Why Social Norms and Market Norms Don’t Mix

Last updated on: January 14, 2011 at 5:30 am by Tim

Why Social Norms and Market Norms Don’t Mix 2011-01-14T05:30:51-05:00 Tim

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Has a friend ever asked you to help them move to a new home? Did you demand payment, or did you help out of the kindness of your heart? If you didn’t think about charging him anything, you displayed a gracious act that could be classified as a social norm. We all have a helpful nature among us (at least I believe so) and people are generally willing to assist others when they can.

Now introduce money…

Your friend says “Can you help me move, I’ll pay you $1.25 an hour!” Insulting huh? But why? You were going to work for free weren’t you? A few extra dollars seems like a nice way to say thank you; but it’s not enough. When you introduce money into the picture, a whole new element comes into play – the market norm. Now that kind, altruistic, warm feeling of helping someone is overshadowed by the dollar and the amount of money offered can make some people feel insulted.

A Real Life Example

A friend of mine travels for work and often asked someone to watch his dog. She loved to help and watched the dog for a few months at no charge. My friend really appreciated the favor (social norm) and thought that he should thank her with a gift of $10 (market norm).

Everything changed that day.

The next time he asked her to watch the dog, her response was “Sure, but did you know that the normal rate for boarding animals is $15 every day?”

It’s a textbook example of how introducing money can actually take away the warm fuzzy feeling that comes from doing good for others and replace it with the need to be paid a fair wage.

So my Question…

When should you offer to pay someone for his or her help or service? Does it take a certain number of times? Do you risk the chance of them feeling ‘used’ if you don’t offer payment?

Feel free to make a case for any example you can think of. (Watching pets, getting your neighbor’s mail, jump starting a car, hosting parties)

image credit: hjl

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