Steven Pinker: The mechanics of trust in money and relationships

My name is Steven Pinker. I am a professor of psychology at Harvard University

I am a cognitive scientist, and my new book is called When Everyone Knows That Everyone Knows, Common Knowledge and the Mysteries of Money, Power

and Everyday Life. The Hidden Psychology Behind Common Knowledge. There is a big, powerful idea floating around linguistics and philosophy and economics and

game theory that's really a psychological phenomenon. I'm a cognitive psychologist, and it drives many phenomena, explains many mysteries, and not enough people know about it

It is the concept called common knowledge. It has a bit of a technical meaning that is not the same

as the way we use common knowledge in everyday conversation. We'll often say, well, it's common

knowledge around here that, you know, you could bribe the police, kind of an open secret. But

common knowledge in a technical sense almost means the opposite. Namely, it's something that

not only does everyone know it, but everyone knows that everyone knows it, and everyone knows that

and everyone knows that, and so on ad infinitum. That is, I know something, you know it, I know

that you know it, you know that I know it, I know that you know that I know that you know it

and so on. And you might think, well, gee, didn't we all know that? What's the big deal with common

knowledge? I mean, everyone knows that there's a difference between something being private and something being public. But there's a big difference between broadcasting a message to everyone and

making it common knowledge. So if everyone gets an email, but they have no idea who else has gotten

the email because the recipient list is suppressed. That can be very different than if there's a big

email list and you know that everyone's gotten the same email that you've gotten

Or if it is posted on Facebook or even more prominently if it's on broadcast media

Because in that case, if you know that other people are seeing it at the same time that you

are, and that they know that other people are seeing it, then people can feel that some norm

is being challenged, which they then have to prop up, or that some equilibrium is being upset

some social relationship is being upended. Probably the simplest illustration is the story

of the emperor's new clothes. Because when the little boy said the emperor was naked, he wasn't telling anyone anything they didn't already know. They could see the emperor was

naked. But he was changing their knowledge. Now everyone knew that everyone else knew that everyone

else knew that everyone else knew. And crucially, that changed their relationship to the emperor

from obsequious deference to ridicule and scorn. I give an example of what happened with Joe Biden

in June of 2024. At the time, many people privately suspected that he was suffering

cognitive decline. A majority of Americans did. But then he engaged in a disastrous televised

debate with Donald Trump. Making sure that we're able to make every single solitary person

eligible for what I've been able to do with the COVID, excuse me, with dealing with everything

we have to do with, look, if we finally beat Medicare. Thank you, President Biden

President Trump? It was on broadcast TV. It was highly hyped so that when people were watching it

they knew that everyone else was watching it and knew that everyone else knew. Now, of course

more people were exposed to Biden's fumbling performance. And indeed, it went up from

I think, 67% of Americans to 73%. I forget the exact numbers. It went up a little bit

but not that much. But still, it changed everything. What changed? Well, now that everyone

knew that everyone knew that he was suffering cognitive decline, you could no longer respect

him as the leader of a country, and he was forced to bow out of the race a few weeks later

Common knowledge is interesting because it's what ratifies our social relationships, our relationships of friendship or deference or love or transactional relationship. And that's

because common knowledge more generally is necessary for any kind of coordination. When people

agree to do something that benefits them both, but it only works if both of them do it. And for that

to happen, you need common knowledge. Something as simple as a rendezvous. If you want to end up at

the same place at the same time as someone else, it's not enough to know that that's where they

like to go because they might think about where you want to go and end up someplace else. They

They might even think about what you know about what they know. And you might think about what you know that they know that you know

And each of you could be at cross purposes. Your plans could fall through the cracks, as we say, unless you could establish the common

ground of common knowledge. Each of you knows the other one knows it

And this is also vital for social conventions like paper currency. Why do I accept a $50 bill in exchange for something of value

Well, because I know other people will accept it. But why will they accept it? Well, they know that still other people will accept it

How do they know that? Well, those other people also know that other people will accept it

