were for her understanding of changes in gender roles that were taking place in the economic system. So she is my bridge to talking about what I think some of those important insights are today. In the last 20 years in particular, there has been a renaissance of thinking in evolutionary biology that has really challenged some traditional interpretations of that Darwinian model of competition in ways that I think are really important for economists to understand.

The two basic points that I would emphasize are that in social species, the individual pursuit of self-interest is mediated by competition among groups, which requires solidarity or group identification. Now, whether you interpret that in biological terms or in terms of cultural evolution or conflict, the idea is that in an ecosystem that involves social species often it’s teams that are competing with each other. In order for teams to be successful, the individuals have to willing to sacrifice some of their individual self-interest on behalf of the team. So the more successful team is the one in which individuals have their own personal ego under control. Now economists have always been skeptical of the very notion that individuals would develop allegiance or solidarity with groups and have argued that that is a solidarity that will inevitably be undermined by free rider problems. Now there is this growing literature, for instance George Ackerlof writes about identity and how people identify with others that resemble them. There is a literature in cognitive psychology about the little signals that people pick up about who resembles them and who doesn’t and how much more likely they are to cooperate in experimental situations with people that resemble them physically. There is also this tremendous accumulation of evidence about what is called strong reciprocity, which is basically a tendency that human beings have to insist on some basic standards of reciprocal exchange and to punish individuals, even individuals they don’t know, who violate these principles of reciprocal exchange. The experiment that has been used in many countries to demonstrate this behavioral predisposition is called “the ultimatum game”. In other words, there is now this literature showing that forms of competition differ and that they don’t really fit that hobbesian Hobbesian model of the war of all against all. Competition is actually a lot more complicated than we thought.

So here’s where the evolutionary biology comes in, in a really interesting way. One of the main reasons that feminist theorists have always been hostile to evolutionary biology is that they’ve seen it as a deterministic model that suggests that differences between men and women are hard wired and therefore you can’t change them. The use of evolutionary biology is often interpreted as a conservative response to the claim that gender roles are more malleable than they should be. But I think that situation has kind of flipped. Now I would say we understand biology and physiology better than we understand the way social and cultural norms affect us. We can take pills, we can inject ourselves, and we are better able to change our physiology than we are at changing our acculturation. So that argument no longer holds. Actually, it would be a lot easier if some difference between men and women were biological in nature than if they were culturally designed, precisely for that the reason that biology is now a little bit more under our control. Don’t get me wrongwrong; I’m not arguing that we should be taking pills here. I just want to open your mind up to these really interesting findings about behavioral differences between males and females that have evolved over time.

Especially but not exclusively in mammals, what evolutionary biologists point to as a significant difference between males and females is the level of investment they have in offspring. The females are starting out with a small number of very expensive ova that they have to take good care of in order to make effective use of them. Males are starting out with an almost infinite supply of very cheap sperm that they need to find a home for. So both males and females are competing, but the nature of their competition varies. Male competition is loaded up front. The really important success for the male is mating success. You have to find a female to mate with that can provide that expensive egg for your sperm to combine with, otherwise you’re not going to make it. You’re not going to reproduce your genes in the long run. So early success is really important and mating success is more important than parenting success. For females the dynamics work the other way. It’s not very hard to find a mate. There is a large supply of males who would really like to share some sweet little sperms. What’s really hard is getting the resources, particularly from opportunistic males, to stick around for the 30 some-odd years it takes to get that little embryo out of college.

This sets up all sorts of game theoretic strategies that are relevant to understanding male-female behavior. In particular, women are much more vulnerable to threats of abandonment than males are. They need help from the father of their offspring to raise that offspring to maturity. The threat to abandon is a much more credible threat on the male part than on the female part. So you can model this as a chicken game. The original chicken game was two guys in hotrods driving towards each other at top speed at midnight on a dirt road. The one who swerves first is the chicken and the one who refuses to swerve is the winner of the game. The problem of course is that if neither of the players swerves, they are both extinct.

Think of the chicken game as this: a mother and father of a newborn infant are lying in bed and the baby starts crying. What is your optimal strategy? If you studied economics you know, it is to pretend you’re asleep. If you pretend you’re asleep the other person will get up and take care of the baby. If you pretend to be asleep then you get to enjoy the luxury of the bed and the baby gets taken care of. But then what happens if both parents pretend to be asleep? Then the baby becomes sick or worse. The question is, which of those people is more worried about the possibility that by both people opting out the consequence will be negative for the child. If the female is more concerned about the ultimate outcome to the child than the male is then she will be more likely to get up and take care of the infant. She will be more likely to swerve than to crash, in short. If you then throw into that model some endogenous preferences --. Namelynamely, women may start out more bonded to an infant and because they spend more time caring for an infant and become more attached to the child,-- then the story complicates even further. Then the relative bargaining position of mother and father diverge even more radically.

