Economics and evolutionary science

I recommend this Evonomics post about economics post-2008, and the kind of re-evaluation that’s been going on among economists, citing somewhat critically Noah Smith and also Dani Rodrik’s excellent

. Author David Sloan Wilson complains: “All good, but there is something missing from the internet links that I just provided—any discussion of evolutionary theory.”

[amazon_image id=”0393246418″ link=”true” target=”_blank” size=”medium” ]Economics Rules: The Rights and Wrongs of the Dismal Science[/amazon_image]

I couldn’t resist preening a little, for my 2007/2010 book

, has a whole chapter, Murderous Apes and Entrepreneurs, about the importance of the links between economics and evolutionary biology. This also forms one strand of my 2012 Tanner Lectures. In other words, I wholly agree with the argument of the Evonomics post, but thhink there has been a little bit more progress than it acknowledges.

Of course, formal evolutionary theorising is not part of the conventional economics mainstream, although it has some distinguished practitioners; but having said that informally it widely informs much business economics. There are also some leading economists who have been thinking about the overlap between economics and evolution. The ‘murderous apes’ of the chapter title was inspired by Paul Seabright’s brilliant

; Wilson cites Robert Frank’s
. There is also an active strand of research on complexity theory, which
and
among others have written about.

[amazon_image id=”B004XCFI2Q” link=”true” target=”_blank” size=”medium” ]The Soulful Science: What Economists Really Do and Why It Matters[/amazon_image] [amazon_image id=”0691146462″ link=”true” target=”_blank” size=”medium” ]The Company of Strangers: A Natural History of Economic Life[/amazon_image] [amazon_image id=”B008W4ASGC” link=”true” target=”_blank” size=”medium” ]The Darwin Economy: Liberty, Competition, and the Common Good[/amazon_image]

Economics will have to be consistent with what we learn about human behaviour and decisions from other human sciences, not just the other social sciences, but also evolutionary biology, cognitive science and psychology.

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Time for the next techno-enviro-social paradigm?

On this week’s flights I read

by Ian Morris. I thoroughly enjoyed Morris’s big book,
, a grand sweep of economic and social history in the vein of (
,
) Jared Diamond. This new book is a series of essays based on his 2012 Tanner Lectures at Princeton, with comments/criticisms and a response. So it’s much shorter and less detailed than the previous one, although a very good and enjoyable read nonetheless.

[amazon_image id=”0691160392″ link=”true” target=”_blank” size=”medium” ]Foragers, Farmers, and Fossil Fuels: How Human Values Evolve (The University Center for Human Values Series)[/amazon_image]

Morris comes across here as a sort of

meets Jared Diamond. In a nutshell, his argument is that humanity has grown better at using the prevailing energy technology to acquire more kilocalories of energy for use, up to a ceiling. At that ceiling, a new energy basis for society evolves, importantly affecting population density and the size of human social groups, and replaces the previous social/technical paradigm. Domestication of grains and animals enabled farming to replace foraging. The extraction of fossil fuels and their harnessing as steam power led to industrial societies in place of agrarian ones.

Each of these three paradigms involves a different kind of social relations: egalitarian in foraging societies because co-operation is necessary for hunting and gathering, and nobody has a lot of property; hierarchical ones in agrarian societies because some people accumulate property to be defended, and a biological division of labour between the sexes emerges too; and industrial ones more egalitarian with respect to politics and gender but tolerant of wealth inequality. There has been little if any biological evolution among humans – and through the millennia the same basic characteristics (or even values) such as the capacity for love, a sense of fairness etc, exist – but there has been cultural evolution. Specifically, values evolve, being shaped by interaction with the physical, social and intellectual environment. Is it acceptable to treat women as chattels or to have slaves? Do animals have the right to humane treatment? Does marital fidelity matter? These kinds of values have changed significantly.

Although it seems highly plausible that the material and technical basis of a society plays an important part in shaping its higher level values, and that population density and the size of social groups will be important, there is something that feels a bit deterministic about Morris’s argument. It may be that at this short length the arguments become caricatures, with less scope for nuance, because the four critiques of the argument aren’t all that convincing either.

The book has lots of facts, always appealing to me. For instance, did you know the Royal Navy’s West Africa Squadron had intercepted and freed 150,000 Africans being shipped across the Atlantic to the US between banning slave trading in 1807 and the outbreak of the US Civil War in 1865?

