The problem is that you can't compare $100 purchasing power in USA with $100 in a remote village in Peru.
Imagine that instead of $100, they give you $10.000 and things change. Would you refuse $1.000 free money even if someone earns $9.000?. Hardly.
But this is exactly what is happening. With 1000 euros/month I live like a king in some parts of South America,like Argentina, but I live badly in Europe, the cost of living is way higher.
> The stakes Henrich used in the game with the Machiguenga were not insubstantial—roughly equivalent to the few days’ wages they sometimes earned from episodic work with logging or oil companies.
I don't think he offered $100. It was probably a much smaller amount.
For minimum wage workers that'd be almost 14 hours of labor in the US (maybe more since they still have to pay the payroll taxes like SS). Given that many of those jobs aren't full-time, that could be 2-4 days of labor for many of those workers. If I'm reading [1] correctly, some 30% of the population earned income at the equivalent of full-time minimum wage income ($15,080) or less. So not most, but certainly a significant number.
And working some more numbers, $100 in a day (full-time shift of 8 hours) would be $12.50/hour. Which works out to $26,000/year. About 48% of individuals earned less than that in that year.
Yet Another Edit (YAE): At $26k/year a single individual with no dependents wouldn't actually be making $100/day. Like the poorer minimum-wage earners, they'd be losing SS and Medicare taxes. At that income they're also paying income tax and not (necessarily) getting it all back (like the minimum-wage earners would). If my brain engages I'll work the numbers for a single individual to actually get to bring home $100/day (ignoring state income taxes).
Note: I'm tired, may be misreading the intro block to the table, but this doesn't seem to be including the unemployed or those under the age of 15 and only those who report income (so those getting paid under the table aren't affecting the percentages).
The median income in the US is $50,000. The average work week is 34.5 hours (per the OECD), or upwards of 40 according to other sources. $25 per hour is a reasonable baseline for the US average. So it's about four hours of work. The average tax rate is 18%, so it's more like 4.8 hours of work including taxes.
That's the household median. When you combine/compare the data in [1] and [2] that median makes sense when you consider two income households. The individual median is around half that value (fits in the $25,000-27,999 bracket somewhere, assuming a uniform distribution across that range it'd be around $26,500).
For most people for the whole EU, probably. For most people in every country, not really. Here in Portugal, $100 is about three days of an average wage (50th percentile, after taxes).
So the idea that scientific studies should include people that are not upper middle-class westerns, is wrong because of the purchasing power of $100?
There is a link to the published paper in the article[1]. I have only skimmed it, but there are many different studies and findings. One I think is really interesting is this:
"Research on IQ using analytical tools from behavioral genetics has long shown that IQ is highly
heritable, and not particularly influenced by shared family environment (Dickens & Flynn 2001,
Flynn 2007). However, recent work using 7‐year old twins drawn from a wide range of
socioeconomic statuses, shows that contributions of genetic variation and shared environment
varies dramatically from low to high SES children (Turkheimer et al. 2003). For high SES
children, where environmental variability is negligible, genetic differences account for 70‐80%
of the variation, with shared environment contributing less than 10%. For low SES children,
where there is far more variability in environmental contributions to intelligence, genetic
differences account for 0‐10% of the variance, with shared environment contributing about
60%. This raises the specter that much of what we think we have learned from behavioral
genetics may be misleading, as the data are disproportionately influenced by WEIRD people,
and their children (Nisbett 2009)."
What they are arguing is that we have conducted science in a way where we have consistently sampled from a specific sub-population and used the results to generalise about the remaining sub-population. To me it sounds like they are on to something that could change many of the "givens" that are "known to be true". I recently saw a TED talk with Paul Johnson[2] where she discusses the problem that the sex of subjects in medical trials is often ignored leading to results that only holds for men or women.
Htsthbjig's point is that if the money doesn't mean much to you anyway, you're more likely to be punishing because you're not losing much. But if it means a lot to you, why punish a stranger when you're getting a significant amount of free money.
To properly compare the cultural differences in the test, it would have to be done with the same level of purchasing power. That's not really stated one way or the other in the article. $100 goes a lot further in a developing country than a developed country, so if they were using the same dollar amount (I doubt they were), then it isn't a directly comparable study.
