The Effect of Money on Trust
Money reduces trust in small groups, but increases it in larger groups. Basically, the introduction of money allows society to scale.
The team devised an experiment where subjects in small and large groups had the option to give gifts in exchange for tokens.
They found that there was a social cost to introducing this incentive. When all tokens were “spent”, a potential gift-giver was less likely to help than they had been in a setting where tokens had not yet been introduced.
The same effect was found in smaller groups, who were less generous when there was the option of receiving a token.
“Subjects basically latched on to monetary exchange, and stopped helping unless they received immediate compensation in a form of an intrinsically worthless object [a token].
“Using money does help large societies to achieve larger levels of co-operation than smaller societies, but it does so at a cost of displacing normal of voluntary help that is the bread and butter of smaller societies, in which everyone knows each other,” said Prof Camera.
But he said that this negative result was not found in larger anonymous groups of 32, instead co-operation increased with the use of tokens.
“This is exciting because we introduced something that adds nothing to the economy, but it helped participants converge on a behaviour that is more trustworthy.”
He added that the study reflected monetary exchange in daily life: “Global interaction expands the set of trade opportunities, but it dilutes the level of information about others’ past behaviour. In this sense, one can view tokens in our experiment as a parable for global monetary exchange.”