Notes from day one

7/29/2019 Notes from day one

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9/4 9/13/2012 9:09:00 AM

Class Notes

Theme 1: Social Bases of Economic Calculation

Why do people make sub-optimal decisions?o Spend more than necessary on interest paymentso Fail to save adequately for retiremento Fail to take advantage of available opportunities

How does an individuals social environment condition the kids of priorities they establishfor different kinds of spending, savings, or investment opportunities?

Buy books: 1. Nudge by Richard Thaler 2. The social meaning of money by Viviana Zelizer

Theme 2: Inequality and the social organization of retail space

How ware race/ethnicity and gender stereotypes reinforced (or challenged) during routineshopping trips?

How does the social organization of retail space reinforce existing inequalities?o By social organization, we mean how people arrange themselves in a shopping

space: where they usually go, with whom they interact

o We also look at how management locates (places) its workers in the space: who is inthe stockroom; who is at the counter; who handles the electronics; and who deals

with the flowers

One book:

A sociologist goes undercover at two big toy storeso One store is located in a richer neighborhood than the othero The ethnic/racial makeup of workers and consumers at the stores also differso But selling the same kinds of products

One assessment:

Essay on an ethnographic experienceo How is the store arranged?o What kinds of conversations do they have with customers?o To what extend are your observations similar or different to the book you read in

this theme?

Midterm:

25 percent of your final grade A section to define terms


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A section of short answers (e.g. read the following scenario and explain how author Xsapproach to explaining the phenomenon would differ from author Zs approach)

-Office hours for professor: Tuesday 2:45-4:45

Theme 3: Collective Identities and Consumption

How people use their purchases to establish their membership in a groupo Gender, ethnicity, race identifierso Activism and social citizenship through consumption

Civil rights by consumption (money as the great leveler) Advancing the groups standing in society through consumption (indicators

of making it to the top)

One assessment:

Papero 15% of gradeo Details to come

Theme 4: Social Movements and Markets

How do social movements change the consumption landscape? Is it possible to shop well to save the world?\

One assessment:

Papero 15% of gradeo Details to come

Theme 5: Bringing it all together

Thinking about commodities as having social liveso They are born, mature, die, resurrectedo They get sick, receive a variety of treatments, respond to themo They interact with other products and people in competition, collaboration, or as a

form of expression

Thinking about how the culture of a society shapes what can be made into a commodity andhow

Concluding with the cultural roots of consumer demand (along with social networkexplanations)


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No assessments with this theme

Final exam: only based on the second half of the semester after the midterm

25% of grade non-cumulative

Office Hours:

Professor Wherryo Tuesdays 2:15-4:45 in 708 Knox

TAso Sarah Sachs

Wednesday 9:45-11:45 in 709 Knoxo Tolgas Kobas

Thursday 2:30-4:30 in 608 Knox


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9/6 9/13/2012 9:09:00 AM

Key Questions:

1. How do we make financial decisions in everyday life?

2. What might be done (with the least amount of market distortion) to improve peoples financial

decision-making?

Part 1: Challenges for Optimal Consumption

1. The status quo reproduces itself (consumer power)

A history of obtaining payday loans means that it is highly likely that a person will continueto obtain payday loans

2. Mental and physical well-being are associated with financial health (government intervention)

But the language of choice and free markets means that intervening on behalf ofsomeone who wants greater mental and physical well-being is paternalistic (and changes

market incentives)

3. Fair arrangements arent necessarily desirable (government regulations)

Here, fair is defined as randomly distributing options so that the kinds of financial deals andinstitution available to you is by luck of the draw (Some will better, others worse, off)

4. Let the do-gooders (credit unions and banks with reasonable interest rates for poor people) pay for

better advertisement or for space more convenient to the needy (supplier power)

5. So long as people are willing to pay higher interest rates, the market is working fine (free market

argument)

People are rational and know what they are doing; markets match people with the thingsthey want

Whats wrong with out choices?

Imagine riding an elephant: you can nudge it, cajole it into moving into a specific direction but you can

never fully control it. Our conscious thought is like the rider atop a much larger, much more powerful

entity that we pretend to control

Situation-specific understandings about what needs to be optimized

Economic profit, status, time life expectancy, etc.Situation-specific decision-rules as

1. Intuitive (taking the leisurely ride atop the elephant 2. Deliberate (telling the elephant where to go) 3. Messy

Ways of Thinking


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-Automatic or Deliberative

What is deliberative cognition?

-The mental act or process of acquiring knowledge or of making a decision that is based on critical,

reflexive, explicit knowledge.

-Thinking slow versus thinking fast

-Explicit, verbalized, slow, premeditated, rule-following

What is automatic cognition?

-The mental act or process of acquiring knowledge or of making a decision that is based on routine,

taken-for-granted understanding of characteristics, relationships, and entailments under conditions of

incomplete information.

-Gut reaction, thinking fast versus thinking slow

-Implicit, un-verbalize, fast, knee-jerk, intuitive

How does automatic cognition work?

-Heuristics a.k.a. rules of thumb

1. Anchoring 2. Availability 3. Representativeness

1. Anchoring

-What is the starting point of the assessment?

The interst rate that you think is OK depends on the interest rate you are used to paying(indisvidiual level explanation)

-The sociiolgocal extension o fthis: the social environment a person operates in shapes the rane of

values she thinks of as appropriate or as realistic for some like herself

-But anchoring leads to unrealistic assessments

People from poor circumstances underestimate, people from better endowed situationsoverestimate, inequality widens

Anchors in Time

-Consider order 1:

[First] How happy are you? [Second] How often are you dating? Correlation: 0.11 (not related)


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-Consider order 2:

[First] How often are you dating [Second] How happy are you? Correlation: 0.62 (related)

-Previous experience with financial services, expectations for future experiences with financial services

Anchoring How Much

-Consider these three options

-1. What percentage of your salary would you like to distribute into your savings account?