That's what keeps currency of value, namely the common knowledge that it has value, which

is also why currencies can become worthless if you get, if confidence in them falls, and

then you can get hyperinflation. Or a run on a bank where the deposits in a bank no longer are worth anything

if everyone is afraid that the bank might be unable to cover its deposits if people withdraw it. So

they do withdraw their savings because they're afraid that other people will withdraw their

savings because those people are afraid that other people will withdraw their savings. And so

a self-reinforcing common expectation can create a new reality. In this case, the bank can fail

and in the case of the Great Depression, the entire economy can fail. You can get recessions

for example, when companies are squeamish about hiring a new employee because they're not sure

whether they can sell enough of their product to have receipts that could pay the employees

And then consumers don't want to buy anything because they're afraid of losing their jobs

And why are they afraid of losing their jobs? Well, it's because employers are afraid

that customers won't buy stuff. And so you can get a vicious circle of reverberant doubt or common

fear. The nicest explanation of this came from Franklin Delano Roosevelt, where he said

the only thing we have to fear is fear itself. That might sound kind of like a feel-good bromide

but it's actually literally true that what people had to fear was fear itself. And by

tamping down on that fear by things like the bank holiday, where you couldn't take your money out

of the bank, but that was actually good because no one else could take their money out either

And so it stopped the headlong rush of everyone to withdraw their money before everyone else withdrew their money

A good example of common knowledge are channels for nonverbal communication that have often puzzled people psychologists philosophers for centuries Like why do we laugh So yeah there certain things certain indignities certain incongruities that we notice but why should we be going ha ha ha ha ha Why should

it interrupt our breath? Why should it be so noisy? Likewise, when someone undergoes some

loss or feeling of helplessness, why should tears trickle out of their eyes? Like, why should the

body get involved the way it does? Why do we blush? Why does blood well up in our cheeks

What I suggest is that these are generators of common knowledge. When you laugh, you know you're laughing

It's interrupting your speech, interrupting your breathing. Other people know you're laughing

They can hear it. They know that you know because they can hear the interruptions in your breathing

and you know they know that you know it. Likewise, when you blush, you feel the heat of the blush from inside your cheeks

at the same time as you know that other people can see the reddening from outside your cheeks

and they know that you know that you're blushing. In fact, they might even make the blush worse by saying

you're blushing. Studies have shown that you can even make someone blush

if they're not blushing by falsely saying, you're blushing. So blushing is also a matter of common knowledge

Tears, you see the world through a layer of your own tears

at the same time that other people see your eyes glistening, welling up and the trickle

Eye contact may be the most potent common knowledge generator of them all because you're

looking at the part of the person that's looking at the part of you that's looking at the part of

them and so on. So it instantly generates common knowledge. So why do we do it? Why do we have

these ways of generating common knowledge? Well, each one reinforces or establishes a certain kind

of social reality. And as I've been mentioning, social reality, like any kind of social coordination

is propped up by common knowledge. In the case of laughing, it's we all recognize some infirmity

some weakness, some indignity in some target. It could be some fancy person who's been

lording it over everyone, a teacher, a preacher, a president, a blowhard, the barroom gas bag

that you want to take down a few pegs. Now, if you're the only one taking him down

then he could have you in his sights and you could be in trouble. But there's safety in numbers

How do you generate safety in numbers? Well, laughter, which is, of course, contagious

can signal to everyone, we all recognize that person's weakness at the same time

and we all recognize that we all recognize it. So none of us is in danger. We're standing up

against this person. A well-known example was the White House Correspondents' Dinner in 2011

in which Barack Obama historically roasted Donald Trump. Trump had advanced the birther theory

that Obama had not been born in the United States and was not eligible to be president

He was born in Kenya. Turned out to be false. So Obama said, I've released my birth certificate

And tonight, for the first time, I am releasing my official birth video

This not only showed that he was willing to pretend as if he was actually taking the accusation seriously

but saying this is as absurd as a cartoon, but he followed it up by saying

I want to make clear to the Fox News table, that was a joke

Making fun of Fox News' credulity credulity at anything that attacked anyone on the left. Well, then he went on to take aim at Trump

himself, and he said, well, there are rumors that Trump might be president, and one thing that he

could certainly accomplish is closing down the prison camp at Guantanamo, because Trump has a

history of, shown he's been very good at running waterfront properties into the ground. Now, that

was a dig at Trump's many bankruptcies, Atlantic City hotels and such. And amid the merriment

everyone was laughing but Donald Trump. He was visibly seething, partly because that indignity

that insult, struck to his proudest claim, namely that he was a successful businessman

