At this week’s Consilience Conference I am presenting a poster called Conspicuous consumption and female choice: How sexual selection shaped economic growth. The summary:

The evolution by sexual selection of the human propensity to engage in conspicuous consumption contributed to the emergence of modern levels of economic growth.

Males who engaged in conspicuous consumption had higher reproductive success than those who did not, as females responded to the costly and honest signal of their underlying characteristics. The prevalence of males in the population who engaged in conspicuous consumption increased, along with the level of economic activities conducted to fund conspicuous consumption. The increased economic activity associated with rising conspicuous consumption provided a basis for modern levels of economic growth.

A proviso is offered in the concluding comments:

As it is likely that other evolutionary changes to humans are relevant to economic growth, it is not proposed that the desire to engage in conspicuous consumption is the sole “trigger” for modern economic growth. Rather, the model provides a basis for the observation that males engage in work effort and consumption at levels above that required for survival (or at a cost to survival) and proposes that these behaviours have significant economic effect. The need to signal quality to choosy females is an important, but not sufficient, foundation for economic growth.

A copy of the poster can be download from here (it is a pdf that seems more readable when downloaded than when read in the browser), or my updated “My Research” page. The template that formed the basis of the poster came from Colin Purrington, who also offers some sound poster advice. I broke half of his rules.

The working paper that the poster is based on will (hopefully) be released within the next month.

From a debate between Gary Marcus and Geoffrey Miller on the biological basis for musical talent:

Miller: Music’s got some key features of an evolved adaptation: It’s universal across cultures, it’s ancient in prehistory, and kids learn it early and spontaneously. …

Marcus: “Ancient” seems like a bit of stretch to me. The oldest known musical artifacts are some bone flutes that are only 35,000 years old, a blink in an evolutionary time. …

Miller: The bone flutes are at least 35,000 years old, but vocal music might be a lot older, given the fossil evidence on humans and Neanderthal vocal tracts. Thirty-five-thousand years sounds short in evolutionary terms, but it’s still more than a thousand human generations, which is plenty of time for selection to shape a hard-to-learn cultural skill into a talent for music in some people, even if music did originate as a purely cultural invention. Maybe that’s not enough time to make music into a finely tuned mental ability like language, but nobody knows yet how long these things take.

The remainder of the debate is worth a read.

HT: Rob Brooks

I am sympathetic to the argument by Robert Frank and others that competition for positional goods is a major factor driving our behaviour. The natural outcome of this is that we should want to work more, or at least more than anyone else. However, recent trends in working hours do not neatly fit with this story.

When Jared Diamond proposed that agriculture was the worst mistake in the history of the human race, he was referring primarily to work hours. Diamond writes:

[T]he average time devoted each week to obtaining food is only 12 to 19 hours for one group of Bushmen, 14 hours or less for the Hadza nomads of Tanzania. One Bushman, when asked why he hadn’t emulated neighboring tribes by adopting agriculture, replied, “Why should we, when there are so many mongongo nuts in the world?”

There are plenty of studies which support this view. Hans-Joachim Voth summarises the results of a series of studies in his book Time and Work in England 1750-1830 and notes that worUking hours increased from an average 4.9 hours per day in hunter-gatherer communities to 7.4 hours per day in mixed societies through to 10.9 hours per day in advanced sedentary agricultural societies.

Voth also describes how work hours increased further around the time of the Industrial Revolution, with the average hours worked per year by a London resident increasing from 2,288 hours per year in the 1750s to 3,366 hours per year in 1800-1803 and in 1830. This equates to around 64 hours per week.

But work hours peaked around that time. Today, workers in the United States work, on average, around 35 hours per week. With the exception of South Korea, almost no developed country has an average work week of more than 40 hours. Work hours have generally been declining for over 150 years.

Why, with competition for positional goods such as entry to good schools and neighbourhoods, are we working less? The story about competition for positional goods needs to accommodate the fact that while we still work more than hunter-gatherers, recent trends are towards working less.

Nicholas Gruen writes:

[Y]ou’d think that economics would have a good theory of herding, or at least that it would be a prominent subject within the discipline. Alas, if you thought that, you’d be mistaken. When Oswald looked at the biology of herding, the canonical article was Hamilton, W. D. (1971). “Geometry for the Selfish Herd”. Journal of Theoretical Biology 31 (2): 295–311.

This theory models herding as a ‘rational’ strategy to avoid predators. The ‘game’ that gets selected for is for each animal to try to avoid being on the outside of the herd so that the predator gets to eat the outsider. It’s a powerful theory which fits (ie ‘predicts’ a lot of of biological data). …

You know how many times it’s been cited in the economics literature? Well it’s never been cited – at least when Oswald looked it up – it probably has now. …

By contrast, the prominent theory of herding in economics is herding as informational learning. Thus for instance people imitate others figuring ‘they must know something I don’t’. In a cinema, someone yells “Fire!”. People start running for the exit. Others up the back don’t hear what the yeller yelled, but they figure they could do worse than follow the herd. The idea is illustrated at the end of this famous scene. This idea can help explain financial bubbles.