VERSUS

2a. Please select one of the following percentages: 5, 7, 10, 15, other

2b. Please select one of the following percentages: 10, 15, 20, other

Availability

-A recent event makes some information seem more than it would have been otherwise it would have

been otherwise

-Recent earthquake, sharp increase in enrollments of earthquake insurance

-Availability bias: the future seems far off, feels unavailable, so preparations for the future skewed in

favor of the present

Representativeness: Objective vs. Subjective Probability

-Trying to figure out how similar X is to something we already know (call it Y)

-In situations of risk, we miscalculate because ask:

1. How similar are the events central characteristics to the characteristics believed tobelong to a parent population of events; and

2. How does the event reflect the set of salient features of the process that generated itGains and Losses

-We hate to lose something

-We hate losing something twice as much as we like gaining something

A rule of thumb

-Integrate losses

-Separate gains

-(Repeat this over and over, know it by heart


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When can deliberative cognition override automatic cognition?

-Attention, motivation, or a nudge?

Attention

-As people become more self-aware (seeing themselves in mirror), they approach task deliberatively

How, attention can work in the opposite direction (not discussed by the authors we haveread)

If core beliefs (or collective beliefs) indicate that a particular type of person is not as good atdoing a particular set of tasks, deliberate cognition leads to more mistakes or to surrender

Stereotype threat

-How attempts to promote deliberative cognition produce outcomes opposite of those intended

-Consider the following experiment by Claude Steele and his collaborators

The researchers randomly assign undergrads with similar test score [indicator of ability] totwo different groups

o Group 1: Takes a new test but are asked to indicate race and gender just beforetaking the test

o Group 2: Takes the same new test but are not asked to indicate race and gender justbefore taking the test

o Outcome: The test scores of women and minorities in group 1 are lower than thetest scores of women and minorities in group 2 [attention drawn to negative

stereotypes]

Motivation

-If a person becomes highly frustrated with the status quo or if the moral silence of an issue increases

sharply in its intensity, the person may be spurred to act against the status quo or on behalf of a morally

important issue

-In other words, if the rider on the elephant becomes motivated enough, she will figure out how to tame

the elephant

What are the social sources of motivation?Nudge

-Strategies to get people to make more optimal decisions

Taking advantage of the status quo by subtly changing it


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o Status quo is that a percentage of salary will go into a retirement account Anchoring how much is enough to save

o Present options so that the person is likely to choose an adequate savings rate


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9/11 9/13/2012 9:09:00 AM

Price Anchors

-Three price anchors

1. the price marked on the ticket 2. the market price 3. the price paid by the seller, i.e. the cost

-Assumption that price charged to a friend is an estimate of a fair price

-Relationship between productivity and incentive breaks

Overview

-Sociologists and psychologists can learn from one another

Psychologists focus on individuals (cognition) Sociologists focus on groups and on supra-individual properties (such as culture)

-To Understand phenomena such as economic calculation we have to examine

Bottom-up (individual cognition, rules of thumb) Top-down (group properties, institutions, collectively-held meaning systems)

Two Ways to think about culture

-Supra-individual cultural phenomena

e.g. mateieral culture, media messages, conversations, etc-Social construction of economic calculation

People struggle within institutions (including government, schools, etc) to generateevaluation instruments

The instruments do not naturally spring up but are worked on, fought over Our ways of evaluating deals could have been something other than what they are now

How to we calculate?

-Calculators, abacus, spreadsheets, databases, point-system weight watchers, tithes

How we used to talk about culture

-A unified system

-It lay beneath everything

-Became invisible in:

Media images Attitude questionnaires Everyday practices, activities

-Widely shared with a group (a collectivity)


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VERSUS How we think about culture NOW

-Not a unified entity within a group

-Can be used strategically by individuals

-Not latent but manifest

-It is visible in:

frames through which people interpret the world widely shared narratives embodied knowledge deployed with ease

-Culture is inconsistent

Multi-dimensions of culture (pt. 1)

-Frames

the lens through which we interpret and categorize our surrondings (making somebehaviors more likely)

Living within ones means vs the selfishness, caring for family that might require spendingmore than one would otherwise vs social status vs social citizenship

-Narratives

Stories

Multi-dimensions of culture (pt. 2)

-Symbolic boundaries

Marking differences between self and others (through consumption)-Cultural capital

Tacit knowledge E.g. learning about money, ease of banking and of making investments

-Values

Explicit goals and aspirations expressed by a majority within a group-Money is the great leveler?

It can only do so much.The Problem with Values

-Values not consistently held across members of a group but sometimes what people in the group think

everyone else in their group believes is incorrect


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Pluralistic ignorance-Sometimes the shared beliefs of the group that are consequential for behave exist in opposition tot the

aggregated beliefs of the members within a group

Individual Schemata

-knowledge structures that represent object or events and provide default assumptions about their

characteristics, relationships, and entailments under conditions of incomplete information.

Schemata embedded information:

1. Is recalled more quickly 2. Is recalled more accurately 3. But may be recalled falsely

Schemata embedded information is recalled more quickly, is recalled more accurately most of the time

but may be recalled falsely (false recall)

False Recall

-What we remember depends on what we think we usually see

-Our assessments of credit worthiness or of soft skills may suffer from false recall

The Synthesis: What culture is

-Top-down evaluation first

Two ways to think about identity

-Identities of collectives

Share representation of a collectivity, flag or emblem, a census category-Collective elements of individual identities

The elements of existing collective representations Styles of dress, consumption patterns that do not encompass the total of any one

collectively

Social Classification

-The placing of elements into a group to form a comfortable environment

Logics of Action

-An organizing principle for how people-like-us do things-like-that

-How should lending, saving, and investments be handled?


