The Trust Economy

In describing economic growth, some economists ask how much our mental states have to do with how the economy functions. Trust, for example, is heralded as a necessity for transactions to occur. “[Neuroeconomist Paul] Zak calls The Wealth of Nations Smith’s ‘second-best book,’ pointing out that the Scottish thinker had published an earlier work titled The Theory of Moral Sentiments that described how moral behavior arises naturally from social interactions and provided one of the earliest published descriptions of empathic feeling. Clearly, Smith’s take on all this was more nuanced than is commonly supposed. As an economist, Zak doesn’t question the power and efficiency of markets, but he argues that economic models ought to reflect that people are motivated by altruism and reciprocity as much as naked self-interest.”