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Psychology (evolutionary or otherwise) seems to be merging with economics already Yes, and that's unfortunate because emotion is not all that important to understanding the business cycle. There is a perfectly good explanation that shows that an economy made of quite rational agents [in the economic sense] will generate the business cycle.... One thing about rational actors is that the are not presumed omniscient. They can be tricked....
This gets back to the main theme: We want the simplest explanation that accounts for the data. Yet I know of no test for “simplest.” Different people can in good faith look at competing explanatory theories and reach different conclusions about which is simplest.
To the extent that rather simple understandings of self-interested behavior explain the business cycle, I tend to agree that we need not look for more. And given the difficulty of measuring emotions, they seem like particularly unhelpful explanatory variables. I don’t mean to dismiss the possibility that they play a role; I just mean to advocate exploring all the other variables first. Yup, the scientific process is biased in favor of explaining things in terms of easily-measured variables; deal with it.
Yet evidence shows that people are “predictably irrational” in two ways. 1) They make predictions that are not only inaccurate, but predictably so; see the research into happiness. 2) They behave in ways that seem manifestly counter to (our understanding of) their self-interest; see the Ultimatum Game. How should economics deal with these dynamics?
Arguably, Dynamic 1 poses no problem for economics. Economists don’t study what you predict; they study what you do – whether or not based on a prediction.
Dynamic 2 is the real challenge to the “rational man” thesis. What conclusions do we draw from the fact that actors do not merely err, but that the errors reflect a predictable bias?
Some people cling to the rational man thesis regardless. They regard economics as a kind of positivist religion. When they find people acting in a manner inconsistent with what our understanding of economics predicts, they shake their fingers and say “Tsk, tsk, obviously there’s something wrong with them.”
Others look on economics as a social science. When they find an anomaly, they say, “Wow, obviously there’s something wrong with our data or our understanding. We presume that they’re behaving rationally, so clearly there’s more to this situation than we yet appreciate.”
And still others conclude that there is nothing “wrong” here; rather, the idea of rationality itself need to be modified to, for example, account for thought patterns that have proven adaptive over time even if they produce maladaptive (“irrational”) behavior on occasion.
In the abstract, I can’t say which of these explanations is the simplest way to reconcile the data.
Given the brain's plasticity, I'm leery of claims that concepts like "fairness" are evolved--especially when that concept varies widely among cultures and individuals.
Nature vs. nurture in the mind. I’m often pondering the extent to which the appeal of music is a matter of nature vs. nurture. Arguably the Western harmonic system derives from the overtone series derived from plucking a string. Aha, harmonics derive from nature! Yet other cultures have very different senses of harmony. So harmonic derives from nurture. But then, at least some harmonic systems also appear to reflect an overtone series – just the series derived from the vibration of a bell, or a metal tube, or a triangle, or a drum. So maybe humans are naturally inclined to develop an appreciation for harmony based on an overtone series, but nurture determines which overtone series we are most exposed to?
But are concepts of “fairness” a function of nature? There's a growing school of thought that moral instincts, like visual ones, are a product of evolution. When we encounter visual situations that rarely arose throughout the period of human evolution, our instincts can lead us to interpretations that conflict with reality; this is an evolutionary explanation of optical illusions. Similarly, when we encounter moral situations that rarely arose throughout the period of human evolution, our instincts may lead us to decisions that are hard to reconcile with what we regard as moral behavior. That is, our " moral instincts" can lead us to immoral behavior.
Given the brain's plasticity, I'm leery of claims that concepts like "fairness" are evolved--especially when that concept varies widely among cultures and individuals.
Nature vs. nurture in the mind. I’m often pondering the extent to which the appeal of music is a matter of nature vs. nurture. Arguably the Western harmonic system derives from the overtone series derived from plucking a string. Aha, harmonics derive from nature! Yet other cultures have very different senses of harmony. So harmonic derives from nurture. But then, at least some harmonic systems also appear to reflect an overtone series – just the series derived from the vibration of a bell, or a metal tube, or a triangle, or a drum. So maybe humans are naturally inclined to develop an appreciation for harmony based on an overtone series, but nurture determines which overtone series we are most exposed to?
But are concepts of “fairness” a function of nature? There's a growing school of thought that moral instincts, like visual ones, are a product of evolution. When we encounter visual situations that rarely arose throughout the period of human evolution, our instincts can lead us to interpretations that conflict with reality; this is an evolutionary explanation of optical illusions. Similarly, when we encounter moral situations that rarely arose throughout the period of human evolution, our instincts may lead us to decisions that are hard to reconcile with what we regard as moral behavior. That is, our " moral instincts" can lead us to immoral behavior.
