Property Rights Are All in Your Head – Part I

Property rights are, ultimately, beliefs.

You are at your favorite hair salon and you see that a wallet has been left by a client on the table in the waiting area. There is a fair sum of cash in the wallet, but no identification. You show the wallet to the owner of the salon, who helps you try to find the person who lost it. (You are limited in the means of your search because the year is 1866). After significant efforts, you give up. The owner says that the money is now hers; she owns the shop and the wallet was in the shop. You, asserting the truism that finders are keepers, beg to differ.

Who is right?

The law was sufficiently unclear in this case that the answer had to be judged by a state supreme court.¹ A century and a half later, researchers presented this story for participants to judge, and they split very close to down the middle. Who owns the money doesn’t have an answer. The question is not like, how many protons are in a titanium atom, which has a discoverable answer.² The question is more like who is better, the Beatles or the Stones?

For many questions, there can be no “right” answer because concepts such as property rights are created by—even, one might say, imagined by—human intuitions, which vary according to many factors, not the least of which is self-interest. Property rights are not things that we discover in the world, but rather ideas that people create and agree on. This creates both confusion and disagreement.

Who owns what is made even more complicated by the fact that we often attach property rights to another made-up entity: human groups.

This essay argues that because property rights are just ideas in people’s heads, there’s often no point in arguing who “in fact” owns a little region of the world—to name it is to take a side—where a whole lot of people keep arguing about who “in fact” owns it.

Property Rights and Wrongs

Some animals seem to respect property rights. Among one species of butterfly, whoever gets to the flower first gets to keep it. When newcomers arrive, they defer to the resident.³ In some species, however, it’s the reverse: If one individual is at a resource and another one arrives, the convention is that the resident leaves and the newcomer takes possession. Generally, different species use different conventions to avoid fights over resources. Generally, respect for property rights, in some form, is not unique to humans and can be found in taxa including insects, birds, and, especially, mammals.

Indeed, some of our mammal relatives are pretty sophisticated about property rights. In classic work in the 90s, two researchers looked at how long-tailed macaques thought about who owned a tube of raisins, something these creatures value a great deal. In the crucial comparison, the tube was either fixed in place in such a way that the “owner” could put their hand on it but not move it about or, in another condition, attached to an object by a tether but movable by the macaque. In the latter condition, when the animal could move the tube around, even dominant animals did not contest ownership. In the contrasting condition, they did. Dominants “believe” that another animal has a “property right” when the owner can move the thing around, not merely stand near it.

Among humans, even young children have intuitions about ownership. Kindergarteners think another child has a property right over an object if that child is using it.⁴ (That doesn’t mean that children always respect others’ property rights. Children’s moral fiber stiffens over time.) Even three-year-olds can acquire property right beliefs, simply by being told that something is “theirs to keep.”⁵ More recently, scholars seemed to demonstrate some understanding of ownership in infants—five months or so—though this work⁶ has recently been called into question.

From these examples and the wallet case, we see that property rights are not like atomic number; titanium has 22 protons no matter how many people think it has more or fewer. You can bring titanium into a lab and do cool science on it to measure its atomic number and get an answer, independent of what is in people’s heads. In stark contrast, property rights are conventions. Rights are a psychological phenomenon, getting their reality because of something in people’s—or insects’—brains. Property rights are not intrinsic properties of objects. Property rights are created by people’s beliefs. Their only reality lies in those beliefs.⁷

Those beliefs have teeth. In humans, property rights get their traction through a distinctly human trait: morality.

Here’s how this works.

As we saw in the wallet case, property rights are, in their essence, about conflict. Rights are only relevant when there are two parties that claim access to some resource, whether a wallet, land, ideas, or anything else.

So, the question is, when conflicts break out, how is the winner decided? If you own a house and someone breaks the door down, cooks breakfast in the kitchen, and takes a nap on the couch, when the police arrive, that person—having committed the offense of trespassing—will be duly arrested, charged, and punished. You have a right to the exclusive use of your house because of this enforcement. Because it’s “wrong” and “illegal” to use your house without your permission, the instruments of state are brought to bear to secure your right to your house through punishment.

All property right conventions are enforced the same way, whether formally by law enforcement or informally when your mom slapped your little brother’s hand for trying to take “your” brownie.

I like the way that some economists put it,⁸ arguing that at its core, a property right is a promise that others won’t punish you. They say that a property right is a “guarantee… against reprisal, in that a property right places restrictions on punishment…”.⁹ That is, the teeth of property right beliefs is that they indicate which side people will oppose when a conflict emerges: the one who violated the property right.