For example: Make it $10. The stranger gives me a 1:9 split in their favour. Fuck 'em, I'm not going to lose any sleep over a dollar, and it's not worth my time to even collect the dollar. Now make it $10k. Hey, I could actually do something nice with $1k, even if the other person is being 'unfair'. The relative purchasing power of the money in the test is significant within cultures, let alone across cultures.
I have no problem with the question "Have they considered purchasing power". I could also come up with a dozen possible issues they might not have taken into consideration. But I would never argue that they havent considered them before I actually checked. And even though it seems reasonable to say
"The relative purchasing power of the money in the test is significant within cultures, let alone across cultures."
I am not convinced that is correct. A quote from the paper describing the study [1] suggest that the amount of money is not crucial
"Indeed, in the UG, raising the stakes to quite high levels (e.g., three months’ income) does not substantially alter the basic results. In fact, at high stakes, proposers tend to offer a little more, and responders remain willing to reject offers that represent small fractions of the pie (e.g., 20%) even when the pie is large (e.g., $400 in the United States). Similarly, the results do not appear to be due to a lack of familiarity with the experimental context. Subjects often do not change their behavior in any systematic way when they participate in several replications of the identical experiment."
The point of the article is that it is the norm to conduct studies where participants are selected from the same non-representative sub-population, and that this methodology is heavily biased. Rejecting this idea, because you find a possible issue with one of the many studies it is based on, seems like a really bad idea.
20% of $400 is still not all that much unless you're in abject poverty. For a minimum-wage worker in the US, it's a little over a day's work, but for anyone else, it's vanishingly smaller. For a person on a median income (around $27.5k in the US), it's only several hours work. For a higher-level professional, it's not even an hour's work. $80 doesn't buy you a lot of professional time.
$400 certainly isn't three months income in the US (~$6900/qtr is the median), as suggested earlier in the paragraph, let alone the 20% split of that.
"The stakes Henrich used in the game with the Machiguenga were not insubstantial—roughly equivalent to the few days’ wages they sometimes earned from episodic work with logging or oil companies." - Probably far from $100.
* paragraphs 1-5 describe an experiment which makes makes no sense because it appears to ignore purchasing power parity (PPP)
* paragraphs 6-12+ completely ignore the rather obvious PPP objection and go off on a tangent about the lone genius rebelling against authority blah blah blah - a style of writing which makes me increasingly more irritated and skeptical that the author is going to say anything convincing or interesting because he couldn't foresee and address my (and apparently others') immediate objections, which makes me wonder if this was even proofread
I stopped reading at that point because it felt like a waste of my lunch time. Perhaps I'm missing something obvious? I may read further this evening to see if the other 1000s of words have more substance.
Your criticism is misplaced. PPP is not the issue, its the nonconstant marginal utility of money. If the marginal utility of money were constant, one would expect the results to be identical for a dollar or a million dollars, and billionaires would be expected to behave the same as day laborers. That is ludicrous. Rather than cultural ideas of fairness, the game more likely could serve as a proxy for the participants initial ex ante wealth endowment.
That being said, many of these 'experiments' in behavioral economics are silly, in that they capture so little of a real world environment and introduce substantial effects of their own as to be meaningless in terms of real (model driven, hypothesis building, testable, repeatable) science.
One of the reasons for trying the Ultimatum Game in poor villages is that you can see if the theory holds for high rewards, without spending $1,000 a pop to try it out in San Francisco.
The article doesn't mention that when this game is played with American children (using pieces of candy instead of money) they usually offer the least amount of candy and accept whatever's offered, say, a 9-1 split. This is seen as "rational" by both sides, because the giver should give as little as possible and the receiver should be happy to have something rather than nothing.
This behavior changes as people grow up. As teenagers, people generally won't accept a split worse than 70/30, which implies that it's worth it to lose out on the 30 in order to send a message to the stingy giver. Also, men are more likely to engage in this sort of justice-driven behavior than women, which is all considered economically irrational. But when the stakes get very high they tend to outweigh people's ethical notions of fairness.
Imagine that instead of $100, they give you $10.000 and things change. Would you refuse $1.000 free money even if someone earns $9.000?. Hardly.
But this is exactly what is happening. With 1000 euros/month I live like a king in some parts of South America,like Argentina, but I live badly in Europe, the cost of living is way higher.