Neuroeconomics: In Oxytocin We Trust

Economic researchers are uncovering the chemical triggers in our brains that spark feelings of trust—and using their findings to better understand how markets work.

The concept of trust is in many ways the connective tissue of society—governing everything from our personal relationships to our common use of currency. Most, if not all, of the decisions we make every day rely on one form or another of trust. But what if our capacity for faith is simply the result of brain chemistry?


Economic researchers are uncovering the chemical triggers in our brains that spark feelings of trust—and using their findings to better understand how markets work. Paul Zak, a professor of economics at Claremont Graduate University, has spent the past six years pioneering the new field of neuroeconomics, which could potentially explain the neurological mechanisms that result in poverty and prosperity.

So far, Zak’s research has focused on oxytocin, a neurochemical known to flood a mother’s central nervous system during labor—in part to establish attachment for the child. Long thought limited to birth, research by Zak and others is now revealing that this chemical circulates in small doses in everyone, and is critical to creating and sustaining trust among people.

In a series of tests based on giving or keeping money, Zak found that when someone demonstrates that they trust you, your body releases faint traces of oxytocin, which creates a "fleeting signature of safety and care." As well, when trust is shown to a person, their resulting higher levels of oxytocin make them more likely to show trust to the original person, creating an oxytocin feedback loop. In this way, "our brains motivate us to be trustworthy," says Zak. "It’s a beautiful kind of system."

Zak's research has shown that low levels of oxytocin are released when people are given a 15-minute massage, when they make eye contact, when they watch a highly emotional film, and even when they tweet. As well, Zak recently took samples of a wedding party to see what patterns of oxytocin release would be triggered by the ceremony. Zak found the bride released the most oxytocin, then her mother. The groom came in further down the list. Zak says his research has found that people who release more oxytocin report greater satisfaction with life, better romantic relationships, more friendships, more sex, and greater trust.

Neuroeconomics departs from neurology in its desire to map how these trust patterns among individuals ripple out to result in macro-level consequences. With such an aggregated map of how trust circulates or stalls in a society, neuroeconomics might describe the robustness of nations' economic development as well as the intricacy of institutions that fill in the gaps where trust fails.

One issue that began Zak’s work in this new field was research in the late 1990s that found an unexplored connection between trust and national prosperity. Data showed that high trust exists in countries that are, by and large, rich or fast growing. Countries in which trust is high have effective governments, says Zak: "They have very tight social structures, people interact very nicely with each other, they don’t have a lot of divisions." A 2007 study by the Pew Research Center found 45% of Americans said they trust each other—a large percentage compared to many other countries, which hover in the single percentage points.

Linking the data to the discovery of how oxytocin-led trust cycles can harness or hurt economic transactions toward prosperity, Zak shows how trust becomes the "great summary measure of a society in which things are working well." However, as he notes, lack of trust is also a measure of to what degree things are broken.

Trust isn’t universal or perfect, and for good reason. Whereas the expectation of trust can facilitate a broader range of economic engagement among strangers, misplaced trust is a recipe for developmental gridlock. Therefore, institutions develop to cover the gaps in trust. These institutions include the legal and corrections systems, which enforce agreements and allow economic transactions that contribute to overall prosperity. Without a baseline of transactional confidence, says Zak, the size of the market shrinks, decreasing prosperity as people prefer to deal primarily with small, trusted groups. This, says Zak, is why certain countries have remained mired in poverty.

National trust levels, especially around economic transactions, also offer a mean method of forecasting. China, for example, has markedly high levels of trust, yet the market-oriented way in which the nation is leaning will, according to Zak, build the economic-led trust around individuals. This should in turn loosen the centralized authority in favor of individual, trust-led market commerce.

In another example, Zak says programs such as microfinance and micro-entrepreneurship are "a way to take economic power and bring it to the individuals even at the lowest levels." This builds the necessary foundation of economic trust that drives development, and eventually prosperity.

More Resources

—Zak, P. "Personal and Impersonal Exchange, Trust and Growth."

—Zak,P. "Introduction: Moral Markets - The Critical Role of Values in the Economy."

—Penenberg, A. "Social Networking Affects Brains Like Falling in Love." Fast Company.   

Center for Neuroeconomic Studies at Claremont Graduate University. 

LinkedIn meets Tinder in this mindful networking app

Swipe right to make the connections that could change your career.

Getty Images
Sponsored
Swipe right. Match. Meet over coffee or set up a call.

No, we aren't talking about Tinder. Introducing Shapr, a free app that helps people with synergistic professional goals and skill sets easily meet and collaborate.

Keep reading Show less

4 reasons Martin Luther King, Jr. fought for universal basic income

In his final years, Martin Luther King, Jr. become increasingly focused on the problem of poverty in America.

(Photo by J. Wilds/Keystone/Getty Images)
Politics & Current Affairs
  • Despite being widely known for his leadership role in the American civil rights movement, Martin Luther King, Jr. also played a central role in organizing the Poor People's Campaign of 1968.
  • The campaign was one of the first to demand a guaranteed income for all poor families in America.
  • Today, the idea of a universal basic income is increasingly popular, and King's arguments in support of the policy still make a good case some 50 years later.
Keep reading Show less

Why avoiding logical fallacies is an everyday superpower

10 of the most sandbagging, red-herring, and effective logical fallacies.

Photo credit: Miguel Henriques on Unsplash
Personal Growth
  • Many an otherwise-worthwhile argument has been derailed by logical fallacies.
  • Sometimes these fallacies are deliberate tricks, and sometimes just bad reasoning.
  • Avoiding these traps makes disgreeing so much better.
Keep reading Show less

Why I wear my life on my skin

For Damien Echols, tattoos are part of his existential armor.

Videos
  • In prison Damien Echols was known by his number SK931, not his name, and had his hair sheared off. Stripped of his identity, the only thing he had left was his skin.
  • This is why he began tattooing things that are meaningful to him — to carry a "suit of armor" made up the images of the people and objects that have significance to him, from his friends to talismans.
  • Echols believes that all places are imbued with divinity: "If you interact with New York City as if there's an intelligence behind... then it will behave towards you the same way."
Keep reading Show less