The Returns to Being Nice

by on December 19, 2012 at 6:05 am in Economics | Permalink

Santa Claus may know if you’ve been naughty or nice — but does the market? This from the June issue of Scientific American (gated):

“When Nice Guys Finish First” by Daisy Grewal

  1. People who are nice are those who score high on the agreeableness personality trait. They are generous, considerate of others and pleasant. Such people benefit from good personal and work relationships. They are more likely to get a job—and to keep it.
  2. Being exceedingly agreeable does have drawbacks, however. Nice people tend to earn less than their more demanding colleagues and to get passed over for promotions
  3. Nice people should pay attention to their posture when they find themselves in leadership positions or in situations in which they need to exert authority over other people.

Sounds nice, but there’s no way it’s domain general. I expect returns to niceness are high for service professionals like real estate agents (see all those smiling faces on billboard ads?) and primary care physicians, but rapidly diminishing for win-or-lose professions like litigating and coaching sports. I also wonder about politicians. For academics, niceness probably pays in teaching more than research (or blogging?). Certain icons of creativity were also known to treat the people close to them boorishly, like Steve Jobs or Jackson Pollock.

In this working paper on siblings and twins, scoring high on agreeableness doesn’t seem to affect labor market success; instead, the market rewards extraversion and punishes neuroticism. Twins and siblings get put through the empirical ringer in this paper—unlike Santa, the market rewards nice boys and nice girls differently. Oh, how naughty.

NM December 19, 2012 at 7:06 am

I suspect it may be even more complicated than that. Lawyers are a function of their reputation, and so, so-called “niceness” can be a virtue if other lawyers and judges can rely on your honest judgment and your willingness to reach a resolution. Real estate agents, on the other hand, may be more likely to secure a better deal for their clients or may be more likely to convince someone to buy a house if they are more demanding. That is all to say I suspect each person occupies a different niche within their respective professions. It seems more relevant to me that a person either identify the niche that suits their personality and optimize to that niche or find a way to be demanding and agreeable when either characteristic trait is necessary.

Rob December 19, 2012 at 7:27 am

“Real estate agents, on the other hand, may be more likely to secure a better deal for their clients or may be more likely to convince someone to buy a house if they are more demanding”

To make matters even more confusing, different strategies will work on different people. Having just bought a house in London (never an easy matter), I saw both ends of the spectrum from estate agents, and I much preferred the friendly ones to the pushy, aggressive ones, to the extent that I didn’t follow up certain properties if I thought the agent was being too pushy.

Basically, strategy A seemed to be this: create pressure on the buyer to buy (at a higher price), by saying things like “there’s lots of interest in this house” or “prices are going up in this area” or “the vendor really wants a good offer to secure the property”. Strategy B was to say things like “this house is actually a bit overpriced – you could offer a little bit less than the asking price and get a real bargain”, “prices have been flat lately and this is a good time to get a good deal” and so on. As a buyer, I like to feel that I’m getting a reasonably good deal and I’m instinctively opposed to making decisions under pressure, especially artificial pressure, so I would naturally favour dealing with the “nice guy” agent. However, I can only conclude that some people must work differently, because this strategy was certainly not dominant.

I’m not saying that I got a better deal by going with the “nice guy” agents either – I don’t think it made much difference to the final price.

This suggests that one of the roles of firms could be to match the right type of person to the right case, as there’s no definitive right way of behaving for all circumstances.

Engineer December 19, 2012 at 9:03 am

I’m not saying that I got a better deal by going with the “nice guy” agents either – I don’t think it made much difference to the final price.

The main benefit of real estate agents is that they show a property when the owner is not home. Those sales tricks (“prices are going up” etc.) are just annoying. I found my house on the web.

An Academic December 19, 2012 at 9:20 am

I’m laughing at the listing of “blogging” alongside research and teaching. Keep blogging if you like, guys, but don’t try to pretend it’s a legitimate academic pursuit on the par with research or teaching. Most academics don’t, and shouldn’t, blog.

Urso December 19, 2012 at 9:40 am

A true academic would never blog; it’s beneath his station. *Commenting* on a blog, however, is clearly a totally different thing.

Engineer December 19, 2012 at 9:44 am

Ha
+1

dan1111 December 19, 2012 at 12:03 pm

If your ideas matter, then you should care about communicating them to others.

It they don’t, then…well, the I guess you should stick to “legitimate academic pursuits”. At least that way, you won’t waste the world’s precious time.

Benny Lava December 19, 2012 at 2:51 pm

I expect returns to niceness are high for service professionals like real estate agents

You have obviously never worked in commissioned sales

dan1111 December 20, 2012 at 12:39 am

I have never met a non-nice real estate agent.

Yet in some other commissioned sales professions, the trend is very different (e.g. car salespeople).

Why the differences?

Comments on this entry are closed.

Previous post:

Next post: