In his 2009 book, Predictably Irrational Dan Ariely, yet another proponent of behavioral economics, notes the distinction between social and market norms, for the same activity or different activities dealing with the same person.
He gives as an example having a wonderful thanksgiving dinner at the mother-in-law’s place. As a sign of appreciation, do you pull out a hundred bucks and give this to her? The social context of this activity makes such a gesture the height of bad manners. And yet the same meal in a restaurant is not concluded by hearty compliments and appreciative remarks; a bill has to be paid.
The distinction between a social situation where even hard tasks (washing clothes for the family) are offered for free and a market norm where the same services (doing the hotel laundry) are charged can get tangled in a culture that tries to avoid bringing up the matter of money among friends. Should a former classmate who happens to be an interior decorator be prevailed upon to give free consultations?
Even in the corporate world, not all relationships are covered by market norms where contracts usually define rights, obligations, and fees. Thus, an informal adviser who gives valuable and solicited evaluation of a business issue, analyzing problems and providing marketing solutions may be tapped for lunch or coffee devoid of power point presentations and opened notebooks.
And to be sure the meeting is considered “purely social,” the talk is interspersed with gossip about aging associates, and common friends who have been diagnosed with some dreaded disease. No staff assistants are on hand.
Since there is not even any taking of notes or designation of “next steps,” the lunch ends with a vague plan to meet up again with the spouses. The advice seeker picks up the bill — it’s your turn next time.
Informal chats over lunch are trapped in Ariely’s social norms.
Advisers feel awkward moving the informal consultations on a market norm, and putting a value on their inputs, even when these have been acted on afterwards without credits given. If they even hint of possible compensation, the timid request to formalize some consultancy arrangement is met with an incredulous stare — you mean you’re going to send me a bill for your jokes?
Being sociable has its costs. This exchange is sure to end the lunch meetings altogether, and fray whatever friendship was involved at the start, not necessarily with a fiery exit but an awkward coolness.
Lawyers, PR crisis managers, doctors, ghost writers, and tax accountants are experts in avoiding this predicament of an ambiguous market norm. These professionals have a ready response to anyone bringing up a problem for free consultation — I have this recurring ache in my big toe. Before the complainer removes his shoes and gets further with more details, he is quickly told not to take it up here at the party and just make an appointment with the secretary for a diagnosis at the clinic, so the problem can be more properly evaluated… and billed.
Still, even the successful professional who gets paid by the hour for his advice can be generous with free comments. He understands where the line for the charging can be drawn as when contracts and pleadings need to be drafted. A seemingly generous sharing of ideas can be an effective demonstration of expertise and justification for high fees later.
Anyway, someone who puts everything on a market norm, including text messages and casual conversation, can be perceived in our culture as too greedy. The vernacular characterization is even more graphic, “mukhang pera,” which roughly translates to: it’s all about money. I know that doesn’t capture the contempt of the original.
In the realm of philanthropy and good works, market norms can be subsumed. Legal skills for example can be provided by a group pro bono in the service of persecuted sectors, using a purely social norm.
The blurring of social and market norms can sometimes become problematical. A professional relationship initially based on market norms entailing the exchange of services for a fee on a per appearance basis can evolve into a more complex relationship with expectations and commitments, the inflicting of pain, even possessiveness and the introduction of rules. This type of complication and emotional roller coaster is not limited to dental care. It can apply to other situations where regular flossing doesn’t help.
As in any social and economic relationship, it’s best to define which norm applies… and if you can afford it.
A. R. Samson is chair and CEO of Touch DDB.