It's often said that in laughter there is truth, and that was a truth that Trump could not abide

There's even a theory that that was the last straw that tipped him over running for presidency

as a kind of revenge and redemption. It can also be used, of course, convivially

Sometimes we often make fun of ourselves. We Josh, we tease our friends

And there, it's also a kind of hierarchy leveling signal, kind of egalitarian signal

Because when you're friends, you want everyone to be equal. That's the whole point of friendship

You're not someone's boss. You're not someone's superior. And we constantly reinforce that signal in social gatherings by laughing when one of us makes fun of ourselves or our friends

In crying, in particular, the most common trigger for crying, some sort of loss or weakness or surrender

you often want to show that you're not willing to put up more of a fight for the same reason that an army might raise a white flag

or a boxing coach might throw in the towel, as we say

Once it's clear who's won, who's lost, neither side wants the fight to continue

It's in both their interests to back off, and tears are a signal that someone has gone too far and the time is to back off

For eye contact, we can use it for all kinds of social relationships

it is among many animals, not just humans, used as a threat signal that the cold, hard stare can mean

I'm hereby asserting dominance, you better back off, or there could be a fight that both of us

will suffer from. So it's in both of our interests if you back down and you know that I'm standing

my ground. But in humans, we use eye contact to ratify all kinds of things. Basically means

something which so far has been private knowledge, I am right now making common knowledge. As in

can you look me in the eye and say that? That is when you challenge someone who has been saying

something that you know is false, that he knows is false, but that you haven't yet agreed is false

When you say that while looking me in the eye, you're saying, I'm making that common knowledge

and it's going to change the nature of our relationship. I got into the whole topic of common knowledge from my interest in language, because a well-known

phenomenon of language is that very often you can't figure out what someone really means

just by looking at the grammatical structure of their sentences. Someone says, if you could pass

the salt, that would be awesome. You know, what does that mean? Well it doesn mean if you could pass the salt that would be awesome It means give me the salt And polite requests are one of many examples where we don just blurt out what we mean

but we expect our hearer to read between the lines, to catch our drift

and to figure out what is the intent behind the somewhat misleading wording

That's one of the reasons why it took so long to get computers to understand language

If you just programmed them with the rules of English grammar, they would come up with all kinds of wacky interpretations, even though they're not wacky if you look at the literal meaning of the nouns and verbs

But if you say to a computer question and answer system, could you tell me the shortest way to get to Times Square

You know, the literally correct answer is, yes, I could tell you that. That's all you want

You want it to do it. You see, you're not actually asking the question, are you capable of doing such and such

So it's a major phenomenon of language. It's one that I took on a number of years ago in a book that I believe I talked about

on Big Think, The Stuff of Thought, Language is a Window into Human Nature, where I gave

other examples where we clearly don't mean the literal content of our words

Want to come out for Netflix and chill? People kind of know that that doesn't mean you want to come out for Netflix and chill

or, uh, gee, officer, is there some way we could handle the ticket right here

without, like, doing all that paperwork and going to court? People recognize that as a veiled bribe

I cited a dialogue from The Sopranos where a member of the family approaches an old friend

in a supermarket and says, Listen, Danny, we just want you to know how glad we are

a guy like he was on that jury. Wife and two kids. We know you'll do the right thing

Now, everyone knows that that is a veiled threat. So why don't we just cut the crap and say what we mean

That was the puzzle that I took up, and I think the answer depended on common knowledge

