With the US election looming, a £40 billion tax budget just announced in the UK, and economic difficulties and political unrest across much of the world, fairness is at the top of the agenda.

How do you determine what is fair? A good idea of how to work this out can come from the New Science.

Swiss economist Ernst Fehr, based at the Massachusetts Institute of Technology, has made his life’s work the study of the economics of fairness.

As he has demonstrated with many experiments, fairness entirely rests on the assumption that this impulse also exists in the person who is the object of our generosity, and that he or she will automatically return the favor. We immediately respond to any instance where we are in some way betrayed – whether by bankers rewarding themselves with giant bonuses after bankrupting the pensions of ordinary citizens, or by freeloaders capable of working who illegitimately claim welfare benefits.

Most of us possess an in-built scorecard that abhors a freeloader, with a corresponding need to punish those who take more than their fair share. In humans our abhorrence of unfairness is most evident in the fact that we are willing to punish transgressors of the social contract, even if it comes at our own expense.

Fehr has proved this with a game called the “Public Goods,” a standard in experimental economics. This game is designed to test how people behave when asked to contribute to something that could benefit the entire community, but at a price to themselves.  It’s a bit like asking people to voluntarily pay a sum of their own choosing in taxation toward maintaining the parks in California.

In this scenario, a number of participants are given tokens, which are redeemable at the end for money.  They’re allowed to decide secretly how much of it to keep and how much to put into a common pot.  The experimenters then award some percentage of the total in the pot — 40 per cent, say — to everyone playing. If each player is playing with 20 tokens and all four put in all their tokens, the experiments will award 40 per cent of eighty, or thirty-two tokens to each. The irony of the game is that everyone makes the most money when handing over all his own tokens, since the experimenters reward the most from the highest amounts within the pot.

Although you’d expect many not to put anything into the pot, lest they become victim to freeloaders, this has almost never happened among the large number of Public Goods experiments carried out by Fehr and other social psychologists.

Most people add something to the pot and the average is for people to give up half their tokens to the public good.

This game can be run either as a “one shot” or a “repeat” over a series of up to ten rounds. A very different scenario emerges during repeat Public Goods games.  In that case, the urge to give is initially enormous — on average, people begin playing by giving up to 40 to 60 per cent of their tokens — but this generous impulse quickly abates so that, by the final rounds, nearly three-quarters of all people contribute nothing and the rest, close to nothing.

Although at first glance, it would appear that people are simply following their own self-interest, that isn’t the explanation offered by the players.  When interviewed later, those participants who had initially been generous grew increasingly furious at freeloaders, who were either contributing nothing or less than the others.  The generous players had retaliated with the only weapon available to them: they’d stop contributing to the public fund.  In other versions of the game, when players are allowed to fine the freeloader, albeit at a cost to themselves, they are more than happy to do so, even though they would benefit more individually by continuing to contribute to the pot.

Fehr discovered that, when people are allowed to punish those who are simply along for a free ride, cooperation in the game is maintained. Furthermore, the biggest contributors turned out to be the biggest punishers.

When there is no possibility of punishment, however, cooperation quickly deteriorates, and the game, in effect, falls apart. We’re willing to spite ourselves to stop people from violating our expectation of giving to the common good.  It’s a bit like a taxpayer, annoyed at loads of people on the welfare rolls, refusing to pay his taxes.

Our reaction to inequity has nothing to do with a need for sameness  —or a socialist-style, across-the-board equality. Throughout history, the fact that there is a wealthy group of individuals at the top of any society has not automatically made for revolution.

Members of society are usually only prompted to rise up in rebellion when conditions are manifestly unfair, such in 2008 when bankers took record bonuses after trashing the economy, or when millions of people fully capable of working are on welfare benefits.

None of those at the top of government understand our fundamental need for give-and-take community.  Our sense of unfairness emerges when the most fundamental needs we have — to belong together, to give generously of ourselves, to take our turn — are thwarted, when the promises we make to each other to take our fair share are broken.

Fairness is an innate drive in nature – a basic pulse of life itself.  But the difference between taking too much at the top and the bottom of society is finely balanced. Taking turns and making a contribution to the whole is not only the key to cooperation and the primary glue of society, but also the most politically stable strategy.

Like the Public Goods game, everyone in our society is better off simply by taking turns with each other. If politicians can’t achieve it nationally, we can do in our communities.  In the coming months, I will show you how to achieve true fairness locally and how you can cause this to go viral.