Social Norms Versus Market Norms

Social Norms Versus Market Norms

Reviewed by Faisal Zaidi

Two frames for exchange: in the social frame people give without keeping accounts, and naming a price moves the exchange into the market frame.

What it is

The distinction is credited to Margaret Clark and Judson Mills (1979), and Dan Ariely builds on it in Predictably Irrational. In a social exchange people help without keeping accounts; once a price is named, the exchange is judged in market terms instead. A small gift keeps an exchange social, while stating the gift's price moves it toward the market frame.

In effect

In the article on why we spend more at Christmas, it explains why a gift is judged by more than its price, and why naming the price can change how it is received.

What it does not say

It describes two frames people use for exchange. It does not say that money always crowds out goodwill, and the size of the effects varies by setting.

Sources

  1. Ariely, D. Predictably Irrational.