Reader Mark Spahn points us to this book review on the Gene Expression blog of Moral sentiments and Material Interests, edited by Herbert Gintis, Samuel Bowles, Robert Boyd, and Ernst Fehr.

The book's starting point is an empirical look at the actual economic behavior of individuals, in order to see whether it matches the rational-self-interest assumed by economic theory. It is found that it doesn't, and the actual behavior observed is next interpreted in terms of evolutionary psychology. Finally, the political and social significance of these new observations is sketched.

...The authors define three mechanisms leading to altruism and social cohesion: strong reciprocity, conformity, and "costly signaling". These are made possible by innate dispositions evolved in two steps -- simple reciprocity first at the early primate small group level, and the more complex behaviors next at the early human. Altogether they make possible genetic selection for altruism, via net fertility advantages for all members of organized social groups (not simply biological groups or kinship groups) which are successful because their members behave altruistically. Biological competition within the group is suppressed by non-innate social and cultural mechanisms, giving an advantage to members of the group on the average, but not to every individual. This way, with gene-culture coevolution and mutualism, there can be genetic selection for a degree of innate altruism in a way that there could not be without culture and society, which form a kind of artificial environment.

"Strong reciprocity" is what replaces "rational self-interest". It consists of the weak reciprocity described by Axelrod (initial cooperation, continued until the partner defects) plus an additional altruistic propensity to punish defectors even if there's no personal advantage in doing so. In a society of strong reciprocators (altruists both in giving and in punishment), defectors do not have an advantage, whereas in a society of non-punishing altruists, the defectors have an advantage which causes the defector gene to drive out the altruist gene.

Two other behaviors are mentioned. "Conformity" is a weaker principle explaining social uniformity in the absence of the threat of punishment, and mostly applies to cases in which there is no clearly-perceptible advantage or disadvantage for the individual, so he just does what everyone else does. "Costly signaling" only appears in one chapter, which uses the biological concept to explain generosity of the potlatch / largesse / big man type. To me these are less immediately interesting than strong reciprocity, though "costly signaling" is a step on the way toward defining a more complex heirarchal society extending beyond the face-to-face level.

A significant advantage of this book is that it describes a social world which, like the world observed and described by historians, has "multiple equilibria and tipping points" and is thus less stable and less predictable than the imaginary world of equilibrium economics.

Readers of my blog know that I have no sympathy for the simplistic ways that economists apply the apparent axioms of economics to complex real-world problems. Yet I find the fundamental assumption of "rational self interest" nevertheless a completely compelling axiom. We can argue about what is meant by "self" -- is it an individual, a family, a social collective, a gene? -- but regardless, assuming self interest somehow defined is a practical necessity: somehow, we have survived and prospered, so whatever it is we have been doing all these years must be rational self interest.

I fear that many who attack the science of economics for its embedded exaltation of "selfishness" are really engaging in culture warfare, not science. They start with the ethical commandment that individual's interests should be sacrificed to some greater good, and seek to undermine any purported science that seems to achieve reasonable explanatory and predictive power by assuming selfishness. If the nature of selfishness is more complicated that economics typically assumes, if it is indeed tied up in considerations of family, friends, nation, species -- whatever -- then let the science of economics try to adopt itself to those complexities. But those complexities merely redefine and broaden the meaning of selfishness, they do not overturn it. They do not even begin to justify systematic self-sacrifice or coerced altruism. Nor do they lead to scientific rationales for why particular collectivist policies touted in the name of the greater good are either moral or effective.

Update... Economist John Seater opines,

Beautifully expressed. I couldn't agree more. I agree with your skepticism (stated in the first paragraph) of many attempts to explain complex phenomena with current underdeveloped economic theories. Economists know about the limitations of existing theories and always are looking for ways to improve the theories. That's what economic research is all about. In the meantime, they try to use what they've got. For some applications, it works; for others, it doesn't.

• 1988
• 1987
• 1986
• 1985
• 1984
• 1983
• 1982
• 1981
• 1978
• 1977
• 1975
• 1974

I started at the top, with 1988. I was stunned by this passage, revealing that Democratic spin doctors back then were pulling the same tricks they pull today, to downplay the economic success of a GOP-led prosperity:

...some people—and I'm not mentioning any names because I don't want to build up any candidacies before New Hampshire but you know who they are-have actually taken it upon themselves to prove to the American people that they've been worse off under this administration than they were back in the Carter years of the '70s.

Now I agree with you, this takes some doing. How do they manage it? Well, you see, any statistical comparison of the two recent administrations would start with 1977 to 1981 as the budget years of the last administration, and 1981 to 1987 as the pertinent years for this one. Now, that sounds reasonable enough. But our opponents have a new approach, one that would have embarrassed even the emperor's tailors. They take the years 1977, to up to 1983—and then they stop. So you see, not only do 1984 and 1985 not get counted in their database, but they include in this administration's economic record four years of the last Democratic administration. As columnist Warren Brookes pointed out in an article published in the Washington Times, "All of the foreshortened Reagan gains are nullified by the Carter losses, so they look like no gains at all, or, worse, losses." Our successes, in short, are buried under the last administration's failures.

But the truth is otherwise. Because under the last administration real per capita disposable income rose at only one percent annual rate, only half the two percent rate of increase under this administrations gain that has totaled 12.4 percent in six years. Under the last administration, median family income declined 6.8 percent while under this administration it went up 9.1 percent. Or take the real after-tax labor income per hour, If you use the approach adopted by our liberal critics, you see a 4. 5 percent decline. But the truth is that that figure fell 8.5 percent under the last administration and we turned this around and accounted for an 8.9 percent increase.

Under the last administration, the average weekly wage went down an incredible 10 percent in real terms, which accounted for the worst drop in postwar history. Here again, we've stopped the decline. And that's not to mention what all this has meant in terms of opportunity for women, for blacks, and minorities, the very groups our opponents say they most want to help.

Well, since the recovery began, 70 percent of the new jobs have been translated into opportunities for women; and black and other minority employment has risen twice as fast as all other groups. Minority family income has also increased at a rate over 40 percent faster than other groups. In addition, since 1983, 2.9 million people have climbed out of poverty, and the poverty rate has declined at the fastest rate in more than 10 years.

So, think for a moment on what these statistics mean and the kind of political nerve and desperation it takes to try to sell the American people on the idea that in the 1980s they never had it so bad. The truth is, we're in the 63rd month of this non-stop expansion. Real Gross National Product growth for 1987 was 3.8 percent, defying the pessimists and even exceeding our own forecast—which was criticized as being too rosy at the time—by more than one half percent. Inflation is down from 13.5 per cent in 1980 to only around 4 percent or less this year. And there's over 15 million new jobs.

So, believe me, I welcome this approach by the opposition. And I promise you, every time they use it, I'll just tell the story of a friend of mine who was asked to a costume ball a short time ago -- he slapped some egg on his face and went as a liberal economist.

Reagan was the best. Command of the facts. Genuine wit. And a sense of personal warmth that showed through even when he was savaging his opponents.

Posted by Donald L. Luskin at 12:20 AM | link