A threat is a criminal act, but a veiled threat may not pass the threshold of proof beyond

reasonable doubt, likewise with a bribe, and with a polite request, like, I was wondering

if you could pass me the salt. Again, a very weird thing to say if you think about it literally

you're avoiding the impression of treating someone like a servant. You're not barking orders at them

but by indicating some prerequisite to what you want. Namely, a person couldn't pass the salt if

they're incapable of passing the salt. So if you say, can you pass the salt? You're cluing them that

you want them to pass the salt, but you're treating them with greater respect. So the two different

layers, two different levels of communication. The overt wording determines the nature of your

relationship. The innuendo, the guess, the reading between the lines conveys the content of the

proposition. So common knowledge is what allows people to be on the same page, to coordinate

to act together. That's generally a good thing because all of our conventions, like money

like technological standards, like recognizing who has authority, who's the boss, who can

legitimately boss whom around, like our friendships, our romances, they are all

cooperative endeavors that depend on common knowledge. But common knowledge, when people

act together can also be a fearsome thing as when you have a mob that engages in a riot because

all of them feel that some attack on one of their members will result in them sinking in status or

respect. So they lash out also in a public arena to make sure that everyone knows that they are

formidable. They won't take it lying down. And so you can get riots and pogroms and revolutions

A good example of this is a political polarization in the last 10 or 15 years

And it's been speculated, I think, plausibly that one driver of that could be social media

but not just social media, cable news channels where people watching it are

a subset of the population with common political assumptions. And there's not that much

back and forth between different networks of literal television networks like Fox News

and informal networks within social media of people reposting something that other people

repost that something that other people repost. Studies have shown that we are getting two

different pools of people posting, reposting, seeing what each other sees. And that can lead

to two different pools of common knowledge, really common belief, because for something to be common

knowledge, it has to be true, and contradictory things can't both be true. But you could have two

in fact, we are seeing two pools of common belief where people naturally assume something that they

think is the truth, that their fellow coalition members also see as the truth, that people in the

other coalition don't recognize as the truth. And some of the mutual incomprehension and scorn

that we've been seeing could be that there are fewer channels that generate common knowledge

compared to the era where there were a few nationwide TV stations and newspapers

traditional media were excellent forums for generating common knowledge. When you watch

Johnny Carson or Walter Cronkite or 60 Minutes or Saturday Night Live, you can come to work the next

day and you could make some reference to them and you'd have high confidence that everyone else

would have heard what you heard or seen what you've seen. That can sometimes generate bubbles

and shortages and hoarding. There was, I describe an episode in 1973

At the time, Johnny Carson, who hosted The Tonight Show for many decades

was the king of late night. He was so familiar that catchphrases from the show like

here's Johnny, were kind of national models. Everyone knew where it came from

Anyway, one night, this was a time when there was a oil shortage

because of the Arab oil embargo. though there were also around that time shortages of meat and coffee and sugar

And Carson quipped, Do you know what else is disappearing from the supermarket shelves? Toilet paper

Ha ha ha, you can laugh now. Now, it turned out there actually wasn't a shortage of toilet paper

but soon there was a shortage of toilet paper because everyone watching Johnny Carson

knew that the rest of the country was watching Carson, and therefore everyone else was going to run out and buy toilet paper

So they ran out because they wanted to get theirs before the shelves were bare

So it created a shortage over nothing because in the days of just three commercial networks

they were very good common knowledge generators. Likewise everyone knows about the Super Bowl Everyone knows that everyone watches the Super Bowl That why advertisers often use the Super Bowl to introduce products that depend on common knowledge

The most famous example is the Apple Macintosh. So it was introduced in 1984

It was a way better computer than the PCs that were available at the time, which had 80 rows of 24 characters

You had to memorize these convoluted strings of characters and text. and one mistyped character and the whole thing would crash

So they introduced this insanely great new device that had windows and icons and a mouse, much easier to use

But the problem was that no one was going to go out and buy one

if they thought they were going to be the only one because then the price wouldn't come down with a lot of demand

There would not necessarily be software. There wouldn't be peripherals. There wouldn't be support groups

there would be repair centers. You'd buy a Mac only if you thought enough other people were

buying a Mac. And why would they buy a Mac? Well, because they had to expect that a lot of people

were buying a Mac. So Apple had this problem. They even introduced a predecessor called the Lisa

which flopped. So this time, they hired Ridley Scott, one of Hollywood's most famous directors