But the biological herding idea seems so much more powerful. Because it suggests that a dominant biological mode is one in which each ‘agent’ seeks the local optimum of their own survival, and that this gives the group some holistic coherence, but that no-one is thinking of the group, and the group’s survival and welfare – the global optimum – is therefore the (arbitrary) result of these individual optimisations. The biological theory of herding spells danger for the herd in many situations.

I had come across Hamilton’s paper before, but this post prompted me to read it properly. It is worth it. Add it to the list of biological examples where the “invisible hand” can lead to an emergent phenomena that is costly to the group.

Audio and slides for Andrew Oswald’s speech, which triggered Gruen’s post, can be found here.

A common recommendation for an addition to my evolution and economics reading list is Matt Ridley’s The Rational Optimist: How Prosperity Evolves. These thoughts are designed, in part, to explain why I don’t plan to add it.

The core theme of The Rational Optimist is that exchange is the major driver of human progress. Exchange allows specialisation and division of labour, which results in people doing the tasks they do best.

Exhange also increases innovation, for which, as Ridley points out, there are cumulative returns. He captures this concept in the phrase “ideas having sex”. Ideas can be combined into new ideas, further increasing their value.

I agree with Ridley’s general argument concerning the importance of exchange and innovation, but when Ridley puts it in the context of evolution, he creates an implication of progress that evolution does not have. For example, Ridley writes:

I have tried to show that, just as sex made biological evolution cumulative, so exchange made cultural evolution cumulative and intelligence collective, and that there is therefore an inexorable tide in the affairs of men and women discernible beneath the chaos of their actions. A flood tide, not an ebb tide.

Through the book, Ridley generally takes this tide to be one way unless government gets in the way. But while biological evolution has a tendency towards greater complexity, there are extinctions and crashes. Ridley turns a general tendency into an iron law.

This habit manifests itself through the book, as noted in an excellent review by Bill Easterly. Suppositions and thought experiments often become statements of fact in the space of a couple of pages. I suspect many of them are right, but some arguments are a stretch.

Part of the reason why Ridley takes the combination and accumulation of ideas to be a forward march is that the ideas which are the focus of Ridley’s discussion are those which drive technological progress. But ideas also appear as religions, urban myths, political philosophies and conspiracies. So when he writes of the Darwinian selection that occurs between ideas, he does not consider whether the idea will be good for the hosts. It may generally be, but again there is no iron law that this is the case.

Ridley also skims over human evolution, attributing change over the last thirty thousand years to cultural evolution. While he occasionally contemplates the role of more recent evolution, such as his suggestion that humans have evolved to have high oxytocin receptivity associated with trade, his exploration in that area sells it short. Willingness to trade and foresight would have been greatly rewarded in recent times.

Despite my discomfort with the direction that Ridley places on evolution, I like The Rational Optimist. It is an entertaining read, and despite the selective use of facts and arguments that come with an advocacy book, it places a light on human progress and the benefits to trade that most people don’t appreciate. I also believe that Ridley’s optimism concerning human wellbeing is well placed over the timeframes in which we can predict. In 2050, despite climate change, the people of the world will be richer, live longer, have better health, have access to more goods and services and experience less extreme poverty, on average, than they do now. Over the last 200 years, technological progress has been very good to us.

Despite Ridley’s claims that he is no Panglossian, he sometimes veers in that direction. Worried about overpopulation? Don’t worry, fertility is falling. Worried about underpopulation and an ageing population? Don’t worry, fertility is going back up again. His approach to the ecological effects of climate change reflect a similar tendency.

I would have liked Ridley to discuss in more detail how he sees his expectation of increasing wilderness areas and protection for ecosystems coming to fruition. He argues that organic farming is land intensive and notes that by adopting more intensive forms of agriculture, we could return land to wilderness. If organic farming were as inefficient in its use of space as Ridley suggests, and was demanded by an increasingly rich population, what would Ridley propose we do about it? Ban it? Many of Ridley’s targets for criticism are the product of the choices of rich people, and there are going to be more rich people.

Ultimately, I also take Ridley’s plea for optimism with a grain of salt. Contrast Ridley’s plea for optimism to Julian Simon’s suggestion that it is worry that actually delivers the benefits.

I have never said that we don’t need to worry about anything. We need to worry about everything, in the same sense that you had to worry whether you’d get here on time, whether there’ll be enough food in your kitchen for next week, and so on. The world needs the best effort of all of us. I’m saying that the result of all this worry – and of your constructive work, of your throwing your life into trying to do good things for the world and for other people – is that on balance you will create more than you will use in your lifetime, and you will leave the world a little better than before, on average.

If there is no iron law that everything will get better, a bit of worry is useful to increase the chance it will.

Overall, Ridley’s case is strongest on the economics. Specialisation and trade have played a massive part in human progress. More people mean more ideas, so larger populations have generated greater technological progress. But as Ridley argued in his book The Red Queen: Sex and the Evolution of Human Nature (a book I should add to my recommended reading list), evolution is not about constant progress. Rather, it is about running as fast as you can to avoid falling behind.