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Differs by group and by their corresponding logics of action-Look at corporations, same kinds of technology but different logics of action at Apple versus IBM

What do we want?

-Utility

Individuals make purchases because doing so is useful (utility) If we observe someone do something, we should infer that the person is acting in her own

interests

Two Kinds of Utility

-Decision utility

Anticipating future shares and making an assessment-Experiences Utility

Characteristics of Decision Utility

-1. Events/Situations matter more than states wealth (as carriers or as triggers of utility)

Gains or losses assessed relative to a reference point (often the status quo is the reference)-2. Losses are felt more intensely than loss aversion

Experience vs. Memory

-Combing top-down with bottom-up understandings of what culture and cognition are

What are some examples of bottom-up approaches to cultures and economic calculation What are the advantages and disadvantages of bottom-up approaches

-What are the implications for financial decision-making?


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9/13Mental Accounting & Relational Work9/13/2012 9:09:00 A

Overview

-We begin with a basic social problem: many households do not have bank accounts, leading to poorer

financial health than they have had otherwise

What explains it? What can be done? Subject of reading for todays class

List of Terms

-Construal

-Schemata (DiMaggio)

-Pluralistic Ignorance (DiMaggio & Bertrand)

-Relational Work (Zelizer)

-Channel Factors

-Stereotype Threat

-Key Question: To what extent do financial decisions connect with the relationships in someones life?

People process information in different waysRandom Facts that are helpful:

-1 in 12 households in the US do not have bank accounts

-Not having a bank account reducing likelihood of saving

-Not having a bank account results in higher transaction costs for paying bills and for cashing checks

-Given the numbers, we should ideally be able to just give people information and then increase the

number of people who have bank accounts

But it is not that easy Why?

Why so many households without bank accounts?

-Bertrand et al 2004 want to bring psychology (cognition) and culture together to explain the economics

of the poverty

Poor people have similar goals as non-poor Poor people differ from the non-p[oor in the means at their disposal to reach their goals Poor people al so may have different lesnes for interpreting and evaluating economic

strategies (how culture matters)


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Psychology of how people interpret the world

-Construal

=mental representations of the *the states/conditions of the world+ that people use tointerpret what is going on (Bertrand)

The mental represents do not have a one-to-one correspondence with actual aspects of asituation or an event (or a state)

But people act as if the mental representation is materially real CONSTRUAL WILL NOT SHOW UP ON TEST

-Schemata

=the abstract knowledge structures that guide the interpretation of information, shapingthe construal

CONSTRUAL WILL SHOW UP ON TEST-Pluralistic Ignorance

The idea that people act with reference to shared representations of collective opinion thatare empirically inaccurate (DiMaggio, pg. 272)

o If people keep hearing that everyone is doing X, they may act with less inhibition intry to do X; X is no longer considered to be a fringe, infrequent behavior (through

empirically it is infrequent)

The sociological counterpart to self-construal=Relational Work

-The process whereby individuals differentiate what kinds of relationships they are in by virtue of the

kinds of money and transactions they engage in

Budget categories depend on social relationships and share understandings about whatthose kinds of relationships mean

Earmarked Money

-Money and other media *of exchange+ are defined as flexible adaptations to multiple social ties.

(Zelizer)

-Examples of money and other exchange media

Legal tender Tokens, coupons, credit cards, etc

-Money is nicknamed or earmarked by virtue of who earned it, how they earned it, to what purpose it

will be put, and who benefits from its use

-Earmarked money is a great example of mental accounting (separating money into categories)

-Pushes against the theory that money is fungible

-People who contribute money into a Christmas savings club are not just protecting themselves (self-

control) from using the money for other purposes


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-these accounts also guarded funds away from specific othersthe *working-class] women [of the

early 20th century] likely relied on the clubs as a valuable institutional device for safeguarding holiday

monies from other household members, especially their husbandsFor housewives without access to

earned income, moreover, the segregated Christmas money spared them from what was often

considered the humiliating need to extract gift money from their wage-earning husband. (Zelizer, pg.

160)

Where it came fromit shouldnt matter, but it does

-Money from the lottery

-Inheritance from an adored grandparent

-Salary

-Tax Refund

-It should not matter where it came from, but in reality it actually does have a large effect/influence

Symbolic Boundaries

-Top managers: first-class travel, child care at exclusive day care centers (Zelizer, page 157)

-The forms of payments differentiates these top managers from the middle-managers

-Other symbolic boundaries: types o purchases made and the direction of the purchases might indicate

that a person is a close or a distant relation

What is to be done?

-Channeling Factors

The circumstances that make an outcome more likely (or not) A general term meant to encompass a broad range of nudges meant to facilitate

Channel Factors

Message Only

If people only told about the dangers of payday loans Awareness and attitudes change But behaviors probably wont

Message + Channel

If people told about dangers of payday loans and maps indicating alternative servicesprovided at same time

Behaviors will probably changeChanneling


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-Maps of local banks and a specific person to speak to there

-Commitment by setting up appointments

-If helping people fill out earned-income tax credit (EITC) applications can also require the opening of a

bank account to put in

-This is paternalism

A nudgePhysical Proximity

-Counseling center nearby

More people took advantage of counseling-Counseling center not nearby

Few people took advantage of counselingStereotype Threat

-a prevalent stereotype about a groupcreates a burden on group members and acts as a threat. The

threat arises whenever stigmatized individuals behaviors run the risk of substantiating the stereotype,

and this threat can distort or disrupt the performance of those individuals (Bertrand, pg. 14)

