Evolution for Everyone

So far I have shown that Homo economicus, the conception of human nature imagined by rational choice theory, is a far cry from the real thing. Moreover, it stubbornly refuses to gravitate toward the real thing, even when its shortcomings are made glaringly apparent. This might seem pathological, but only when we adopt a naïve conception of science as smoothly converging upon the truth. When we take seriously the concepts of paradigms from philosophy of science, multiple local equilibria from complex systems theory, and multiple adaptive peaks from evolutionary theory, then stasis, or an incapacity for change, is something that we should expect (see E&E I).

For over half a century, Milton Friedman’s argument that Homo economicus doesn’t need to resemble the real thing to be predictive has helped to maintain the dominance of rational choice theory. That argument has now failed in two ways. First, rational choice theory isn’t as predictive as it needs to be to formulate successful policy. Second, Friedman’s basic argument counts as an example of naïve adaptationism of the sort criticized by Stephen Jay Gould and Richard Leowontin in their famous “Spandrels” paper written in 1979, as I show in E&E III. The fact that these two classic papers have never (to my knowledge) been related to each other says it all about economics and evolution as different paradigms, the overarching theme of this series.

There should be universal agreement on the need to base economic theory and policy on a more accurate conception of human nature–on Homo sapiens, not Homo economicus. That is the rallying cry of a new breed of economics called behavioral economics, which originated in the 1970′s and has become widely known through bestsellers such as Nudge: Improving Decisions About Wealth, Health, and Happiness by Richard Thaler and Cass Sunstein, Predictably Irrational: The Hidden Forces that Shape Our Decisions, by Dan Ariely, and Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism, by George Akerloff and Robert Shiller.

To their credit, behavioral economists do experiments to critique and revise rational choice theory. They have done much to restore the balance between theory and empirical research in economics that is required for all scientific inquiry. Their empirical research program is ambitious and more systematic than much human behavioral research. Their inventory of “games”, which are microcosms of social interactions that can be systematically altered and played in a variety of settings, is priceless. They have done much to delineate human preferences in their quest to find the real Homo sapiens–but there is a problem. Most behavioral economists are curiously uncurious about evolution.

As a symptom of the problem, consider the number of times that the word “evolution” is used in the three aforementioned books. It’s easy for me to check because I have them on my Kindle. The answer is zero, zero, and two respectively, with the two uses in Animal Spirits tangential. Somehow, these authors think they can identify the real Homo sapiens without consulting the genetic evolution of our species or cultural evolution as an ongoing process. With a handful of exceptions, this is representative of the field as a whole.

How is this possible? The subtitle of Animal Spirits provides the answer: Behavioral economists consult psychology, not evolution, in their quest to find the real Homo sapiens, and their psychological inquiry does not lead them to consult evolution in any meaningful sense. This is because most psychologists don’t consult evolution in any meaningful sense. After all, the term “evolutionary psychology” wasn’t even coined until the late 1980′s. The disconnect between behavioral economics and evolution is therefore based on a larger disconnect between psychology and evolution. Make that even larger–a disconnect between nearly all of the human-related sciences and evolution, which is only starting to be addressed by nascent disciplines such as evolutionary psychology.

There is only one argument for claiming that the real Homo sapiens can be identified without consulting evolution that has a shred of legitimacy, in my opinion. Isn’t it possible to study what is without bothering with how it got that way? Of course the human preferences being studied in the laboratory are a product of genetic and/or cultural evolution, but why not just empirically delineate them rather than telling just-so stories about how they evolved?

In evolutionary terms, this is equivalent to claiming that proximate causation can be studied without reference to ultimate causation (see E&E X). No evolutionist would make this claim for any other species and humans are no exception. The venerable idea that “learning” and “culture” somehow remove us from the orbit of evolutionary theory has no substance, since they are sophisticated products of genetic evolution and evolutionary processes in their own right. Learning and culture especially need to be understood from an evolutionary perspective!

The lack of an evolutionary foundation for behavioral economics results in at least two shortcomings. First, since psychology itself is not grounded in evolutionary theory, it consists of a vast array of subdisciplines poorly related to each other. Most behavioral economists do not consult psychology writ large but a relatively narrow slice called cognitive heuristics and biases initiated in the 1970′s. Don’t get me wrong–I like this slice, but it’s not the whole pie.

Second, because behavioral economics began as a critique of rational choice theory, it has resulted in a long list of “paradoxes” and “anomalies”, as if Homo economicus is some kind of Platonic ideal and Homo sapiens is an inferior version. I encourage you to visit the Wikopedia entry on behavioral economics and ask yourself whether the long list of anomalies adds up to a coherent theory of human nature. True to form, the word “evolution” does not appear in the body of the article.

