Evolutionary theory meets artificial intelligence and the management of algorithms.Evonomics
As an evolutionist critiquing the field of economics, I felt like a disciplinary outsider until I encountered the work of Friedrich Hayek. The Austrian economist was himself critical of Walrasian general equilibrium theory and proposed a radical alternative: Economic systems are a form of distributed intelligence that evolved by cultural group selection. They work without having been designed by anyone.
That was my area of expertise. I had to admire Hayek as a pioneer, especially since group selection was a heresy and the study of human cultural evolution was in its infancy when he wrote. Nevertheless, both topics have advanced by leaps and bounds since then and do not support his view that economic systems work best in the absence of regulations. Instead, cultural group selection theory points to a middle road between laissez faire and centralized planning that is rich with possibilities.
More recently, three distinguished economists—Samuel Bowles, Alan Kirman, and Rajiv Sethi–have made their own assessment in a retrospective titled Friedrich Hayek and the Market Algorithm published in the Journal of Economic Perspectives.
Daily life requires us to cooperate with a large number of – potentially unrelated – people. This column argues that cultural variation in the ways people cooperate with each other are empirically associated with fundamentally different religious beliefs, moral values, emotions of shame and guilt, social norms, and institutions. This suggests that various psychological, biological, and institutional mechanisms co-evolved to support specific social cooperation systems.Harmonizing personal freedom of choice and action with social responsibility and the self-discipline this entails is a key issue in anthology, sociology, political science, and economics. This problem is fundamentally an ethical one involving norms, in addition to being a behavioral one involving motivation and also a psychological one involving both disposition and learning. Even physically identical twins are not identical in disposition, for example, which results in different preferences and habit structure. Similarly, cultures are diverse and the the result is a diversity of customs and institutions.
A surprisingly simple solution to the conflict between self-interest and mutual benefits at all hierarchical levels.…
The conflict between lower-level selfishness and higher-level welfare pervades the biological world.…
But goodness has its own advantages, especially when those who behave for the good of their groups are able to band together and avoid the depredations of the selfish. Punishment is also a powerful weapon against selfishness, although it is often costly to wield. Every once in a great while, the good manage to decisively suppress selfishness within their ranks. Then something extraordinary happens. The group becomes a higher-level organism.…
Only recently have scientists begun to realize that human evolution represents a similar transition....
In this essay, we have sketched a surprisingly simple solution to the apparent conflict between self-interest and mutual benefits at all hierarchical levels. We are suggesting that the social dynamics that take place naturally and spontaneously in villages can be scaled up to prevent the ethical transgressions that routinely take place at a large scale. Why is such a simple solution not more widely known and discussed? Although we immediately realize this solution when it comes to cell-organism relationships or individuals within villages, we do not realize that the same principles also hold for companies or nations.
One reason is because of an alternative narrative that pretends that the only social responsibility of a company is to maximize its bottom line. Free markets will ensure that society benefits as a result. This narrative makes it seem reasonable to eliminate social controls – precisely the opposite of what needs to be done. Governments have been under the spell of this narrative for nearly 50 years despite a flimsy scientific foundation and ample evidence for its harmful effects. We can break the spell of the old narrative by noting something that will appear utterly obvious in retrospect: The unregulated pursuit of self-interest is cancerous at all scales. To create a global village, we must look to real villages.
…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.…
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.
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]. — WikipediaThis sort of knowledge is not "natural" in the sense of innate but rather is acquired through experience, specifically socialization, education, and enculturation.
A bedrock assumption of economics is that firms become well adapted by competing against each other. If so, then consider a study that I reported upon earlier, which monitored the survival of 136 firms starting from the time they initiated their public offering on the US Stock Market. Five years later, the survivors—by a wide margin—were the firms that did best by their employees.
If only the fittest firms survive, then doing well by employees would have become the prevailing business practice a long time ago. That hasn’t happened, so something is wrong with the simple idea that best business practices evolve by between-firm selection. That “something” is multilevel selection, which is well known to evolutionary biologists and needs to become better known among economists and the business community.
Multilevel selection theory is based on the fact that competition can take place at all levels of a multi-tier hierarchy of units—not only among firms, but also among individuals and subunits within firms. The practices that evolve (culturally in addition to genetically) by lower-level selection are often cancerous for the welfare of the higher-level unit. By the same token, if selection did operate exclusively at the level of firms, then the outcome would often be cancerous for the multi-firm economy. When it comes to the cancerous effects of lower-level selection, there is no invisible hand to save the day.
The kind of firm selection imagined by economists, along with the invisible hand assumption that lower-level selection is robustly beneficial for the higher-level common good, would be called “naïve group selectionism” by evolutionary biologists. Its biological counterpart was roundly criticized during the 1960’s and has had a half century to mature. Modern multilevel selection theory is not naïve and has much to teach the economics profession and business community.
This is the topic of my interview with Lynn Stout, who knows a thing or two about firms. She is Distinguished Professor of Corporate and Business Law at the Cornell Law School and author of Cultivating Conscience: How Good Laws Make Good People and The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public.….Evonomics
Apparently, evolution has equipped us with a subconscious long-term perspective that often disagrees with the neoclassical economic assumption that we maximize utility in the here and now.There is an interesting observation in the post that is also borne out in fact.