-Experiment: Asian women, if race primed (strong at math) performance better on standardized test

than if sex primed (weak at math)

-Experiment: Low SES, equal test performance with high SES students when SES not primed

-Since identity/culture really matters, we need to do the right priming

If Identity Associated with Independence, so too Preferences

-Identity as taxpayer rather than identity as a poor person = Earned Income Tax Credit more likely to be

sought

-Identity as a lender [an acting subject] rather than as a charity case [an incapable dependent] = more

likely to seek much needed help

Defaults

-Will return to defaults in next lecture

SALO not PayDay

-If we know that poor people tend to get loans that they pay back on payday

Why not let the poor keep their habits but practice those habit in institutions offering betterinterest rates


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Salary Advance Loans (SALOs) in North Carolina as example 5% of SALO gets deposited into a savings account

BIG QUESTION: How do we make welfare enhancements for people that need them?


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9/18Social Meanings of Money 9/13/2012 9:09:00 AM

Overview

-Zelizer argues that a dollar is not simply a dollar and that predictions that money would overwhelm

moral and aesthetic values have not been supported by the historical record

-We will review the arguments

For money as absolutely overwhelming and corrupting; and contrast it with Money as instrument of moral regulation and relationship management

-We begin with this time period is strategically chosen: 1870s-1930s

Key Concepts/terms

-Strategic research materials

-Money as corrupting vs. money as moral

-Fungibility

-The Absolute Model of Market Money (5 assumptions)

-The Relational Model of Earmarked monies ( 5assumption)

KNOW THE 5 ASSUMPTIONS FOR EACH MODEL FOR MIDTERMCase Selection: Why the 1870s to the 1930s

Strategic Research Materials

-Opportunistic research opportunities to observe the processes that are usually hard to discern but that

manifest themselves with remarkable clarity in a set of events, debates, or other data

-Theories of money being manifested by

Strategic time-period where there is a transition from multiple monies to a single currency Observable changes in household budgeting due to sharp increases in average wages

Change from above:

-Institutional unification after the Civil War

-As legal tender adopted a more uniformed form, observations made about

National levelBefore the Civil War

-States issued their own currencies

5,000 or more varieties Money difference from one bank to the next. One state to the next

-Money attached to local, geographically specific sites


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Struggles over money

-There were interest groups promoting different forms of money

Greenbacks: first paper currency without gold backing had its contingenet of supporters Yellowbacks: group insiting that gold certificated be a primary form of currency Free silver: a group insisting that silver as well as gold could act as main currency

Matching money with tasks

-Greenbacks: not for import duties or interest on bonds and notes, but ok for other transactions

-Gold: foreign transactions but also for custom duties domestically

-Greenbacks not widely used in newly settled West

History of God and Money

-1864: In God We Trust on 2-cent coin

-1883: In God We Trust disappeared from the coins

-1908: Debate to place In God We Trust back on all gold and silver coins

-1938: In God we Trust re-appears on all coins (end of the Great Depression, begun on Oct. 29, 1929)

-1957: In God We Trust first used on papers money

The saying pops up whenever the nation needs unity, etcConditions Below: beyond Biological Need to Survive

1) Money as Corrupting; 2) Money as Moral

-Two approaches to Money

1) Money as Corrupting

-Why Money dangerous

Pervades all areas of social life Annihilates uniqueness, authenticity, special qualities What Marx called the radical leveler Everything has its price; nothing is priceless

-corrupting?

Auctions for scarce organ transplants: highest bidder healed Auctions for children (instead of adoption): search and select the child you want; bid for the

good ones; removal of bureaucracy; faster allocation system

dating auctions: mail order bride (consenting adults) Renting intimacy: legalize commercial sex work; order it like you would lawn service


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Moral Regulation Through Money

-Whether you pay for something has a a lot to do with your sense of honor

-We use the money to demonstrate honorable intentions

-An instrument to affirm your own moral code and regulations

Expressive, not corrupting

-Alfred Marshall (1885):

the fact that when we want to induce a man to do anything for us, we generally offer himmoney does not mean that generosity or sense of duty has disappeared, but simply that

money serves as the most efficient measure of the ordinary motives that govern men in the

acts of everyday life (quoted in Zelizer 1994, pg. 9)

Model of Absolute Money

-1)Money has no social/symbolic function

Money is merely a tool for market exchange It is not going to judge you Restricted to economic domain

-2) Absolutely interchangeable

what Simmel called its qualitatively communistic character (Zelizer 1994, pg. 11)o fungibility assumptions

Only one kind of money Fungible

o -Substitutableo -Doesnt matter where it comes fromo -A weight or a measure makes its units equivalent and indistinguishableo -A gallon of gasoline can come from anywhere

-3) Profance vs. Sacred

Money operates in a realm of profane, instrumental action (neutral)-4) the reduction of quality to quantity

Leads to commodiification of society An authentic experience as a qualitative evaluation The higher price for the authentic expereience is reducing authenticity to a quantity

(amount)

A bowl made in a factory for mass production is cheaper than a bowl made by hand


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-5) unidirectional transformation of society

One-way transformation: money is not thought to be transformed by non-economicsconsiderations, but money is thought to transform non-economic entities into market

quantities

Relational Model of Earmarked Monies

-1) Money has social and cultural functions

Not just an economic instrument of calculation because it operates in the cultural, social,and political spheres of life for a variety of purposes

-2) Monies, not money

There is no single, uniform generalized money, but multiple monies: people earmarkdifferent currencies for many or perhaps all types of social interactions (Zelizer 1994, pg.

