Wednesday, July 13, 2016

Scientists Discover What Economists Haven’t Found: Humans — David S. Wilson interviews Joseph Henrich

Ha ha!
…in our work we’ve tried to test some of the basic predictions made by the Homo economics model using some simple tools from behavioral economics applied across a diverse swath of human societies. Not only do we find that the Homo economicuspredictions fail in every society (24 societies, multiple communities per society), but instructively, we find that it fails in different ways in different societies. Nevertheless, after our paper “In search of Homo economicus” in 2001 in the American Economic Review, we continued to search for him. Eventually, we did find him. He turned out to be a chimpanzee. The canonical predictions of the Homo economicus model have proved remarkably successful in predicting chimpanzee behavior in simple experiments. So, all theoretical work was not wasted, it was just applied to the wrong species.…
In fairness to economists, modeling requires simplification. However, if assumptions are too restrictive, then the models they generate will be too simplistic to yield useful or reliable information. The question in economics is which models are useful and reliable based on quite restrictive assumptions about economic agents.
JH: The central idea that the book follows through is that human cultural learning gives rise to a system of cumulative cultural evolution that, over generations, gradually produces increasingly complex tools, technologies, bodies of know-how, communication systems and institutions. This is effectively a second system of inheritance that has been interacting with our genetic inheritance for over 1 million years. Consequently, understanding humans from an evolutionary perspective requires considering the interaction between these two inheritance systems. The book is built around a series of examples. I use examples of how our anatomy, physiology, and psychology have evolved genetically in response to culturally constructed practices, like fire and cooking, and institutions such as those related to marriage and kinship. 
One central idea that might be of interest to economists is the notion of the collective brain. The process of cumulative cultural evolution that arises from the specifics of how individuals adaptively learn from other members of their social groups means that our ability to produce increasingly complex tools technologies and know-how depend on the size and interconnectedness of a population, over time. This means that innovation, in part, depends on the flow of information among a large population of minds. 
I also make the point that many of our cognitive abilities that we may think of as innate are actually bootstrapped up via cultural evolution from much simpler and less impressive cognitive abilities. Cumulative cultural evolution produces things like numerical systems, spatial reference systems, pulleys, levers, elastically stored energy and complex languages Without these, we’re much less impressive.…
Homo economicus is too restrictive. What to do?
I think the major problem with moving away from the Homo economicus model lay in what to add to the model. The economists I know are nervous about moving away from this canonical model because they worry that it opens the door to the willy-nilly adding of different preferences to fit the data. What the field needs is a disciplined way of theorizing and testing preferences (or irrational beliefs) that can then be added to the model.
This is what I think a fully-fledged evolutionary approach can add to economics — theory that endogenizes beliefs and preferences within a cultural and genetic evolutionary dynamic. Economists can keep all that powerful utility maximizing machinery that they love but it has to be embedded the larger evolutionary framework.
I might add here that Ludwig Wittgenstein's later work showed how language acquisition and use is embedded in world views that provide the logical frameworks for language use by connecting symbols with context through behavior. For instance, pointing is a behavior but the logic of pointing as an indication is logical rather than behavior. This connection is a learned response.

Since this framework and its logic is embedded in language and acquired through learning a language, it goes largely unnoticed and is very difficult to disentangle even when noticed.

Michael Polanyi, the similarly brilliant brother of Karl, author of the The Great Transformation, also called attention to what he called "tacit knowledge" in Personal Knowledge.
The term “tacit knowing” or “tacit knowledge” was first introduced into philosophy by Michael Polanyi in 1958 in his magnum opus Personal Knowledge. He famously summarizes the idea in his later work The Tacit Dimension with the assertion that “we can know more than we can tell.”.[1] He states not only that there is knowledge that cannot be adequately articulated by verbal means, but also that all knowledge is rooted in tacit knowledge in the strong sense of that term.
Tacit knowledge can be defined as skills, ideas and experiences that people have in their minds and are, therefore, difficult to access because it is often not codified and may not necessarily be easily expressed (Chugh, 2015).[2] With tacit knowledge, people are not often aware of the knowledge they possess or how it can be valuable to others. Effective transfer of tacit knowledge generally requires extensive personal contact, regular interaction[3] and trust. This kind of knowledge can only be revealed through practice in a particular context and transmitted through social networks.[4] To some extent it is "captured" when the knowledge holder joins a network or a community of practice.[3]. — Wikipedia
This sort of knowledge is not "natural" in the sense of innate but rather is acquired through experience, specifically socialization, education, and enculturation.

Why is this important? Because the naive assumption is that human minds are mirrors of reality that reflect reality in the same way for all owing to commonly shared physiology. This leads to the incorrect assumption that there natural laws governing the social world in a way similar to the way that "laws of nature" operate in natural science.

Scientists Discover What Economists Haven’t Found: Humans
David S. Wilson, SUNY Distinguished Professor of Biology and Anthropology at Binghamton University and Arne Næss Chair in Global Justice and the Environment at the University of Oslo interviews Joseph Henrich, Professor, Department of Human Evolutionary Biology, Harvard University


Ignacio said...
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Neil Wilson said...

"What the field needs is a disciplined way of theorizing and testing preferences (or irrational beliefs) that can then be added to the model."

What the field needs is a computer game where real humans can do what real humans do in a simulated world with different policies.

The field needs to get out of the lab.