The results of the ultimatum game do vary a great deal between cultures.
Yup, there’s some variance among people of different cultures.
Just to clarify, my point is that experimental results show people acting in a manner inconsistent with what a simple understanding of self-interest would predict. That fact remains true across cultures – albeit to differing degrees.
I'm skeptical of evolutionary psychology as a scientific endeavor, because the basic theory can explain anything in retrospect--but I've never seen a researcher make a prediction based on EP and then verify it via testing.
Funny you would say that....
Where cultures differ environments differ: a hunter-gatherer tribe may be so closely interdependent that their optimal strategies in the ultimatum game would differ than those of people in more individualistic-independent environments. In a tribal setting, direct competition for resources or sexual partners might be more intense: in such a setting, if you're directly competing with the person proposing the split, it makes no sense to accept less than 50/50....
I like it! That seems like a sound basis for predicting that people in small, close-knit communities would demand greater equity than people in larger, more atomistic societies.
But the last time I looked at experimental results, I saw the exact opposite outcome. That is, people from cosmopolitan, market-based economies offered and demanded GREATER equity; people from more traditional, isolated societies offered and demanded less.
The authors hypothesized that people in market economies were accustomed to interacting with strangers. They identified with BEING a stranger, and therefore identified with the need to accord equity to strangers. And they recognized that building a reputation of rejecting inequitable treatment might prove expensive in the short term but pay off during future negotiations – either with this specific individual, or with others who had learned of your reputation.
In contrast, people in isolated societies were accustomed to frequent, repeated dealing with kin, punctuated by rare interactions with strangers. In such societies there is much less value placed on equity. When dealing with kinsmen, the terms of any one transaction are not so important given the high degree of sharing – both in an economic and gene-pool sense. But the calculus for dealing with strangers is completely different. Because they did not expect the interaction would be repeated, the benefits of establishing a reputation for demanding equity were unlikely to compensate for the short-run costs. And acts of “altruism” would be less likely to result in benefits to your gene pool than acts of selfishness.
Having now set this contrast sharply into focus, I must sheepishly acknowledge that I haven't found a citation to the studies I have in mind. Sorry!
Perhaps I’m unduly influenced by a study of economics, but I tend to think that people respond to incentives, often seeking to maximize ... something. When I encounter an anomaly, my first reaction is not to doubt that people respond to incentives, but to revise my understanding of what people have an incentive to do.
One example in experimental economics is the Ultimatum Game. You are offered $10, no strings attached. Do you take it? Classical economics would suggest yes. But evidence shows that you will actually be unlikely to take it under the following circumstances: You are told that some random person X was given $100 to split between himself and you. He has decided to keep $90 and offer you $10. If you accept the offer, you get $10 and he gets $90; if you reject, you both get nothing. All over the world, people from various cultures respond to this situation in the same way: overwhelmingly they reject. People seem to take offense at the inequity of a 9:1 division of a windfall gain.
Turning down free money just for spite? This shows that people are irrational and don’t really respond to incentives, right? Perhaps. Or perhaps it shows that people have an incentive to demand equitable treatment, and to punish those who don’t behave accordingly.
But that explanation’s just silly. This is a “one-off” game; there’s no long-term relationship between you and this unknown Mr. X, so there’s no rational basis to worry about the future ramifications of your interactions with Mr. X, right? Perhaps. Or perhaps there’s a game-theoretical/evolutionary advantage in treating a broad range of apparently “one-off” games as repeated games. After all, research on the Ultimatum Game shows not merely that most people reject offers of less than 45%; it also shows that most people in the role of Mr. X know that offers of less than 45% will be rejected, and therefore know to offer more than 45%. For whatever reasons, people’s tendency to demand equitable treatment – even in “one-off” games – has resulted in a situation in which players tend to get equitable treatment, just as if they were expecting to have repeated interactions. It’s hard to call this strategy irrational if it works.
To the extent that evolutionary psychology has merit, I would expect it to merge with economics. I don’t mean that as a prediction. I mean that as a statement of philosophy: economists would want to adapt their models as necessary to make accurate predictions of human behavior. But I also expect that economics would remain economics – that is, economists will continue to look for ways to explain actions in terms of promoting the self-interest of the actor. And that’s pretty consistent with evolutionary psych, too.