18)

-3) Deeply subjective, sometimes sacred character

Money is not a profane, instrumental instrument Money is also a social medium

-4) Value and values as false dichotomy

Values are not reduced to value Qualitative distinctions are eroded at the same time that new qualitative distinctions are

created

Singularity and un-exchangeability also possible-5) bi-directional transformations

Not just a uni-directional effect of money and modernity acting upon social and culturalstructures

cultural and social structures and set inevitable limits to the monetization process byintroducing profound controls and restriction on the flow an liquidity of monies. (Zelizer

1994, pg. 19)

Matching Monies to Social Interactions

-Creating or dissolving social ties

-Establishing or maintaining inequality

-Establishing or managing individual or group identity

-Managing inadmissible conflicts of interest

-Making rites or passage

-Intimacy


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Matching relations, transactions, media

-Relations=category of the relationship

-Media= objects exchanged along with goods, services, and monetary tender to be traded

-Transactions= the way that the media will be exchanged (money in ones hand, money in an envelope,

no cash payment, tit-for-tat, etc)

-Third parties enforce categorical boundaries

Dating subcategories:

-Friends with benefits; fuck buddy

-joined at the hip

-Less intense but ocmmitted orelationship (with or without sexual benefits)

-Hanging out = spending time with one or more partners

-Dating = the old-fashioned dinner/movie paid for by the guy

-Third party enforcement: overarching or situation specific?

-If you can get the same service for a cheaper price, why would you reject the discount?

If they offer it for free, they are violating the boundaries of the relationship typeDomestic Monies

-Extra-economic factors shape

1) uses: certain monies for specified uses 2) users: designating different people for different uses 3) allocation system: varies by type of money 4) control: who controls it (role type/ identity) 5) sources: use of money depends on where it comes from

apply to domestic money (also gifts, the dole, etc)

-1) uses: what are the different categories of use (budget categories)

-2) users: who are the people using the monies

-3) allocation system: how is it distributed

-4) control

-5) sources

Why monies matter

-Families are not single units where money is equitably distributed


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Therefore, possible to have uneven, otherwise unpredictable, outcomes within families aseconomics conditions change

Some of these outcomes (which ones?) might not make sense in the market money model

-Home and family causes mental accounting to go awry

-Dad buys a pair of golf clubs and mom gets pissed, but what if dad buys a new pair of shoes for the

same price, but mom has no opinion on it

Doesnt make total sense unless you think about relational modelConclusion:

-On Thursday, we will go into more detail on domestic monies

-Will also consider gift money and poor peoples money

-Finally I will g into detail on the embeddedness versus relational work perspective tha t the Zelizer

(2012) paper discusses


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9/20 9/13/2012 9:09:00 AM

Key Terms and Concepts

4 Parameters of noxious markets (not in readings) Embeddedness 4 goals of relational work processes 4 elements of relational packages Gifts for ceremonies, rites of passage, inequality maintenance (or resistance) Morality and poor peoples financial agency

Morals implicated in markets

-Should we sell citizenship?

http://www.youtube.com/watch?v=TBmCb7nancc Michael Sandel, Professor of Government, Harvard The price mechanism as neutral

-Also should money be given as an incentive for civic behavior

Deborah Satz http://www.youtube.com/watch?v=1q7_BeEEDVE 5 minutes, 12 second mark, end at 30:45 minute mark Same number of bads, but more efficient distribution of bads Main idea: Always be sure about what you are agreeingto. Letting people engage in voluntary exchanges respects their liberty

o Its wrong to forbid capitalist acts between consenting adults.Robert NozickFour Parameters of Noxious Markets (Satz)

-1. Weak Agency

-2. Inequality and Vulnerability

-3. Extreme harms to individual

-4. Extreme harms to society

Tyler Cowen: Individuals and Freedom

-Individuals and Freedom

-What type of person does Cowen have in mind as moral

How people demonstrate their morality-To what extent are the people to whom the individual is tied rendered invisible

-http://www.youtube.com/watch?v=8aAZg1-9aS4&feature=reiumfu
http://www.youtube.com/watch?v=TBmCb7nancchttp://www.youtube.com/watch?v=TBmCb7nancchttp://www.youtube.com/watch?v=8aAZg1-9aS4&feature=reiumfuhttp://www.youtube.com/watch?v=8aAZg1-9aS4&feature=reiumfuhttp://www.youtube.com/watch?v=8aAZg1-9aS4&feature=reiumfuhttp://www.youtube.com/watch?v=8aAZg1-9aS4&feature=reiumfuhttp://www.youtube.com/watch?v=TBmCb7nancc


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-Person has agency

What does that mean?o If you can walk away from a good deal, you have agency

Embeddedness of the Market

-Mark Granovetter

-the economics action of individuals as well as larger economic patterns, like the determination of

prices and economic insititutions, are importantly affected by networks of social relationships. (Zelizer

2012, p. 147)

-http://www.youtube.com/watch?v=KXGbCjzmm2M

-Not over-socialized

-Not under-socialized

-Just right

Key Insights from Embeddedness

-Who you know maters for getting a job

Knowing timing of when to apply for a position Knowing areas that will be open Confidence of employer that youll be a good fit

-Your social ties matter for how you search for commodities

The cost of searching for information reduced Fine grained information transmitted

-Network configurations matter for promotion

More of an asset when you can bridge two unconnected groups (gatekeeper) Becoming more central to flows of advice and information

The Why? Of Relational Work

-Four Kinds of Justifications

Create interpersonal relations Maintain interpersonal relations Transform interpersonal relations Terminate interpersonal relations

-These justification-acts are goals of relational work

-The meaningful world of transactions

Relational Packages
http://www.youtube.com/watch?v=KXGbCjzmm2Mhttp://www.youtube.com/watch?v=KXGbCjzmm2Mhttp://www.youtube.com/watch?v=KXGbCjzmm2Mhttp://www.youtube.com/watch?v=KXGbCjzmm2M