Which, by the way, raises the point that some property right regimes are reversed. The moral rule and the law that protects you in your house is “don’t take,” but the regime can just as easily be, “must share.” If your mom tells you to sit down and watch television and you sit so as to block your little brother’s view, then you’re the one who might get the time out.

Shared norms exist across cultures. Among the San, as portrayed in the film The Gods Must be Crazy, tools are subject to the “must share” norm and if one tries to keep the tool for oneself, one invites moral censure. The reality of the rule derives from the fact that everyone has the same idea in their heads and will gang up on the person refusing to share. Just like power, property rights come from shared beliefs.

The key point of all of this is that the correct way to think about what a property right is—its ontology, a philosopher might say—is, somewhat counterintuitively, shared beliefs. It is, again, not like the number of protons in titanium, something to be discovered by learning facts about the world out there. You have to look inside people’s heads. You have to know what moral beliefs they hold and what facts they believe to be true. And, of course, as beliefs change, property rights change.

The Right Moves – How do property rights change hands?

The fact that property rights are a psychological phenomenon makes things hard enough. Matters get worse when property rights move.

Who gets your stuff when you die?

In many places, you get to express your will about who gets your stuff through, well, a will. Today we view the default to be that people’s children inherit any wealth from their parents, but it was not ever thus. Indeed, the fact that we have wills at all is to settle any ambiguity about what rights are transferred. Over the course of history, there have been many different regimes, many of which have been highly consequential.

One obvious example is the inheritance of titles—and associated lands—in the medieval period in Europe. Wars of succession focused on how rights passed after the death of a ruler.

Rules of inheritance can have profound effects on conflicts over protracted periods of time. Anthropologist Rob Boyd has pointed to the example of the Neur conquest over the Dinka as such an example. The two groups, similar in many ways, differed in a number of cultural practices, including inheritance norms. Among the Neur, property rights passed to one heir rather than among multiple heirs, a system that allowed power—through the rights to large pieces of land—to be concentrated in fewer people. Boyd argued that the concentration of power allowed for defense and expansion, contributing to the eventual crowding out of the Dinka by the Neur. In short, how property rights pass after death matters.

Indeed, in the present day, there is considerable debate about how rights should be allocated once the person bearing them dies. Different states in the U.S., for example, have widely variable inheritance taxes and estate taxes. States vary in how much of what you had it feels entitled to.

And to be sure, there are those who object to the present law and would see significant changes. The present (federal) law in America allows a great deal of wealth to be transferred with relatively modest taxation. This regime allows the wealthy to make their heirs—usually but not always their children—similarly wealthy, leading to wealth remaining within families, aiding the propagation of dynasties. Those with egalitarian bents want to end property rights with the death of the wealthy, reducing the longevity of family dynasties.

Is Land Special?

If you go to the grocery store and buy an ear of corn, you are purchasing full rights over that corn. You can eat it. You can give it away. You can bury it. It’s your corn. If someone were to try to prevent you from eating it, gifting it, or burying it, third parties would back your claim to do as you please with the corn.

Property rights over real property—real estate—are considerably more complicated. The first time that people buy a house is when they learn the term “fee simple,” which means that you are buying, in perpetuity, the right to sell, lease or will the property.

There are many other kinds of rights you might have to land. You might, for instance, lease land, which gives you the right to occupy property during some time period, a “leasehold estate.” You can have a “life estate,” which gives you full rights to occupy, improve, and exclude others from your patch, but you can’t sell it or will it; the rights revert to the seller when you die. If you own a condo, then you know that you own your unit—though there can be restrictions on what you can do with it, including decorations and improvements—and you have joint ownership over common areas. In short, ownership can be temporary, shared, and limited in a diversity of ways.

Of course, the heart of debate about land is usually not about contracts, though to be sure there are plenty of conflicts. For example, conflicts about eminent domain, the question of when the government can lay claim to otherwise private property, has led to any number of important conflicts. But the real problem arises because of wars and conquest.

In that case, does the land “really” belong to the losers of the conflict? If so, in what sense is this the case? If property rights exist because of shared beliefs, whose beliefs matter? Certainly the conquerors’ beliefs are typically that they own the land, planting flags to signal their assertion.

In the United States, there has of course been much hand-wringing over this topic. I am not taking a stand on this or any other controversy regarding land ownership. Note, however, that people talk about land being “stolen” rather than “conquered” in the context of the conflict between European colonialists and the people who occupied the land when they arrived. The word “stolen” implies that there was a property right. As the wallet case illustrates, people can differ about who has a property right, even if there is agreement about the facts of the matter.