Throughout this series, I have tried to avoid the error of attributing paradigmatic failures to stupidity, ignorance, or suspect motives on the part of individuals. Most rational choice theorists are smart, well-informed, and well-intentioned in their own way, and the same is true for behavioral economists. The paradigm associated with Homo economicus departed from factual reality for other more complex and interesting reasons than the caliber of its architects. The paradigm associated with behavioral economics claims to have identified the real Homo sapiens. Yet, with a handful of exceptions, behavioral economists have not consulted basic evolutionary principles or human biocultural evolution in any meaningful way whatsoever. Even worse, what goes for the new field of behavioral economics goes for nearly every branch of the human-related sciences until very recently. The real Homo sapiens has yet to stand up.

Comments

  1. #1 disgruntledphd
    July 21, 2010

    I would say (speaking as a psychologist) that while evolution is something which many people are interested in within the field, there are some issues with its testability.

    The problem is (as i see it) that the domains investigated by psychology do not leave as many traces in the fossil and arhceological records, so its quite difficult to come up with testable hypotheses which aren’t a reflection of current human nature and nurture, and which may not be reflective of what actually happened to homo sapiens in our evolutionary history.

    Perhaps we need more psychologists with a background in archeology?

    Apart from that minor quibble, I totally agree with the substance of your post.

  2. #2 Sam
    July 21, 2010

    If one were to conduct an experiment without reflecting the current human nature, shouldn’t it last for for many years? I guess we can see how a person evolves throughout his/her life. Hmmmm…I don’t how many psychologists would aim for a background (perhaps a minor) in archeology. Although a good idea, i don’t think many would pursue.

  3. #3 Thomas de Haan
    July 23, 2010

    Mr Wilson is in my opinion succesful in making a diagnoses of some of the main problems in behavioral economics and psychology. Behavioral economists struggle to find the right kind of bounded rationality choice theory and psychology is too scattered and lacks a common language.

    However…

    Mr Wilson completely fails to show what the addition of evolution-think would actually add. What ‘common language’ does the evolutionary perspective have to offer, other than ending every paper with: the behavior we saw in this experiment probably had some evolutionary advantage,someplace, somewere in time, or selection pressure was too low to select it away…

    we are the way we are because of the specific way the universe emerged during the big bang. Still in most of physics, chemistry and biology research, the big bang theory does not play an active role, however interesting the matter (or non matter) may be. Maybe the evolution theory situation is not so different from this….

    if the addition of evolutionary arguments doesn’t add that much to the selectiveness of our behavioral theories, then I’m afraid that occams razor (yes, the one that tends to shave god out of the theories) would razor out the evolution part for theory efficiency reasons.

  4. #4 Tom Hickey
    July 24, 2010

    Let just come out and say, evolutionary theory or not, many economists just make stuff up. It is obvious that people don’t behave the way that REH and EMH assume. These theories assume a representative agent, that is, that everyone is the essentially the same in the approach to consuming and saving. That must mean for everyone that “I” am acting exactly like this. Yet, virtually everyone knows that they do not in act like they are assumed to act under REH and EMH. Maybe some people who have studied economics or are heavily into math might, but I would venture to bet that it is not always, as assumed. It is trying to fit reality to a model and then when it doesn’t work, blaming the data. Bizarre.

  5. #5 Cal Miles
    July 27, 2010

    Behavioral economics is not what you’re looking for if you want experimental corroboration for “human nature” related to economics. For that, you want experimental economics, which is much more rigorous and systematic.

    See the papers of Nobel laureate Vernon Smith on this subject.

  6. #6 Troy Camplin, Ph.D.
    July 29, 2010

    You think evolution is lacking in the social sciences? Try the humanities. Those of us using evolutionary theory are outright pariahs. Fortunately, there are a few evolutionary literary theorists (I know you know one of them quite well — Jonathan Gottschall — and the fact that he can’t get a full time position, even with all his publications), but hardly enough. The humanities are outright hostile to any sort of scientific approach — and this of course includes (especially) evolution. Of course, I add to my difficulties by using both evolutionary theory and Austrian economics. Which is why I’m writing this post at my job as a hotel night auditor.

  7. #7 Emil Karlsson
    July 29, 2010

    Dr. Wilson, if your argument against the free market is that it does not work because people are not completely rational, then this may also disprove statism, because statism may be presupposing that (1) politicians are rational and want to help their population and that (2) people are rational and vote for the party that i. best reflects their values and ii. they think will be best for the country.

    Having less than rational people choose less than rational politicians based on less than rational criteria may be a recipe for disaster.