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-Different combinations of the following four components

1. Distinctive social ties (categories of social relationship) 2. Transactions: interactions, rituals, practices (for compensation, loans, gifts, bribe, etc..) 3. Media for those transactions 4. Negotiated meanings: shared cultural understandings and moral evaluations (Zelizer

2012, pg. 151)

-These are ritual performances in which we see money, but they are called different things

Domestic Monies

Allocation Systems

-Womens money directed toward collective consumption and trivial consumption

-Changes in gender roles and family structure influence the menaing and methods of allocation of

married womens money. The traditional dole or asking method becamenot only inefficient but also

inappropriate (Zelizer 1994, 1997, pg. 65)

the (negotiated) meaning of the transactionGender and Social Class

-The meanings of gender (not biological basis)

-The practices that vary by material environment of social class

-Domestic monies are distinct (Zelizer, 1994, pg. 77)

Extra-economic factors shape

1. uses: certain monies for specified uses

2. users: designating different people for different uses/roles

3. allocation system: varies by type of money

4. control: who controls it

5. sources: use of money

Gifting Moments

-Before the 1900s, birthday celebrations were rare

-After 1905, gift certificates created: specific sum, specified store, sometimes specific items

-In 908, Mothers Day created (a new gift giving opportunity)

High price, high intimacy


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-etiquette books recommended that expensive presents be sent only by most intimate friends. Thus,

not only were gifts marked as transfers for intimates but gifts also served to distinguish degrees of

intimacy. (Zelizer, 1994, 1997, pg. 79)

Making Money Value Imperceptible

-For money to become an acceptable gift, it had to overcome its uncompromising objectivity that

distances and estranges the gift from the giver (Zelizer, 1994, 1997, pg. 82)

-Or its uses had to be highlighted to indicate closeness and care

Gifting Rituals to transform cash

-Rites of passage monies

veil money for bride after cutting her hair burial money for burial society to have individual stay with the body before the burial

-Art there concerns that the rites of passage become tainted in noxious markets?

Inequality/Vulnerability and Gifting

-Ceremony of gift-giving in offices (early 19th century)

Recipients wrote letters to their bosses to say thank you and to indicate the use of the giftWe dont tip status equals

-A man tipped his barber for years (inequality affirmed)

-Barber became proprietor of his own shop, so the man stopped tipping his barber (equality affirmed)

-Barber then lost ownership of his shop, so his customer faced a dilemma

Should he resume his former tipping and thus humiliate his quondam friend. (Zelizer,1994, 1997, pg. 96)?

Why do we tip?

-A tip is a form/category of money

-Are there other ways to pay servers that might be more advantageous for the servers?

Conclusion

-On Tuesday of next week we will finish our discussion of Zelizer

Will review a list of all key terms/concepts Bring in questions


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Key Terms/Key Concepts for Theme 1:

Automatic cognition Deliberative cognition Anchoring Loss aversion Stereotype threat identity Social classification Earmarking Pluralistic ignorance Relational work Channel factors Strategic research materials Money corrupting vs. moral Fungibility The absolute model of market money The relational model of earmarked monies Noxious markets

Relational Accounting

-Gender race, ethnicity -Socioeconomic status and family structure -Cultural codes, cultural understanding

-These three come together to make budgeting categories

Commion in relational and mental accounting

-Budget categories + source funds = economic behavior (individuals vs. groups)

How does mental accounting handle moral regulation?

-Are there moral concerns in the mental accounting literature (we read) linked directly to how money

used?

Fair prices? Corrupting currencies? Incompetent calculators?

-What leaders a person to assess a price as fair?

How is this assessment different in the mental accounting literature versus the comparative-historical account found in Zelizer


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Lets Consider Fair Prices

-Think through the hockey example. You have received a ticket for $10 but the price printed on the

ticket is $5. In the experiment you are asked what you would charge a friend versus a stranger.

How might we rethink this problem? Telling versus asking for a price? Dydadic tie or bundle of ties? Meanings of money (to what purpose will the money made through the sale of the ticket be

put?

What about terminating the transaction?Lets re-design the hocket experiment

-What if we combine direct observations of behavior with follow-up questions presenting the scenario?

What should we expect to see from direct observations? What might be the protocol for the observations? Why might observed behaviors differ from what people do in a controlled experiment?

APPLIED TO POOR PEOPLES MONIES: How does relational monies model differ from an absolutized

market money model

-Zelizer takes us through a grand tour and says that there have been a lot of different perspectives on

who should be allowed to handle money

1. Money has social and cultural functions

-Not just an economic instrument of calculation because it operates in the cultural, social, and political

spheres of life for a variety of purposes

-What are cultural concerns about poor peoples monies?

How does money function to teach moral responsibility? What are the political functions of money for controlling behaviors or maintaining order

2. Monies, Not Money

-There is no single, unoiform generalized money, but multiple monies: peopole earmark different

currencies for many or perhaps all types of social interactions. (Zelizer, pg. 18)

What are the different currencies used by poor households How are these currencies matched to different types of social interactions?

3. Deeply subjective, sometimes sacred character


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Money is not a profane instrumental instrument Money is also a social medium with a sacred character

o What kinds of earmarked monies are considered sacred?

4. Value and values as false dichotomy

-Value are not reduced to value

Qualitative distinctions are eroded at the same time that new qualitative distinctions arecreated

Singularity and un-exchangeability also possible-How are values imbued on AFDC payments, for example?

-How are values used as justification for the generation of charitable currencies?