I was recently fortunate to be able to travel to Patagonia, in Argentina. There, many signs and public monuments assert that the Falkland Islands—or, as Argentina has it, the Islas Malvinas—are theirs. The UK asserts ownership in virtue of their history there and the way that residents self-identify. Argentina points to the proximity and its claim to the island as part of its inheritance from Spain when it achieved independence. The war fought in 1982—at a cost of an Argentine cruiser, a British destroyer, and nearly 1,000 people killed—illustrates how seriously both were willing to back their claims.

Similar disputes over who has the property right exist all over the world, including in Kashmir, Tibet, the South China Sea, and, of course, the Middle East.

In the case of the Falklands/Malvinas, many readers might be unsure about who has the better claim. Does the ongoing UK presence take priority over the Argentinian claim dating back to their independence? These cases are difficult and, in part because there is no “right” answer, such matters are often and unfortunately settled by force. Where there is a complex set of historical facts, there is more room for different beliefs and more room for conflict. In the Middle East, where there is so much more history, there is more room for differing views.

And, of course, it’s worse than that. As the saying goes, history is written by the victors. Suppose that there are people, right now, who want to make an argument about whose land this particular patch is by referring to history. Recall that establishing a property right is just the same as establishing that one can’t be punished for exercising that right, including defending their patch with force or, the reverse, taking that patch by force.

Well, those people, with an interest in the outcome because they are embroiled in a conflict, might be inclined to, let us say, take a certain amount of creative license with the narrative. The audience might be other group members, third parties, or anyone who might affect the conflict one way or the other.

In short, there is no “right” answer to who owns something because the ownership is in people’s heads. It’s worse than that because in the case of land, to the extent history is used to try to change those beliefs, there is an incentive to play loosely with history, which is fraught with the fact that evidence is often scarce and subject to different interpretations. It’s worse than that still because people have complex intuitions about how ownership, even if well established, passes from one party to another.

In future posts, I’ll argue that, as if that weren’t bad enough, it’s even worse than that in some cases because “groups” are psychological phenomena, more like property rights (created by human brains) than atomic number (a natural phenomenon independent of psychology.)

So that’s really depressing, so I’ll end on a more positive note. Humans give rise to property rights which in turn give rise to conflicts but humans have also given rise to things such as treaties, conventions, and international agreements. Because we can now communicate with one another on a global scale, we can try to agree if not on particular cases, at least on a set of principles to apply to cases. Indeed, while it might not seem like it, we have built a world in which, for 100 years or so, most international boundaries have been respected, even if the exceptions are easy to bring to mind. In the future, I can imagine a world in which, more or less, everyone agrees to answer to some difficult questions. Should groups of people in a nation state be allowed to choose to join a different nation-state? Should countries who wage an aggressive war permanently lose territory lost in the conflict? Is conquering territory a legitimate form of acquiring territory? How should we arbitrate claims over territory that has been conquered and occupied more than once?

Difficult questions, to be sure. But if world peace turns on answering them in a way all can agree on, seems worth trying to answer them.

REFERENCES

Davies, N.B. (1978). Territorial defence in the speckled wood butterfly (Pararge aegeria): the resident always wins. Animal Behavior, 26, 138–147.

Eisenberg-Berg, N., Haake, R. J., & Bartlett, K. (1981). The effects of possession and ownership on the sharing and proprietary behaviors of preschool children. Merrill-Palmer Quarterly of Behavior and Development, 27(1), 61-68.

Furby, L. (1978). Possession in humans: An exploratory study of its meaning and motivation. Social Behavior and Personality: an international journal, 6(1), 49-65.

Hamlin, J. K., Wynn, K., Bloom, P., & Mahajan, N. (2011). How infants and toddlers react to antisocial others. Proceedings of the national academy of sciences, 108(50), 19931-19936.

Hoffman, E., McCabe, K., Shachat, K., & Smith, V. (1994). Preferences, property rights, and anonymity in bargaining games. Games and Economic Behavior, 7, 346- 380.

1. The Supreme Judicial Court of Massachusetts agreed with the shop owner. Sorry.

2. It’s 22.

3. See Davies (1978) for the classic work.

4. Furby (1978).

5. Eisenberg-Berg, Haake, and Bartlett (1981)

6. Hamlin, Wynn, Bloom, and Mahajan (2011)

7. For a thorough and excellent treatment, see the work of Bart Wilson, especially his book, The Property Species. My view is that when neuroscience improves, you can bring people into a lab and do cool science and discover, say, that everyone’s beliefs are that the wallet in the opening vignette belongs to you. You can’t do research on the wallet, or anything else in the world, to answer the question because the answer lies in brains, not the world, as in the case of titanium.

8. Hoffman, E., McCabe, K., Shachat, K., & Smith, V. (1994). Preferences, property rights, and anonymity in bargaining games. Games and Economic Behavior, 7, 346- 380.

9. P. 350.