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.