It ends rather gloomily, pointing out that the big transitions he identfies – from foraging to farming to fossil fuels – occurred when successful societies hit the “hard ceiling of what was possible given their stage of energy capture and found themselves taking part in a natural experiment….. More often than not, people failed to revolutionize their energy capture and suffered Malthusian collapses.”

Perhaps, he muses with unseemly cheer, that’s about to happen to us unless we can solve the climate change issues. So that’s our choice: a catastrophic collapse of civilization, or a new techno-enviro-social paradigm.

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Shiny models versus human nature

It’s been one of those weeks – three days with meetings from morning to night. So I’m only half way through 

by Michael Lewis, even though he writes like a dream and it’s a pleasure to read.

Meanwhile, I was distracting myself this morning with this interview with E.O.Wilson. Why did he become a biologist? Not much else to do growing up in Alabama, he says here, apart from looking closely at ants.

I’ve not read many of his books, including the famous/notorious

; but I was inspired by 
(1998) and enjoyed
.

[amazon_image id=”034911112X” link=”true” target=”_blank” size=”medium” ]Consilience: The Unity of Knowledge[/amazon_image]

My notes from reading it in 1999, nicely scrawled on by a 2 year old, have the following quotations:

“Social scientists as a whole have paid little attention to the foundations of human nature and they have almost no interest in its deep origins.” (This obviously does not refer to the earliest social scientists such as David Hume, John Locke, Adam Smith, and is becoming less true of at least some of today’s social scientists.)

“Thanks to science and technology, access to factual knowledge of all kinds is rising exponentially while dropping in unit cost. Soon it will be available everywhere on television and computer screens. What then? The answer is clear: Synthesis. We are drawing in information while starving for wisdom. The world henceforth will be run by synthesizers, people able to put together the right information and the right time, think critically about it and make important choices wisely.” (Right analysis but optimistic conclusions? Not much overt sign of more wisdom in action.)

And on economic models: “Their appeal is in the chrome and the roar of the engine, not the velocity or destination.” Vroom, vroom.

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Putting people in economic theory

Some books are hard to judge. I can’t decide whether 

by Paul Frijters with Gigi Foster is brilliant or barking. It looks appealing, an attempt to combine the good aspects of the theoretical rigour of choice theory based on self-interest with the realities of human emotions. Of course love and group identity shape our choices! The book has endorsements on the back from economists I greatly respect. Andrew Oswald calls it, “The most remarkable book I have read in the last decade…. a book that is intellectually taxing but unforgettable.” Jeffrey Williamson and Bruno Frey love it too. So embarking on reading this, I thought it was going to be in the rich tradition of the Adam Smith of
.

[amazon_image id=”1107678943″ link=”true” target=”_blank” size=”medium” ]An Economic Theory of Greed, Love, Groups, and Networks[/amazon_image]

Instead, it’s a more difficult and theoretical read. It’s best explained in a blog post by Paul Fritjers, who says:

“[W]e take the stance of aliens looking at humans as just another species, with love merely one behavioural strategy available to that species. Blasphemous as this may sound, our goal is to apply the scientific method to the realm of the heart.

At the most basic level, we contend that love is a submission strategy aimed at producing an implicit exchange. Someone who starts to love begins by desiring something from some outside entity. This entity can be a potential sexual partner, a parent, “society”, a god, or any other person or abstract notion.From a position of relative weakness, the loving person tries to gain control over this entity.”

In fact, there are four core concepts, including the fundamental one of self-interested choice (‘greed’), in this alternative decision theory. They are love, groups (and power relations) and networks. These concepts are selected from all the other possibilities social scientists have suggested as important in shaping economic choices, such as social norms, freedom, identity, institutions and so on. How they are selected is not fully explained; the author says it follows much work on the explanatory power of each as a potential core concept but I am puzzled about the selection and the mix of categories – emotions, social structures, descriptors of status. Nor did I ever really understand how ‘explanatory power’ was tested. One could say that any of these concepts is self-evidently important in some way in individual choices and social outcomes.