He did Alien and Blade Runner. And he put together a striking ad that showed exactly once

in all of TV history, and it was the most expensive ad ever made, it didn't say anything

about the Macintosh. It had a grim corporate meeting where everything was in gray, and then

there was a young woman in a tank top and red shorts who burst into the room, threw a hammer

at the screen, which shattered into a fireball, revealing the rolling text

in January, Apple will introduce the Macintosh, and you'll see why 1984 will not be like 1984

Now, that's kind of a weird ad because it didn't say anything about this insanely great new product. But the whole point of the ad was not the product. The whole point of

the ad was everyone else was watching the ad, and that's what they had to generate. And that was

true of other products that are heavily hyped on the Super Bowl. The Discover card, when it was

first introduced, who wants a credit card that no merchant will accept? What merchant will accept

a credit card that no consumers will have? More recently, the Super Bowl a couple of years ago

was filled with high concept ads for cryptocurrency, which again said nothing about the benefits of

cryptocurrency, like the government can't confiscate it and it's a hedge against inflation

All the ad said was, everyone's buying crypto, don't be left out. The idea would be to whip up

a bubble where people would buy crypto because they think that other people were buying crypto

Why would they think that? Well, they just advertise in the Super Bowl and everyone knows

that everyone watches the Super Bowl. Advertisers care a lot about the difference between the size

of an audience and whether the audience knows that there's a big audience. Now, social media

of course, have a different mode of transmission. They are directed to you in a personal feed

One would think, therefore, that social media were incapable of generating common knowledge

almost by definition. You get it. You have no idea who else is getting it. But people

sometimes perceive social media to be common knowledge. Twitter, now X, was called the town

Square. And a lot of people stayed on X, even though they really hated it, just because the

rivals that came up, like Threads and Blue Sky, just did not have as big an audience as X did

And so people stayed on X because other people were staying on X. Also, the thing about social

media is that because of the like and repost buttons, anything could go viral. You could help

make it go viral. And that's exacerbated by the feature of social media that have a trending column

or a for you column that where you kind of think, geez, if I'm seeing a trending, a lot of other

people are seeing a trending. And I can even make a comment that all those people who are seeing a

trending we'll also see. So it opens up a whole new dynamic of common knowledge, or at least the

perception of common knowledge. And I think it's one of the reasons we see social media shaming

mobs, where someone might make a dad joke or an innocent remark or a wisecrack, and someone decides

it's racist and they attack the person, then all of a sudden you could have hundreds of thousands

of people attacking this person, even if it wasn't intended to be racist in the first place

But I think it's because we have a norm against racism, which is a really good thing

People don't tell ethnic jokes in public anymore, which they used to not so long ago

But what holds up that norm? It's not like the police that enforce it. It's held up like

other social norms because it's just something you don't do and everyone knows that you don't do it

because everyone knows you don't do it. And so if someone seems to flout that norm in public and

people perceive social media as potentially viral, they feel the need to punish it also in public to

prop up the norm. It's not enough that the person who breaks the norm be punished, but everyone has

to know that everyone knows that he's being punished. Otherwise, you have not propped up

the norm. That's why we used to have punishments in public, like public hangings and public

crucifixions and burnings at the stake, or even pillories and stalks. It isn't enough that the

person suffer, everyone has to see, and that other people are seeing the person suffer

and social media make it really easy to do that. It can spiral out of control

and it even brings out, since the cost in one person piling on is so low

and they can kind of gain esteem in their circle of like-minded people

that they're on the side of the angels, it can be very tempted for people to pile on

Now, this wasn't original to social media And many great novelists and dramatists have brought to life the phenomenon where once someone is being punished in public, you can get a kind of frenzied mob that all want to join in

I give examples from great works of literature like Arthur Miller's The Crucible about the Salem witch trials, Arthur Kessler's Darkness at Noon about the Stalinist show trials, and the famous short story by Shirley Jackson, The Lottery, where the upsetting and puzzling thing about the story is you get a mob that attacks a woman for no reason at all

And readers are always wondering, well, why would they do that? And I think Jackson was commenting on the fact that this phenomenon of stoning someone in a public place can take on a life of its own

It doesn't even need a reason