Empathy, Self-Interest, and Economics

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Customer Experience
Customer Experience
In today's interconnected world business success requires applying the Golden Rule: treat customers as you would like to be treated.

Companies that want to earn their customers' trust have to be willing to act in their customers' interest-sometimes even when the customers' interest conflicts with their own (at least in the short term). This is why i-Tunes will remind you that you already own a song you are about to purchase, for instance. And it's why USAA won't sell you more insurance than you really need, even if you mistakenly ask to do so.

But just in case you haven't already picked up on it, this calls into question the moral legitimacy of free-market economics itself, which is built on the principle that people acting in their own self-interest will, collectively, create a better standard of living for everybody. The "neo-classical" economic model assumes that people always act in their own self-interest, and that these independent, self-interested actions collectively create substantial economic value. As Adam Smith famously suggested in The Wealth of Nations, "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."

It turns out that neo-classical economics is flawed, however, in the way it defines human motives, because pure, absolute self-interest in any person is not the norm, but an aberration. Very few people are ever completely self-oriented, never doing anything that might undermine their own interest. People like this are called psychopaths, and what makes them aberrations is that they're completely immune to the feelings of others. The rest of us have empathy. Concern for others' feelings is hard-wired in our brains. You don't have to "learn" empathy. Newborn babies, a few days old, will cry when they hear other newborns cry. Toddlers unable to speak will try to help adults in accomplishing tasks. So while Adam Smith's description of the baker's motive may be generally correct, if one of the baker's close friends were starving, or if the baker was contributing to a community dinner, then he is not likely to look solely to his own financial interest in selling his goods.

Nearly all of us are born with such a strong sense of empathy, in fact, that we can barely tolerate the idea of killing or inflicting pain on others, even when dealing with outright enemies. As reported in How We Decide by Jonah Lehrer, during World War II, U.S. Army Brigadier General S.L.A. Marshall surveyed several thousand U.S. troops immediately after they had been involved in combat. What he found was astounding: Fewer than 20 percent of all American combat troops actually shot at the enemy, even when they were being attacked. In Marshall's words, "It is fear of killing, rather than fear of being killed, that is the most common cause of battle failure in the individual."

It's almost certainly an evolutionary advantage for our species that individual human beings have empathy, making it easier and more efficient for us to cooperate in finding food and preserving our joint lineage. Empathy plays a major role in the fact that we are social animals to begin with, and it is the fact that we are social that accounts, more than anything else (more, even, than our individual intelligence), for our civilization and technology.

The same technology that is driving up our rate of interaction is almost certainly raising the general level of empathy we have for others, as well. Concern for others increases as people become more interdependent and a society gets to be more advanced. In primitive societies, genuine empathy might be limited to blood relatives or maybe tribe members. With the Industrial Revolution and the invention of the modern nation-state, patriotism became a widely respected virtue, while tribalism was disdained as backward. And as we continue to become ever more electronically interconnected, with geographic boundaries declining in importance, we can already see that patriotism itself is losing some of its former luster. There can be little doubt about the direction of change. Some sociologists point out that modern advocates for animal rights are an example of empathy even being extended beyond our species.

The point is that having empathy for others is a critical part of human nature, and if you want your business to succeed, then you have to show empathy for customers, also. That means treating a customer the way you'd want to be treated yourself, if you were that customer.

EXPERT OPINION
EXPERT OPINION