The value of reputation can explain such enigmatic human customs as dueling in Europe, “saving face” in East and South Asia, and honor killing in some Muslim communities. For instance, the ancient Chinese practiced filial piety, in which family elders were revered to a degree that they were entitled to the best living conditions—the finest food, the coziest rooms, and the highest social status—even though they were too old to work. The logic: filial piety served as the gold standard for reputation. (How can we trust a person who won’t even treat his parents or grandparents well?) Without knowing the value of reputation, the practice of filial piety makes no economic sense. Clearly, the benefit of reputation warranted the cost of sacrifice.I was just reading that in China today, filial piety is a factor in one's credit score. Those who don't take care of their parents take a reputational hit.
Evolution is a blind, amoral process, only caring about organisms that can leave behind the most copies of genes in their lifetimes, regardless of whether they behave selfishly or selflessly in the short term. That is, when the ultimate evolutionary prize is lifetime fitness, being either cooperative or competitive makes no difference, for they are the two sides of the same coin, serving the same end.
Humans have long lifespans and live in stable social groups. These conditions, as biologist Robert Trivers argues, favor cooperation, which often leads to better payoffs than what individuals can accomplish alone in the long run. That’s why prosocial behaviors have thrived in humans. Accordingly, rather than maximizing the utility in every one-shot deal as assumed in rational choice theory, being rational in evolution means behaving in a way that can lead to maximum lifetime payoff.
With the two conceptual modifications—relative and lifetime payoff—in rational choice theory, neoclassical economics can be made compatible with evolution and gain traction in the real world.Evonomics
Because bonobos, chimpanzees, and humans all exhibit framing effects, it is unlikely that this trait evolved independently in each lineage. Instead, it appears that choice biases are evolutionarily ancient. They were probably present in the last common ancestor of bonobos, chimpanzees, and humans, which lived about six million years ago, and may even be much older. That framing effects are shared with several non-human species also suggests that these biases are deeply rooted in our biology, and can arise in the absence of experience with uniquely human monetary markets. Choice biases may have evolved in response to certain challenges in foraging ecology, or they may represent a by-product for selection on other traits, such as emotions.…Evonomics
The more I learned about economics, the more I discovered a landscape that is surpassingly strange. Like the land of Mordor, it is dominated by a single theoretical edifice that arose like a volcano early in the 20th century and still dominates the landscape. The edifice is based upon a conception of human nature that is profoundly false, defying the dictates of common sense, before we even get to the more refined dictates of psychology and evolutionary theory. Yet, efforts to move the theory in the direction of common sense are stubbornly resisted.
There is plenty of dissent among economists, and some of the best are working the hardest for change. The folks who award the Nobel Prize in economics don’t like the edifice that much either, and often add their weight by awarding the prize to the contrarians. Yet, even with all that talent, effort, and the prestige associated with the Nobel Prize, the edifice remains standing in one spot like a volcano adding to its own height and spewing out toxic policies. Why does it resist change? One reason is ideological, as we shall see, but another reason involves path dependence. Neoclassical economics provides an outstanding example of the “you can’t get there from here” principle in academic cultural evolution. It will never move if we try to change it incrementally. It must be replaced wholesale with a more realistic conception of human nature.…Evonomics
After complaining that economic soul searching taking place since 2008 ignores evolutionary theory, I was made aware of Paul Krugman’s 1996 address to the European Association for Evolutionary Political Economy. I had read it before but upon refreshing my memory I see that it provides an excellent opportunity to reflect upon changes that have taken place in my own field of evolutionary science during the last two decades.…
In short, all of the components of economic theory that made Krugman regard evolutionary theory as a “sister field” in 1996 require foundational changes in economic theory in 2016.Updating Paul Krugman, “Evolution Groupie”
This essay, which was published as a pamphlet by the Hogarth Press in July 1926, was based on the Sidney Ball Lecture given by Keynes at Oxford in November 1924 and on a lecture given by him at the University of Berlin in June 1926.Also
It is not an exaggeration to say that as far as his premises are concerned, Hayek is one of the fathers of Evonomics. So is Thorstein Veblen, who titled an 1898 article “Why is Economics Not an Evolutionary Science?”
The conclusions that Hayek draws from his premises are another matter. In my humble opinion, they require updating. But there’s no point discussing the conclusions that follow from a set of premises unless the premises are first accepted. Discussions centered on Hayek are therefore discussions centered on economics from an evolutionary perspective.…A different view of Hayek. To be continued.
Senator and presidential candidate Bernie Sanders stated many times that America should emulate the Nordic model in terms of economic policy. Is this so unrealistic, as many critics point out? And what if we took a totally unorthodox approach to examining why Norway appears to be a success story? That is what biologists David Sloan Wilson and Norwegian Dag Hessen do in their essay titled “Blueprint for a Global Village”, which appeared with commentaries in the Evolution Institute’s Social Evolution Forum and is reprinted here. We think that both Bernie and his critics can learn a lot about good governance by approaching it from a multi-level evolutionary perspective.Evonomics
Evolution, moral sentiments, and the welfare state: Many now maintain that multilevel selection created a sympathetic species with yearnings for social solidarity. Several evolutionary authors on the political left suggest that collectivist politics is an appropriate way to meet that yearning. Harrison Searles agrees on evolution and human nature, but faults them for neglecting Hayek’s charge of atavism: The modern polity and the ancestral band are worlds apart, rendering collectivist politics inappropriate and misguided. David Sloan Wilson, Robert Kadar, and Steve Roth respond, suggesting that new evolutionary paradigms promise to transcend old ideological categories.More articles but this looks most interesting to me.