A large chunk of the book sets out this rather odd idea that love is a generalised ‘Stockholm syndrome’ (as Andrew Oswald describes it on the back), a means of getting something from a more powerful person or entity. Apparently, neuroscience says love is not an emotion and nobody is pre-programmed to love anything: “A child needs to be stimulated to develop the ability to love… Unlike many animals, humans do not necessarily love forever what  they bonded with in childhood.” So the book goes on to explain the ‘evolutionary advantage of the love program’, and fits love into the mould of power relations. This takes the book onto a discussion of groups and power, and from groups to networks and markets. These sections touch on other, familiar areas of sociology and network theory.

Somewhere in the necessarily quite dense chapters on this wide-ranging material, I lost track of how the four core concepts lead us to a new choice theory. The final section of the book does look at how the new theory applies in familiar economic contexts. I focused on competition policy, and was disappointed to find that the consequence is to add not much to mainstream economic theory: “The view at which this book arrives regarding competition regulation is thus very close to the standard mainstream view in terms of the merits of any individual case. What is added is an understanding of who the regulator actually are and why they are there, what keeps them honest, where their power comes from, and what language affected parties will use in their appeals to regulators.” But how weird to add an understanding of the regulator and yet not an understanding of how big companies accumulate power and lobby regulators and politicians.

I think the book wants to rescue the fundamental assumption in economics of self-interested choice and make it relevant given all that we’ve learned about evolution, neuroscience and psychology in recent times. I thoroughly applaud this aim, because it is consistent with the evidence from evolutionary biology. Finding out how all this material across the disciplines can be married in a theory of decision making, on which economic models can build, is an important research agenda. This book is an ambitious effort to do so. It didn’t work for me, but now I’d like a lot of other people to read it and say what they think.

 

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Anthropology and all that jazz

It’s a salutary experience to read a book in a different discipline, even a neighbouring one, because it’s a reminder of how specialized we become, and how hard it is to communicate across the boundaries. Reading Gregory Bateson’s 

– hailed as a classic of anthroplogy and psychology – was hard work. This was partly because of the unknown technical language, and partly because the methodology is so very different to how we economists do economics. In addition, there are areas of detail that are just not all that interesting to me, such as Balinese religious customs, say.

[amazon_image id=”0226039056″ link=”true” target=”_blank” size=”medium” ]Steps to an Ecology of Mind: Collected Essays in Anthropology, Psychiatry, Evolution and Epistemology[/amazon_image]

Still, I’ve taken a couple of useful overarching thoughts from the book, mainly about epistemology and methodology in the social sciences. One is that in social science, the game is to discover the rules of the game. Economics, I think, misses this point altogether. To make matters even more difficult, the game is like Alice’s game of croquet with the Red Queen – with mallets that are flamingos and balls that are hedgehogs, or in other words, it consists of wholly unpredictable components.

I liked also his emphasis, citing Margaret Mead, on avoiding the dualism of means and ends, and the instrumentalism that is used to justify. Bateson insists that not only do ends never justify means, but means are in fact ends in themselves. Echoes here of

. There is a rejection of dualism threaded through the book, for example the dualism of ‘man’ and ‘nature’ or generally of the living creature and its environment; these co-evolve, Bateson argues. “If we continue to operate in terms of a Cartesian dualism of mind versus matter, we shall probably also continue to see the world in terms of God versus man; elite versus people; chosen race versus others; nation versus nation; and man versus environment. It is doubtful whether a species having both an advanced technology and this strange way of looking at its world can endure.” This is similar to the message of a book I greatly admire, 
by the late Gillian Rose.

[amazon_image id=”0521578493″ link=”true” target=”_blank” size=”medium” ]Mourning Becomes the Law: Philosophy and Representation[/amazon_image]

The other interesting area is of course his application of cybernetic theory to anthropology and psychology. I found this very hard to follow, however. It seems to concern the well-known warning about reductionism and absence of systems-thinking: Korzybski’s ‘the map is not the territory’. Bateson warns that many problems stem from ignoring the systemic nature of the world in favour of ‘common sense’. John Kay’s

is an accessible riff on this theme, a warning against social engineering by trying to intervene directly to fix things. Beyond this, I find it hard to summarize Bateson’s final section, although I now have his phrase in my head: “Information is a transform of difference”.

One day, I’ll do more than dabble in the other social sciences, and learn some of it properly. For now, back to economics.

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