5. Bi-directional transformations

-Not just a uni-directional effect of money and modernity acting upon social and cultural structures

-Cultural and social structures set inevitable limits to the monetization process by introducing profound

controls and restriction on the flow and liquidity of monies. (Zelizer, 1994, pg. 19)

What are examples of social structure (socioeconomic status, occupation, gender) affectingthe limits and controls on the flow and liquidity of money

Consider Social Security Payments: SOCIAL SECURITY

-1935 Social Security Act: money payments rather than in-kind transfers or vouchers

-The Bureau of Public Assistance thus proposed a revolutionary reinterpretation of the consumer

sovereignty of poor people; and the y were ready to back it up by putting conventional charitable cash

out of circulation. The needyshould. (Zelizer)

Should Welfare Payment be made in cash only?

-What do you think>

What are the arguments for giving people cash to pay their rent, groceries, etc, without being

monitored?

Is it more efficient? Can we cut down on transaction costs by doing so? Can we reduce number of staff it takes to administer these programs? Then why not do it? We see the corruption if its poor people, but we see it as bad decisions if it is middle class

-The logic of gifts and tipping as a gift gets placed in what is happening in government


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I can tip my barber because he doesnt own the barber shop and therefore he is not myequal

o I would not go to the owner and tip the owner because he is on the same level ofjob quality as me and that would be weird

With or without earmarks

-Social Security payments are targeted to a wide range of people (variation in socio-economic status)

If these payments become mean-tested and if increasingly going to the poor, is it likely thatthese payments will remain as cash (unrestricted) funds?

How does the socio-economic status and the presumed moral competence of the recipientsof official currencies affect the form of money?

Christmas Savings Club: Is mental accounting adequate?

-Mental accounting: putting money for Christmas purchases into a non-interest bearing account as a

way of resisting temptation (lacking self-control)

-Relational accounting: what other questions would one ask?

How does identity work?

-How does identity work in Zelizer as a factor shaping economic decision making?

-How does identity work in mental accounting literature as a factor shaping economic decision making?

-Are these explanations competing or complementary?

Payday Loans

-Lets take a look at arguments for payday loans

-How would mental accounting explain this?

-How would relational accounting explain this?

What do you think?

http://www.youtube.com/wathc?v=dKTIJ5Xmb8w
http://www.youtube.com/wathc?v=dKTIJ5Xmb8whttp://www.youtube.com/wathc?v=dKTIJ5Xmb8whttp://www.youtube.com/wathc?v=dKTIJ5Xmb8w


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Theme 1: Wrapping Up

Payday Loans

-Lets take a look at the argumentsforpayday loans

-How would mental accounting explain this?

-How would relational accounting explain this?

-What do you think?

-If you have to pay your rent, you are probably not just paying for yourself but for you and other people

in your household

-Even when they are accessing private sector sources of funds, there is a moralizing element that comes

into the uses of the money that doesnt happen with people who are not poor

STOPPED THIS LECTURE AND STARTED NEW LECTURE:

Shopping as a Social Phenomenon

Overview

How does shooppping depend upon and reinforce social inequality? How does comparative ethnographic work enable us to examine inequality in retail spaces? What are the shortcomings of ethnography for this task?

o When you are young you will learn the issues of gender, race, and classo Then you will participate in perpetuating the social inequality

Key Terms and Concepts

-Social organization of space

The design of a space affects how people flow through it There may be patterns by demographics

-Interpellation

The stereotypes for a particular job How they are perpetuated

-Intersectionality

How people come togetherEthnography or observational research

-Unarticulated needs (and unarticulated beliefs)

-People alter their behavior because they know they are being observed

http://www.youtube.com/watch?v=9tHgNXzS2EY&feature=related
http://www.youtube.com/watch?v=9tHgNXzS2EY&feature=relatedhttp://www.youtube.com/watch?v=9tHgNXzS2EY&feature=relatedhttp://www.youtube.com/watch?v=9tHgNXzS2EY&feature=related


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Using observation to get at meanings

-Soft customer language

http://www.youtube.com/watch?v=704Jnksf2pw&feature=related Getting behind the language of customers who are looking for competent and friendly

help

o How customers define words like powerful It is useful if you are in the space itself to see how the space is rendered

Why shopping is a social phenomenon

-Three key social decisions

Where to buyo Not always about price

How to search for/select goods/services What to buy

-(At least) three social outcomes

How to Shop as Socially-Oriented Behavior

-How to shop (how to select goods/services)

Management decisions about who is in the front room and who is in back; customer servicepolicies;

Store layout signaling leisure or utility Selecting social characteristics of workers; some customers get more attention than others

-Selected goods/services (Bottom-up)

Social networks for information about product and satisfaction Interactions in the store Reacting to our contesting marketing images and stereotypes

Why Economic Sociologists Should Study Shopping

-Social inequality manifests itself through consumption

-Racial/ethnic identity and gender dynamics manifest

-Consumers have to be taught what to desire and how to desire it (desire/demand as socially

constructed)

Early Study as a Model

-Annie Marion MacLean
http://www.youtube.com/watch?v=704Jnksf2pw&feature=relatedhttp://www.youtube.com/watch?v=704Jnksf2pw&feature=relatedhttp://www.youtube.com/watch?v=704Jnksf2pw&feature=related


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Two Weeks in Department Stores,American Journal of Sociology(1899), 2 weeks 175hours 2 stores, the social conditions of retail work, the Christmas season

-Christine Williams

Inside Toyland(2006), 12 weeks 300 hours 2 stores, the socialization of work, within 4 milesof each other but could not have looked more different from each other

Same objects, different priceso Why?

Other explanations

-Location (easy of entry and exit; crime rate)

-Self-selection

-Shopping services and recruitment/training of workers built into price

-Time of year

-The shifts worked (time of day and time of the week)

-So not a causal argument but a reasonable theory based on empirical data

Ideas from production studies applied to consumption?

