Are people good? Can they be? Is goodness intentional, or consequential? One way to think of goodness derives from Adam Smith's baker, whose selfishness drives him to bake good, cheap bread. If “good” institutions are enough, we can design mechanisms (with markets being one, but only one archetype) where the collective consequences of self-interest are not harmful. In politics, this invisible hand is the focus of Federalist #51: “Ambition must be made to counteract ambition.”

A second project might focus on moral education and an endogenous creation of the “self.” Proponents would argue that law and morals should not be viewed as external constraints on selfish men and women. Instead, we must inscribe the laws on their hearts. Each of us is imbedded in a larger context, with ties to one another and to the larger good. Phillip Nelson and Kenneth Greene argue a third alternative: “Goodness” is hardwired, a key feature of human evolutionary success. The key analytic concept they use is “asymmetric goodness,” an advocacy for causes or people whose welfare is advanced only at personal cost to the advocate.

Living in a setting characterized by both sociality and scarcity, humans had to solve problems of cooperation. Group survival required that humans adopt a set of social norms that softened the edges of pure market outcomes, giving more weight to the future and more resources to the poor than would occur in a “natural” setting.

The argument is lengthy, but the claims are fairly simple. Imagine that you, along with four other people, have to live in a foxhole in wartime. A fragmentation grenade may at any time be thrown in. The person closest to the grenade can jump on it. Otherwise, everyone shrinks back against the wall, and the grenade kills everyone.

Suppose everyone has the same preference: survival. We talk, and sign a promise: “I swear I'll jump on the grenade.” What value does such a “promise,” even signed in blood, have for the way that people in the foxhole form expectations about one another's actions? Without knowing more about the individuals, we cannot say. Nelson and Greene are a little mysterious about what we should expect, noting that there is something more at work than simply a taste for asymmetric goodness, but not spelling out just what that something is.

The promise signed in blood is a trope, and it seems to have force, but why? We cannot tell the difference between a real cooperator, who means what s/he says, and a faker, who signs in blood but will cower against the wall if the grenade actually drops from above.

As Nelson and Greene recognize, both in their title (Signaling Goodness) and throughout the text, being good is not enough. They categorically reject simple altruism as a sufficient explanation. For a society, what is required for the public good is an interconnected set of expectations, fulfilled in equilibrium, and couched in terms of reciprocal obligations to act in the larger public interest, even if it means sacrificing private interests.

The problem is that there is no observational ex ante difference between people who intend to act in the public good and those who simply intend to profit from being perceived as wanting to act in the public good. More simply, because we care about the appearance of acting for the public good, that very appearance itself becomes a public good. But that means that the “good,” be it political correctness, kindness, charitable acts, or volunteerism, is subject to dilution by mimicry from selfish people. Acting good, but being bad, defies detection in many settings. Everyone promises, but no one jumps on the grenade.

The usual way out, in such circumstances, is reputation. That requires close, extensive personal dealings for trust. Michael Taylor's well-known requirements for “community” (in Community, Anarchy, and Liberty, 1982) are a means by which the common-knowledge basis for cooperation can be established. But is there any other way to do it? After all, we tell children “No, that's wrong!” or “You should do what is right.” Can we write these rules on their hearts, or are the rules just window dressing, to be practiced by others but not really believed in by anyone?

Nelson and Greene make, quite self-consciously, a group selection argument. There are three roles that are key to “signaling goodness.” One can be a practitioner, or an enforcer, or an advocate of moral action. Practitioners simply give up the material benefits of cheating; in forbearance, they sacrifice their own welfare for the greater good. Enforcers punish those they perceive to have acted badly, or to have violated social mores of cooperation. And advocates expend resources in hortatory messages, encouraging moral behavior. The point is that each of these types achieves some credibility for their claim that they are good, precisely because each one incurs some cost in the pursuit of a reputation. “Signaling” good only works if there is some content to the signal. And there is only content if there is some cost.

In my view, this solution is tenuous. Given the private benefits to being perceived as good, most selfish people are likely to adopt hypocrisy. It is easy enough to appear virtuous in public, to admonish the impolite, and to intone pious sentiments about goodness. Nelson and Greene recognize this, but they seem undisturbed that they have raised an ancient problem in a new guise, while doing little to solve it.

The reason, in my opinion, is that the world of the economist is a bit cockeyed. The goal is not to achieve the good society, or to ensure that people are virtuous. Instead, Nelson and Greene (and the economics profession) focus on the “mystery” of why people would want to be perceived to be virtuous. To me, that has never seemed all that mysterious.