I think a really great image of this comes from the many illustrations of the rape of the Sabine women that you can find in European art. It is a really great story that Plutarch tells a historical account of the founding of Rome. These two guys Romulus and Remus, their they’re born, the get abandoned by their mother, they are suckled by a she-wolf, they grow up and found the city of Rome with a band of brothers but they can’t find any women. They know they can’t create a city without women. None of the families in the surrounding countryside will allow them to court their daughters. So the Romans hold a big party and a set of competitions. They invite all of their neighbors including the Sabines to come, but it’s a trap. When they come with all their young women dressed in party clothes to have a good time, the Romans are ready. The Romans take the women, marry them immediately, rape them and many of the women quickly become pregnant. By the time the Sabines come back prepared for battle, a lot of these women have already given birth. Just before the battle begins the women run out on the battlefield. And they say, “stop, we do not want our fathers fighting with the fathers of our children!”
“You must stop, you have to except accept this. The well-being of our children is more important than the honor of our family.”

It’s a tremendous historical summary of the difference in male and female interests, in the relative importance of war and child rearing, and has really important implications for understanding things as relatively mundane as care-work. So a lot of women specialize in the work of providing care,. Wwhether its unpaid work in the home or in the paid sector, nursing, education or healthcare. These are jobs that involve the care and nurturance of other people. These are all jobs in which it’s very hard to define performance. It’s very hard to have a race. It’s very hard to say, “Who is the best mother here? Okay, five minutes, we’ll see who gets over the finish line first.” You can’t really do it, you can’t really organize a competition for most forms of care because the outcomes are so complicates and variable and person specific. Organizing those forms of work according to a competitive logic creates a lot of problems; I think it’s likely to cause adverse effects. Another way to think about it is; it’s very difficult to race if you’re carrying a child under your arm. The more competitive the race, the more pressure there is for the winners to be unencumbered. In order to be unencumbered in a modern economic system, you have to offload your responsibilities for care. And if you can’t offload them onto women, you have to offload them onto other people who are hired to take their place, usually also women.

The reason this is so relevant is, you see today so many economists prescribing performance-based incentives as a way to improve productivity. This is how most people explain the corporate accounting fraud that has become so epic in the last few years: it that performance- driven incentives for managers, paying them in terms of stock options created incentives to cheapcheat. The whole process in a sense backfired, because instead of eliciting more effort, which was the original idea that Michael Jensen came up with when he suggested that managers should be paid with stock options, it tipped over to the other side, to the negative side of competitive effects and created some perverse incentives for fraud. There are likewise some perverse incentives that are built into a lot of suggestions that have been made by conservatives to change family policy or to change the organization of the care sector. My favorite example is linking teachers’ pay to test scores. Sure you can do that. Student testing has become the growth industry of the century. Especially with the No Child Left Behind Act we’ve had this proliferation of testing as a way of measuring the performance of teachers. And it does measure some aspects of the performance of teachers, but what it doesn’t measure is that intrinsic motivation that teachers have to really create a community of learners and to instill preferences in their students for problem solving. What it does is it creates incentives for teachers to teach to the test, to convey simplistic forms of information and to provide this easily quantifiable result. I think it’s a very misplaced emphasis that leads to some very negative effects.

You may not of heard of these two other strategies that family policy mavens have come up with. James Coleman, who’s is a sociologists that both Bob Frank and I are very fond of because of his analysis of social capital. One of the proposals he made early on in his work was that the problem with parenting was that there were no performance-based incentives. Why try hard to do a good job in raising your kid if there’s no money in it? How do you do that? Well, you benchmark the children and predict how likely they are to succeed given their IQ and zip code and things likely that. And if the parents exceed that expectation then you give them a bonus for their behavior. I would say that that might have a few perverse incentives for parental behavior.

Shirley Bergrath, who’s written a lot on Social Security, makes the a point that I agree with, that Social Security redistributes money from parents to non-parents. People get the same ratio of Social Security benefits to wages whether they’ve raised five kids or none. But the parents are spending a lot of their time and wages creating the next generation of workers that are paying the taxes that are then funding those benefits. So if you factor parental expenditures of time and money into the whole equation, Social Security is having this tremendous redistributive effect. Well, surely a solution to that problem is just to get rid of Social Security. Give parents a claim on their children’s earnings instead of the whole entire younger generations earnings. Then parents would really have a great incentive to send their children to Business School. That might be a good thing but it might not.

Races are good, we like to race, competition is fine but the race needs to be put in its place. We need to have good rules for the race. The problem with the rat race is that it’s designed by this diabolical scientist who’s just trying to drive the rats crazy. The rats need to design their own race; we need to take control of our on race. That’s where I’ll end. Rodents of the world unite.

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