Posted by To steal a phrase. By way of ScienceBlogling David Sloan Wilson, we come across an interesting white paper, “The Relevance of Evolutionary Science For Economic Theory and Policy” (pdf). Since I’m an evolutionary biologist, you would probably expect me to be partial to the white paper, but I’m not convinced.
ZOMG!! TEH DARWINISMZ!!
No, that’s not why. I’ll leave aside the focus on general equilibrium theory in economics* (I don’t care for it either), and simply note that the current spate of problems really aren’t theoretical in nature, but ideological and methodological.
The latter, methodology, is really important. Not only has much of economics become far too deductive and has ignored what I call those stupid fucking natural history facts, but it also has forgotten that, to a considerable extent, it is a social, not ‘hard’, science.
So let’s consider the four ways evolutionary biology is supposed to aid our understanding of economics:
Evolution can help make sense of the empirical findings from behavioral economics. Behavioral economics started out by identifying “anomalies” in human behavior, beginning in the 1950s and 1960s with the Allais paradox, Ellsberg paradox and others. These are anomalies against the background of the GE model but need to be understood as key products of gene-culture coevolution. This enterprise is now in progress and should have a high priority for NSF funding.
It’s intriguing, but, before we get to that point, we need a lot more work on gene-culture evolution as well as the anomalies identified by behavioral economics. Also, many of these anomalies are not cognitive, but structural. We will need more precision as to what is biologically irrational versus a misidentification of structural problems (e.g., corporate propaganda, incomplete information).
Here’s the second area:
Evolution can help decision makers understand the large-scale and long-run consequences of economic policies, particularly environmental and social policies. The assumptions of the GE model are constructed to validate the concept of the invisible hand, whereby individual preferences result in outcomes that are benign at the level of the whole society. These assumptions can be valid for a narrow range of contexts but for most contexts the relationship between individual and group welfare is much more complex. Individuals behave in ways that benefit themselves at the expense of others or for short-term gains at the expense of their own long-term welfare. Even when individuals manage to form cooperative groups, the problems listed above appear at the level of between-group interactions, where they can take place with even more destructive force than before. In this fashion, “rational” behavior on the part of lower-level agents becomes part of the problem for the long-term welfare of large-scale society. Evolutionary science offers an extensive body of theory for studying conflict and cooperation at multiple levels that can be used to promote large-scale cooperation and long term sustainability in our own species.
I’m not sure how this is an improvement over the microeconomic understanding of incentives. Evolutionary biologists aren’t the only ones who have grappled with this (hell, Max Weber discussed this). Systems theorists have also examined this. Onto the third area of help (we like helping!):
The proximate-ultimate distinction is as important for economic theory and policy as it is for evolutionary science. One of the most important distinctions in evolutionary science is between ultimate and proximate causation, which reveals the need for two separate and complementary explanations for all products of genetic and cultural evolution. Ultimate causation explains why a given trait exists, compared to many other traits that could exist, based largely on the winnowing action of selection. Proximate causation explains how the trait exists in a mechanistic sense. The two explanations are often conflated in the SBE disciplines. It is especially important to recognize the many-to-one relationship between proximate and ultimate causation, whereby many functionally equivalent solutions can evolve in response to a given environmental challenge. Failing to distinguish between design features and specific implementation of design features can result in the loss of ability to detect correlations and policies that work against the background of some implementations but not others.
I agree, but, other than pointing this out, how exactly do we evolutionary biologists help here? And it gets more confusing, since in economics, there is an Intelligent Designer, or, at least, a Semi-Intelligent Muddler. Finally:
Non-adaptive products of evolution are best understood from an evolutionary perspective. The GE model is based upon the assumption of rational behavior and even some of its alternatives are based upon the concept of bounded rationality. Yet, evolutionary processes often result in traits that aren’t “rational” (=adaptive) in any sense. Two important classes of non-adaptations are costly byproducts of adaptations and adaptations to past environments that are mismatched to current environments. For example, nutritional adaptations that evolved by genetic evolution in past environments are now malfunctioning in modern environments, causing an epidemic of ailments such as obesity, diabetes and immune system dysfunctions. Best practices can fail to spread because mechanisms of social transmission that were adaptive in small-scale society are malfunctioning in large-scale society. Costly byproducts and mismatches exist for cultural evolution no less than genetic evolution. In other words, some cultures cause people to behave inappropriately in their current environments by virtue of how they were adapted to their past environments. It is very difficult to address or even recognize these problems except from an evolutionary perspective.
I’ll agree here: understanding cognitive malfunctions is useful, although I think the behavioral economists are starting to get a good grasp on these phenomena (my main gripe is that not all explanations are proximal behavioral one, and behavioral economics oversells its domain of scope). To the extent that evolutionary biology can help identify the “byproducts and mismatches”, this will be useful.
For me, this is the problem with this white paper: I’m not sure why evolutionary biology, as opposed to other disciplines, is particularly relevant. Sure, we can kludge evolution into our discussions, but it seems to require a lot of gymnastics to do so; it also requires us to believe that other disciplines can’t or haven’t already addressed these issues.
I’m all for studying gene-culture interactions, cultural evolution, and levels of selection (evolutionary interactions among different levels of biological hierarchy) for their own sake. But trying to justify this important research agenda in terms of economic understanding–especially when some economists did see what was coming (they just weren’t listened to because they were Dirty Fucking Hippies)–seems somewhat desperate.
*OK, I won’t let it go. As Paul Krugman has noted non-stop for the last few years, a Keynesian understanding of economics at the zero-bound is very consistent with recent events. General equilibrium theory, on the other hand, has sucked ass.
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