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For Better Economy, Trust the Happy Hormone

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CLAREMONT, Calif. -"Trust not the physician," Shakespeare wrote. Had he been an economist, he would have added, "Trust oxytocin instead."

Oxytocin is a hormone that Shakespeare would have appreciated. It plays a big part in guiding human behavior. And some scientists who mix economics with neuroscience think that it might play an equally important role in the world economy.

Researchers in the new field of neuroeconomics seek to understand human decision-making not by consulting economics textbooks, but by studying the biochemistry of the brain. And one of the key chemicals affecting the brain's decisions is oxytocin.

It is popularly known as the "happiness hormone" (sometimes, the "hormone of love") because it facilitates bonding between mother and child and between male and female. Oxytocin is active in many reproduction-related processes, including giving birth, lactating and sexual orgasm. Studies suggest that it's important in building social attachments and most pertinent for economics in generating feelings of trust.

In fact, the relationship between trust and oxytocin is central to understanding many of the world's economic ills, says Paul Zak, a pioneer in neuroeconomics research.

It does require a chain of reasoning that might have a weak link or two, but the oxytocin-economics connection tells a plausible story. Oxytocin is clearly linked to happiness, and countries where people report high levels of happiness are also countries where people report high degrees of trust.

Trust levels, in turn, are a good indicator of a country's economic well-being. For one thing, high levels of trust mean people are more likely to invest their money. And businesses are more willing to make deals and embark on new projects when they trust each other, and the people they work with.

Trust is the prime indicator of a vibrant economy, says Dr. Zak, director of the Center for Neuroeconomics Studies at Claremont Graduate University in California. "It's like the big gun."

By and large, he says, surveys show that high trust levels in a country correspond with strong economies. In prosperous Scandinavian countries such as Norway and Sweden, for instance, more than 60 percent of the population say they find people generally trustworthy. In Peru or Brazil, fewer than 5 percent are so trusting. (In the United States, a 1996 poll found 36 percent agreeing that people are trustworthy, down from 50 percent in 1990).

Zak and colleagues have studied various factors differing from country to country that might influence trust by affecting oxytocin levels. "Biosocial" factors such as birth rate, amount of breast feeding and prevalence of home ownership either boost oxytocin directly or are indicators of social interactions related to oxytocin levels.

Other measures gauge ecological effects levels of pollution (which block oxytocin), and greater population density and frequency of sex, which elevate it. A third group of factors are dietary measures of consumption of soybeans, garlic, tea, wine and other foods containing chemicals that raise oxytocin levels.

Analyses of these factors suggest that strong economies depend on the oxytocin-happiness-trust connection. If so, many public policies now viewed as too expensive actually should have a strong economic motivation.

Cleaning up the environment, for example, should not be regarded as costly to the economy. Spending on pollution control could confer economic benefits by enhancing oxytocin levels, and therefore trust levels, that help an economy prosper.

Other policies designed to boost trust should be important aspects of economic policy, especially in countries with weak economies.

"For poor countries, the Brazils, the Perus, it's extraordinarily important," says Zak. "If you want to stimulate the economy, you've got to do things that give you confidence in the future."

Public policy that builds trust, then, would seem a good way to improve economic conditions. "I think cooperation and trust, everyone agrees, are good for society," says Zak.

Of course, in big economies, new policies have a hard time altering economic inertia. But some policies can help. "Education has a huge effect on trust levels," Zak says. "So if there's one thing you want to do in all these countries, including the U.S., increase the years and the quality of education."

In other words, spending money on things like pollution control, education, and other ways of improving quality of life has been mischaracterized by budget cutters as an economic drain, when in fact it's really an investment. Draconian budgets, rather than being economically wise, may be recipes for recession.

Appreciation of neuroeconomic reality may therefore lead to a kinder and gentler economic policy, whether the policy-makers are kind and gentle or not.

"I think that's the value of this economic approach," says Zak. "I can be dispassionate about this. I don't have to say I want to help poor people because I care about them, or whether they deserve it or don't deserve it. I can use purely a pragmatic basis. I can say this is a win for the economy it's a win for everybody."


(Tom Siegfried is science editor for The Dallas Morning News. Write to him at: The Dallas Morning News, Communications Center, Dallas, TX 75265.)


(c) 2003, The Dallas Morning News. Distributed by Knight Ridder/Tribune News Service.

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