-The Hawthorne Studies

Initial studies on effect of light on productivity-Analogous examinations experiments for consumption

Experimenter effect? The fact that person engaged in an experiment alters behavior-The Workplace is a social system

The IDEA of a fair days wage regulated how hard people worked, not the wagesthemselves

Mapping Social Space

-Think about where people are positioned usually

-Where are the check-out counters, the bathroom, lost/found, security, windows, courtyard, food?

-Which positions move frequently?

-http://www.analytictech.com/mb021/handouts/bank_wiring.htm

Observed Social Relations: Games

-Participation in games?

What kind of decision rules make people ignore Supervisor 2 and go to Supervisors 1 and 3?
http://www.analytictech.com/mb021/handouts/bank_wiring.htmhttp://www.analytictech.com/mb021/handouts/bank_wiring.htmhttp://www.analytictech.com/mb021/handouts/bank_wiring.htmhttp://www.analytictech.com/mb021/handouts/bank_wiring.htm


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Observed Social Relations: Friendships

Concretizes stereotypes

-Thought experiment, perfect equality, random career placement

People would be evenly spread by race-ethnicity, and sex Differences in distribution accounted for by individual experience/qualifications

-Whites, Latinos, Blacks, Asian-Americans work in different types of stores (Williams 2006, pg. 50)

-Latinas are 12 % in retail trade industry BUT

Less than 6% in bookstores and gas stations Over 16 percent in retail florists and household appliances stores (pg. 50)

Socially constructed and constructing

-In interactive service work,employers carefully pick workers who look right for the corporate image

they attempt to project to the public. A recent court case against Abercrombie and Fitch illustrates this.

A suit was brought against the retailer by Asian Americans and Latinos/as who aid they were refused

selling jobs because they didnt project what the company called the A&F look. (Williams, pg. 55)

Can you give some examples of this in Williams experience at either Diamond Toys or Toy Warehouse

Interpellation (socially constructing the self)

-Leslie Salzinger (2003) has examined how this job placement works in manufacturing plants along the

U.S.-Mexico border. She uses the concept of interpellation to describe how managers imagine a specific,

embodied worker in each job and how workers come to see themselves in these imaginings. Workers, in

other words, typically consent to embrace the stereotypes, since their opportunities depend on the

conformity to these managerial imaginings (Williams, pg. 55)

Knowing and learning your place

-Social position is maintained through deference to those above and domination fo those below your

place

-When an individual attempts to change her relative social position, she confronts a negative reaction

(negative sanctions)

Intersectionality

-An analysis claiming that systems of race, social class, gender, sexuality, nation, and age form mutually

constructing features of social organization, which shape *peoples+ experiences and, in turn, are shaped

by *them+ (Collins, pg. 299)

-The likely effects of the intersections among race gender/sexuality are historically bounded


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Concluding Questions

-Visualize a place where you shop often

Draw a rough outline of how the shopping space is structured-Hands-on, knowledgeable staff?

-Racial/ethnic composition of the staff

-Racial/ethnic composition of the customers

Dress and comportment of customers

-Type of person you would be surprised to find shopping there

-There are other ways in which inequality can be reproduced

Review Session Notes

Key terms/Key concepts: (give definition, context, and example)

Automatic cognition

Happens without effort (instinct, nonverbal, readymade) You dont reflect, they are just habitual actions

Deliberative cognition

Thinking about every aspect of a problem, deliberate reflection We are not deliberative in every aspect of our lives, especially in market behaviors Functions together with automatic cognition to make up human decision-making

Anchoring

Loss aversion

Stereotype threat

If presented with a negative identity about yourself, your performance sufferso Example, Asians are good at math

Identity

1. It is not personal, it is collectiveo You can identify yourself as a jedi knight, but if the other people around you dont

think you are one, then it is delusion

2. Collectivity is an identity as well They can be passive, they can be active


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o Active In an attempt to nudge poor people, active identities will be in power

Social classification

Earmarking

You dont spend the money on just anything, you spend it on a specific thing you havecategorized it for

Pluralistic ignorance

Relational work

Always hurts the person when something goes wrong

Channel factors

-

Strategic research materials

Money as corrupting vs money as moral

Fungibility

The absolute model of market money

Idea of embeddedness in the marketo We, as individuals, are born into social phenomenao Takes social sphere and economic sphere as two unrelated spheres

Assumes that everything is calculable (but this turns out not to be wholly true) Money does not have any symbolic function (merely a tool)

o Therefore, money is entirely restricted to the economic domain Reduces quality to quantity Unidirectional

The relational model of earmarked monies

Money as social and cultural functions


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We dont just have money, we have monieso Not just one single type of moneyo Earmarking comes from this idea

Money has a tendency to reduce anything to a value The relation between money and the social body is not unidirectional

o It is bidirectional

Noxious markets

Low/weak level of agency Harmful to individuals and society Inequality in the parties

Schemes

Nudge

Paternalistic economic policy-making Influences you to do things (pushes you in a certain direction)

Mental Accounting

Money in jarso One jar is for rent, one jar is for groceries, etco You mentally project your future income into folders and categories and prioritize

them

Assumes money is relational


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Pediocularity

Taking a childs perspective on the world to market to them An adults eyefor a childrens environment

Pocket Money

Always related to a housewife Allowance given from the person who brings home the bacon

CommodificationCommodity Fetishism Commodification is:

Making everything into a commodity among many others Turns people into consumers Everything becomes for sale

5 key words to define with 3 sentences each

3 short-answers

3 longer-answers

THEME 2 will barely be on the midterm


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Documents

Notes from day one