    Voters may be generally very uninformed about most political issues, especially economics (which is a tough subject even for the initiates) and may be very biased on a few issues (like social conservatives and same-sex marriage or creationism or liberals and universal health care and climate change). They may thus lobby the government to adopt political policies advantageous for their own group, but not likely to the population at large. Thus, politicians may be largely unaware of the desires of voters.

    It may be argued that human nature is largely irrelevant for social organization. If humans are innately cooperative and morally virtuous, no state may be needed. If humans are innately selfish and morally vile, no state may be wanted, as you would put an enormous amount of political, economic and military power into the hands of people you may know are evil. If human populations or human individuals are a mix of these two, then the selfish and vile people may corrupt the cooperative and virtuous (as may have been occurring historically), and we may get the same scenario.

  8. #8 Julian García
    July 31, 2010

    I think this discussion should not be about what is human nature, and if we are evil or not, rational or boundedly rational; nor for or against free market. This discussion should be about how ( and if) evolution could (or should) enlighten our view of human nature, whatever that human nature is.

  9. #9 ap
    August 8, 2010

    the problem i see is that some humans are trying to “steer evolution” in order to fit their vision of what the world should be like. But evolution is anomaly dependent and long and winding before it even reaches it’s destination if it ever does. In a way, by using models and formula to attempt the control of populations/economies, and becoming careless when it appeared their assumptions were right, they have created the very stasis they thought they were avoiding. And people always find a way out of stasis/control, by even the most vile ways if those are the only ways. It just takes a small percentage of the “hoi polloi” to start “evolving” within their lifetime to “corrupt” the whole “program”. are they gonna tell us they figured out women next? ba-dump-crash lol

  10. #10 MosesZD
    August 24, 2010

    Dr. Wilson, if your argument against the free market is that it does not work because people are not completely rational, then this may also disprove statism, because statism may be presupposing that (1) politicians are rational and want to help their population and that (2) people are rational and vote for the party that i. best reflects their values and ii. they think will be best for the country.

    Strawman much? The free market works. Governments work. Both work imperfectly due to the fact that people are not Homo Economicis or Homo Democratris, but Homo Sapiens and are not quite all that rational.

    It is very clear to the people who study/follow these areas that humans do behave like their models/theories suggest. Rather they frequently behave in random or contrary fashions to the predicted behavior of the models in many, many areas. Despite the theoretical claims of certain groups of people, which include the very-right-wing/libertarian segments as well as the very-left-wing/socialist segments of society.

    And, of course, we see the disasters and toll in human life that unfold when we move to their ideals.

  11. #11 Michael
    August 28, 2010

    I think that Professor Wilson’s critique of rational choice theory is misplaced. He argues that “the conception of human nature imagined by rational choice theory is a far cry from the real thing.” But, in economics, rationality is not an assumption about human nature, it is a methodological stance. Economics is not concerned with individuals; “agents” are the rational choosers, not real human beings. Economists use rational individual choice to derive results about the behavior of groups. This is why economics “stubbornly refuses to gravitate toward the real thing.”

    In my view the critic of rational choice theory must question the usefulness of this methodological stance by challenging individual economic models. Professor Wilson does suggest that the usefulness of rational choice theory may be limited. He writes that “rational choice theory isn’t as predictive as it needs to be to formulate successful policy,” but he leaves this claim vague and undeveloped. The economist Fritz Machlup noted long ago that even if the theory isn’t as predictive as it needs to be, it does not follow that it is wrong, but only that it is inapplicable.

    Rational choice theory may be inapplicable for the formulation of successful policies that Professor Wilson has in mind, but critics must be aware that a key result of that theory is to show why, in a wide variety of situations, successful policy cannot be formulated. Mainstream economic theory seeks to identify the limits which economic phenomena impose upon the range of human activities. It does not seek to identify the manner and degree in which the economic interest shapes the general scheme of life. In my view mainstream economics, and its core theory of rational individual choice, is inapplicable not because it employs unrealistic assumptions, but because it systematically excludes a wide range of social interactions.

    Little has changed in the 110 years since Veblen wrote the following: “Whatever form of expenditure the consumer chooses, or whatever end he seeks in making his choice, has utility to him by virtue of his preference…. The question of wastefulness does not arise within the scope of economic theory proper.” (By “waste” Veblen means effort or expenditure that does not serve human life or human well-being.) In this sense I fully agree that rational choice theory is an example of naïve adaptationism of the sort criticized by Gould and Leowontin.

    I encourage Professor Wilson to continue his work with the Evolution Institute and I look forward to his specific ideas on how evolutionary theory can be used to formulate economic policy.

  12. #12 OKThen
    September 27, 2010

    Can you just give and explain one good aha “evolutionary” idea that enriches our understanding of economics?

    Shifting your complaints to psychologists; doesn’t increase your credibility.

    A simple (or complex but understandable) positive example is worth 10,000 complaints.