Nothing in Economics Makes Sense Except in the Light of Evolution?

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.
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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12 Responses to Nothing in Economics Makes Sense Except in the Light of Evolution?

  1. Fred Magyar says:

    Krugman?! Puuleeeze…
    Bah! The only economic theory that makes any sense and gives us at least a hint as to why we are where we are is Biophysical economics. It’s all about the laws of thermodynamics and energy flows. Peak Oil and $150.00 barrel of oil caused TSHTF and was the pin that burst all the ponzi scheme bubbles back in 2008.
    THE AGE OF OIL….pdf
    Most importantly these
    International Journal of Transdisciplinary Research Vol. 1, No. 1, 2006
    Hall and Klitgaard Pages 4-22
    models, like any believable model, must be based upon, or at least consistent with, known
    laws of behavioral, biological and physical science, and not simply ideology. Although the
    ideology that pervades economics today is sometimes associated with political ideology it is
    more often related to its own self-contained but rarely tested ideology, such as “free markets
    lead to efficiency” or “economic analysis is value-neutral” or “externalities can be
    internalized, resolving the original problem”. Many economic models used routinely are so
    inaccurate that they almost invariably make poor predictions of the behavior of real
    economies, for example in the behavior of Latin American economies subject to structural
    adjustment (Hanson-Kuhn, 1993; Hall, 2000). Still these models continue to be used
    routinely, even while top theorists criticize their validity using the scientific method. Why
    are they still used? There are many reasons. Probably the most important are that the theory
    has a certain logical basis, it is well and elegantly developed, it uses mathematical “rigor”
    that is impenetrable to most, because we have not had an acceptable alternative since the era
    of classical economics, and because they are not entirely incorrect in their formulations and
    predictions. Yet they are also enormously and deeply flawed, in a way and to a degree that is
    almost inconceivable and even an embarrassment to someone who has a background in
    natural sciences or who believes in generating truth from the use of the scientific method.
    See also

  2. Bob O'H says:

    Hahahahahaa! Economics trolls.
    Well, now I’ve seen everything.

  3. Lary9 says:

    I see one of my favorite Norman Rockwell paintings at the top left corner, “Freedom of Religion”, part of the 4 freedoms series of 4 watercolors. Excellent selection. Good piece.

  4. God’s story
    God created 432 trillion humans and 60 trillion stars (or star-like heavenly bodies) over 40 million billion years ago. The goal of the creation was to achieve higher harmony.
    To achieve Trinity (as mentioned by Jesus), God and all other gods (except eleven gods mentioned below) were born into this Earth for many times. They did not go about telling people they were gods. Many times they themselves did not know they were gods on Earth.
    God spent trillions of years for achieving Trinity. About 30 years ago, Trinity was achieved. So, the Heaven has been full of joy. With Trinity, God’s punishments are much swifter than before. Another benefit of Trinity is that human sins can be seen by sinners and others in public places rather than hidden from the public. Before Trinity, sins were often covered up in public places.
    People cannot distinguish God (the Creator of Heaven and this physical universe) from the Father of the Creator. In the past when I said God , I sometimes actually meant the Father of God, for the latter was never mentioned in history. Both God and His Father are great. The Father of God has eleven companions who has never been born to any physical world. They are never mentioned in history.
    Humans do not know the Father of God when we are awake. But when are asleep, we go to Heaven every night and we know Him. We simply forget what we know in our sleep, just as we forget our lives in Heaven (before we were born). Trust me, every devil knows who is the Father of God.
    When we go to sleep every night, we go to Heaven to drink energy
    provided by God. That’s the normal condition, but some people go to their friends in hell and drink the energy of God in hell. All humans, no matter in hell or on heaven or in this universe, need the energy of God every so often. This point is obvious to every person in hell or on Heaven. But many people there, as on Earth, are still ungrateful to God most of the time.
    The souls of other animals do not need to go back to Heaven to drink God’s energy. That’s why other animals are more alert in sleep than humans in sleep. That’s why humans die within 7 to 8 days if they do not go back to Heaven/Hell to drink God’s energy in 7 or 8 days. That’s why we feel energetic in the morning even though we may not yet have breakfast in the morning.

  5. scathew says:

    Well, I do think there are some parallels as of late:
    – Those supporting “free market” fix to all that ails are acting like a bunch of f-ing amoral animals.
    – Much of modern thought on the poor is based on “Social Darwinianism” (ie: survival of the biggest assholes – fuck the rest).
    – Advocates of “the markets know best” do seem to be encouraging a free-for-all evolutionary path where, again, the biggest assholes win – fuck the rest.
    That is a sort of “evolution”, just not one that is humanist or shows any sign of empathy. It doesn’t produce the best, at least in any human terms that say Jesus (their savior)(yeah, right) would espouse, but does evolve to the strongest and most evil.
    I’d call it evolution, just sick and perverted evolution.

  6. scathew says:

    PS: Please tell me that “Wretch Fossil” was just having a wee jibe for entertainment’s sake…

  7. scathew says:

    No, going to the web site, no (s)he wasn’t…

  8. popdarwin says:

    I agree that using evolutionary biology to put a bandaid on economics is a stretch. It sounds like economics is trying to become scientific by association, kind of like flying a Mother Theresa flag on a pirate ship.
    It seems to me that it was the rise of the collective instincts that provided the internal infrastructure for economics. The simultaneous need for the collective to inflate egoes in a few leaders, and deflate those in followers, created the first non-material scarcity, the scarcity of leadership-sized ego.
    The collective instincts are a wealth gathering machine, as long as we recognize that ego was the first gold.
    Leadership ability was a ‘precious mettle,’ indeed, without which groups failed.

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  11. bıraktiks says:

    Day pass is the result of a new research, have a negative impact on human health than smoking duymayalım has discovered. In particular, studies in recent years, pregnant women, infants and children, second-hand smoke exposure for passive or even an enormous amount of damage is revealed.
    Ignoring these facts, both to ourselves, as well as adults around us, let’s not forget that we have pregnant women and harm to children. Let’s read and quoted from various sources around the scientific facts that explain in addicts.

  12. Sven says:

    Great post! Thnx!

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