Experience with the Psychology and Economics of Team Production and Gift Exchange

The New York Times article, "How to Get the Rich to Share the Marbles," given in the prompt for this post makes an interesting and very legitimate comparison between man's psychological willingness/non-willingness to share and the current direction of the Democratic party. The behavior of the toddlers in Tomasello and Hamann's experiment seemed quite similar to the consensus behavior of many Americans when it comes to their roles in the American economic structure.When participants are aware of the source of the payout, the dividing up of payouts is usually based on whose input led to what payout as opposed to being based on who gave the biggest input. This system seems to make sense as far as distributive fairness. You've heard the saying, "work smarter, not harder." If one person's effort led to a much bigger payout than another's, why should the first person have to share the wealth they received? This is the problem that Democrats want to alleviate. What will increase the wealthy's willingness to share with their less wealthy counterparts? One idea might be if the wealthy's payout is dependent on their sharing with the less wealthy. I have a example.

I took a class on Financial Management a couple of semesters ago. Part of the curriculum involved a group project in which we analyzed the stock market on a weekly basis, decided on stocks to "buy" or "sell," and reported our findings. After a semester of buying and selling stocks, we had to write a paper as a group, describing various aspects of the projects and our findings. We originally broke this paper up into even parts, so that everyone would provide the same input. However, as the process went on, small chunks of other members' work fell onto the shoulders of myself and one other member. In addition to helping the other members with their chunks, the two of us had to review and edit their work and get the paper formatted for submission. Essentially, the assignment became largely the product of the two of us with small inputs from the other members. Why would we be willing to gift the other members  by helping them out with their chunks? Of course, it was because the group as a whole received a single grade. Helping our group members led to us receiving a higher grade.

This could translate over to Haidt's idea in his article. Since the payout for the two of us who were doing most of the work hinged on the performance of the group as a whole, we were willing to gift our other group members with increased production. If we were each graded individually (assuming the professor could determine how hard we each worked), the two of us would have no incentive to help our group mates out.

This idea sounds feasible considering everyone benefits in the situation. The two of us still received a good grade and so did the rest of our group, but is that fair?  That's hard to say. On one hand, those whose work leads to positive payouts should be rewarded accordingly. However, was is necessarily the fault of our group mates that their work may not have led to such positive payouts? If they truly worked hard on their section of the project, but struggled in some way, should they be punished by receiving a lower grade than other group members who produced more? In theory, one would almost certainly say no. However, if we were to distribute payouts based on effort alone, how would effort be quantified?, i.e. what would stop members from only demonstrating perceived effort in order to receive a payout? This seems to be the critique of choice for Republicans opposed to the liberal agenda of the Democrats. If everyone works hard, then equal payouts is feasible, but if some slack because their production doesn't affect their pay, that could lead to real problems.

The only part of Haidt's piece that doesn't seem to connect with my experience is the final paragraph, regarding the rich lobbying in Washington to help themselves become richer. In my experience, there wasn't a way for any of us to lobby with the professor to give us an edge in grading. This might be an aspect in favor of equal pay for all or effort-based payouts. If everyone received the same payouts, no single person would have any more utility than another, which would effectively cancel out the ability to lobby and the edge gained from lobbying.

Thoughts on Managing Future Income Risk

The extent to which my current decisions affect my future is a subject I have struggled with over the past few years, often changing my views on the matter. Let me explain.

After graduating from high school, I enrolled at UIS, a school to which I could commute while also working a full-time job at my family's chain of dry cleaners. It seemed to be a fairly good situation. I received a partial scholarship from UIS and the tuition rates were pretty reasonable on top of that, so between my savings, my income, and partial financial help from my parents, I was on-track to be able to pay for college without taking out any student loans. Meanwhile, while working for the family cleaners, I learned a great deal about businesses and microeconomics outside of classes. If I had kept in this system, I believe I would have been set up pretty well for my immediate future after college as I would have a college degree, little-to-no debt, and experience in the field I was entering prior to graduating.

However, I was never quite sure whether I truly wanted to go into the family business, and if I were to, I would likely go into my parent's other business, Flynn Sales & Service in which we sell and repair commercial laundry equipment (I discussed this business in a previous post), as opposed to the dry cleaners. While I had been around the business throughout my life, I didn't have nearly the amount of experience with repairing equipment as I did at the dry cleaners, not to mention the lack of experience with the differing customer base, business operations, etc.. You may wonder why I didn't work at Flynn Sales instead of the cleaners. The reason is pretty plain: Flynn Sales would've demanded  me to work hours completely incompatible with my school schedule while the cleaners hours were flexible, and also the need for employees at the cleaners was much higher than at Flynn Sales. In addition to this oversight, I had become somewhat disenchanted with my situation as a whole. Long hours at school and work left little time for other things, such as a social life. Also, I knew that if I stayed in my situation, I may not get the chance to experience new things and would surely end up working for the family business, which as I said I was undecided on.

