The evidence suggests that corporations might encourage people to think and act more anti-socially. What does owning stock do to our brains?



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It's conventional wisdom in business circles today that corporate directors should "maximize shareholder value." Corporations supposedly exist to serve shareholders' interests, and not (or at least, not directly) those of executives, employees, customers, or the community. However, this shareholder-value dogma begs a fundamental question. What, exactly, do shareholders value?

Most shareholder-value advocates assume that shareholders care only about their own wealth. But it is increasingly accepted that the homo economicus model of purely selfish behavior doesn't always apply. This possibility provides a challenge to the dominant business paradigm of "maximizing shareholder value:" the concept of the prosocial shareholder.

THE SOCIAL ANIMAL



The problem with the homo economicus theory is that the purely rational, purely selfish person is a functional psychopath. If Economic Man cares nothing for ethics or others' welfare, he will lie, cheat, steal, even murder, whenever it serves his material interests. Not surprisingly, although homo economicus is alive and well in many economics departments, many experts today prefer to embrace behavioral economics, which relies on data from experiments to see how real people really behave. Behavioral economics confirms something both important and reassuring. Most of us are not conscienceless psychopaths.

The vast majority of human beings are to least to some degree "prosocial." In the right circumstances, we can be counted on to make modest personal sacrifices to follow ethical rules and avoid harming others. Of course, it's easy to doubt pervasive pro-sociality when reading the daily news. We should remember, however, that cheating, corruption, and murder make the news because they are relatively rare. (No newspaper would run the headline: "Employee Doesn't Steal, Even When No One's Looking.") As the phrase "common decency," suggests, prosocial behavior is so omnipresent we tend not to notice it.