For these reasons, I decided to transfer to UIUC. If you travel to Springfield, you'd quickly see that Champaign  and Springfield are very much alike once you're outside the campus, but they were different enough for me and Illinois, being a state school was still within a reasonable price-range tuition-wise. That's not to say the transfer has not been expensive. This is where the new risk comes in. Transferring to a slightly more expensive school, coupled with living expenses and the loss of my full-time job, has thrown me completely off my plan to graduate without debt, which certainly increases the risk I am taking on my future. Also, the move to UIUC is surely not helping me in preparing to work for Flynn Sales. However, I hope that UIUC will help me in finding employment in a different field if I choose to enter one, as it is held in high regard and would insure that I receive a good education. I would consider this a very big risk considering I gave up a decent amount in both accounting costs and opportunity costs to attend here. However, taking the risk wasn't necessarily the goal in coming here. I wouldn't consider myself a huge gambler. I mainly transferred here in order to experience something different than I had been and determine whether or not I want to continue on with my family's businesses or take a chance on doing something different.

I still have Flynn Sales and the cleaners as a fall-back of course. In fact, I spent the summer back home in Jacksonville working for Flynn Sales in somewhat of an apprentice's role. Without classes to get in the way, I was able to dedicate much more time to studying how the business works and what my role may be there if I choose to work there full-time after I graduate. That experience should help me in deciding what I want to do after I graduate and also eliminate a little of the risk seeing as how I have a fall-back option if I choose not to pursue another occupation.


My choices have been slightly different than my siblings before me. My oldest sister, Becca, for example approached college a little differently than I did. Becca was incredibly efficient in her approach to college, which somewhat resembles my approach before I decided to transfer. She enrolled at Illinois College, a small private college in Jacksonville. This allowed her to live at home, cutting living expenses as well as work full-time. She was able to graduate with honors with an Accounting degree in a square four years with little in the way of student loans and quickly find a great job in Jacksonville which helped her pay off her loans in a somewhat painless manner. She seemed to have an understanding early on about what she wanted and was incredibly driven to achieve her goals. While I don't know exactly how intentional it was, she minimized her risk almost throughout the whole process. She controlled the amount she was spending in order to graduate without an obscene amount of debt, she chose a field of study that not only paid well but also was in high demand in our area, and finally, and also she made sure the things she did on the side; working, extracurriculars, etc. would all help her in the future in some way, shape, or form.

I have not managed to be quite as efficient in my approach as Becca was, and shame on me as an economics major for not being efficient. However, I also didn't quite know exactly what I wanted to do from the start of my college career like she did and therefore felt taking a risk may carry more utility for me. In taking the risk that I did, I may have helped myself find what I'd like to do as far as a career goes. She never had that problem and therefore never felt the need to take a risk when choosing a college and an approach to graduating and moving on after college.

Thoughts on 'Illinibucks' Concept

At a major university such as Illinois, there are lines everywhere for everything. Even when there are multiple venues to find what it is you're looking for, the sheer volume of students makes certain that several other people are looking for the exact same thing. This is what makes Illinibucks so interesting. If the university were able to allocate and redistribute these lines based on what students find most important, not only will many students be able to get what they really need  quickly, but they may tend to be more complacent when they are waiting in line for something less vital. Theoretically, the university could increase student satisfaction at little or no financial cost.

The simplest way to implement this system is by administering a given amount of Illinibucks to each student either as a lump sum upon enrollment, or periodically each semester, month, week, etc. If they choose to provide Illinibucks periodically, I believe it is only proper that rollover is allowed, otherwise students would be forced to spend all their Illinibucks in a given amount of time even if they don't wish to so as to not waste them. Rollover would also ease the process of accepting Illinibucks, as vendors would not need to check expiration dates etc. in order to accept the bucks as well as allow students to save for situations that occur infrequently, such as class enrollment.

These Illinibucks could be used at any type of line on campus: bookstores, coffee shops, dining halls, perhaps even local private businesses if they wish to implement the system. It would not be difficult for the university to set such a thing up with local businesses and the result would likely be beneficial for both parties: Illinibucks get more validation and become more valuable and versatile and the businesses may see more customers who wish to take advantage of the bucks.

The difficult part of the system would be in setting prices and the amount allocated to each student. A hierarchy would need to be established to determine which lines are more valuable to cut than others. For example, the price of priority course registration must be far higher than the price to cut in line at the coffee shop. Some differences may be solely based on preference, for those situations, the prices would be similar. The university will need to make sure that there is similar demand quantities for each venue, so that students don't all choose to spend their bucks in the same line, otherwise the system would be useless.
In addition to establishing this hierarchy of prices, the university must decide how many bucks to give each student. There must be enough for students to actually be able to make use of them, but not too much that every student can cut in every line, otherwise the system would be useless.

I personally would likely spend my Illinibucks on registration for course. I'm one of those students who are usually behind the ball when signing up for classes and it would be nice to be able to still get into classes despite my laziness! However, this leads to the problem that I suggested earlier, that certain perks of Illinibucks are much more valuable than others. I assume most students would choose to purchase priority registration, which essentially nullifies the perks. Those who spend their bucks on registration would skip ahead of those who don't but would still have to wait behind the countless students who have already used their bucks on registration. So the benefit for students may not be quite as great as they hope.

With that last bit being said, I still think the system could be overall beneficial to all parties for the second reason I mentioned in my first paragraph. Since students are given the opportunity to cut ahead in line, those who choose not to should tend to be more content than they would be if they had no say in the situation.