In The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics, Eric Beinhocker argues that the economy should be studied as a complex adaptive system made up of adaptive agents, with the economy emerging from the interactions of those agents. It is an excellent book and possibly the best discussion of why the economy should be studied as a complex adaptive system, but as for other explorations of this area, it does not take the step of bringing complexity economics to life as an applied science.

Complex adaptive systems are open, dynamic and modelled individually, with macroeconomic outcomes reflective of microeconomic behaviour. The units of selection – which for Beinhocker are the modules of business plans – undergo an evolutionary process of differentiation, selection and amplification. This contrasts with the “traditional economic” approach of closed, static systems that are in equilibrium and modelled collectively with no mechanisms for endogenous novelty.

Beinhocker’s critique of neo-classical economics and its foundations does not completely avoid caricature, but his argument that an economy is a complex adaptive system is strong. This naturally leads to observations about the importance of path dependence in outcomes, the possibility of markets failing, the existence of bubbles and so on. For someone who has read much on complexity theory, the usual pieces of work and suspects are wheeled out, from Brian Arthur’s El Farol bar problem to Doyne Farmer’s trading markets. It is interesting, but it is also a sign of a field struggling to gain traction when the same examples are wheeled out repeatedly.

Beinhocker generally stays at Stage 2 of the stages of evolutionary economics, whereby evolutionary biology is not directly incorporated into the analysis. At times, this results in some laboured explanations. For example, in attempting to find the appropriate unit of selection, Beinhocker argues that the definition of a gene is fuzzy and changes depending on whether it is undergoing selection. By attempting to cast uncertainty over the biology, the difficulty in defining the units of selection in the economy might seem less so.

Similarly, gaps can be seen when Beinhocker suggests that the economy has shifted from being a “Big Man” economy, in which someone at the top of a hierarchy directs economic activity and obtains the economic surplus, to a market economy. This results in a shift from survival selection to what Beinhocker calls social selection. Technologies in Big Man economies spread with the survival of their carriers, but now that link is divorced. However, this has not changed to the extent that Beinhocker suggests. Human genes are still under selection, regardless of the form of economic system, although the favoured traits may vary. Survival and reproduction still matter, and the transmission of technologies and ideas remain linked to this. An approach that ignores biological motivations also provides limited insight into the formation of the Big Man or market economies. They too are endogenous to the biological actors.

At times Beinhocker heads towards a stronger evolutionary basis, such as in his suggestion that evolutionary psychology should be used to understand human preferences. However, this ultimately short-changes what evolution can offer. Beinhocker notes its central role when he writes:

Economic wealth and biological wealth are thermodynamically the same sort of phenomena, and not just metaphorically. Both are systems of locally low entropy, patterns of order that evolved over time under the constraint of fitness functions. Both are forms of fit order. And the fitness function of the economy – our tastes and preferences – is fundamentally linked to the fitness function of the biological world – the replication of genes. The economy is ultimately a genetic replication strategy.

The book closes with a discussion of what the lessons are from a complexity framework. Beinhocker warns at the beginning of the book that he does not give concrete answers, but he does offer suggestions.

For businesses, Beinhocker’s analysis is similar to (but predates) the argument by Tim Harford in Adapt. Beinhocker encourages experimentation within companies, with greater tolerance for failure and appropriate feedback mechanisms to tell the business when it is time to drop a particular strategy. Unfortunately, Beinhocker then turns to a discussion of whether companies should pursue narrow shareholder value or long-term growth, at which point the argument becomes weak.

Beinhocker also claims to overcome the left-right continuum through his complexity approach, which acknowledges the emergent and useful behaviour of markets but the possibility of market failure. However, after making this claim, he then suggests a group of policy prescriptions that place him on the continuum and that are only weakly derived the complexity approach that forms the bulk of the book. For example, he adopts arguments concerning the lack of intergenerational mobility in the United States and the importance of parental influences on children, despite the dearth of any evidence for parental influence, yet he fails to mention the argument about path dependence provided by complexity theory (nor the implications of heritable traits). Instead, he falls back on Rawlsian arguments for justice.

One interesting observation by Beinhocker is his description of the role of government as a fitness function shaper. By introducing market based regulations (such as an emissions trading scheme), government shapes the landscape of what strategies will have highest fitness, without prescribing which particular strategies should be used. In such a case, it is not clear that the change in landscape will be efficiency destroying, although Beinhocker does note the potential for what Hayek would term the fatal conceit.

Overall, Beinhocker’s book is a great synopsis of the area, but it confirms that since the formation of the Santa Fe Institute 30 years ago, the field of complexity economics has moved slowly. Beinhocker suggests it takes some time for changes in frameworks to be absorbed. There is no sign of change coming for complexity economics yet.

Many of the suggested additions to my reading list in evolution and economics came from the fields of evolutionary economics and complexity theory.

While my area of interest is sometimes described as “evolutionary economics”, evolutionary economics is a label generally applied to the study of the interactions of firms, institutions and agents in the economy using an evolutionary methodology. Businesses search the landscape for technology and other sources of competitive advantage, and those business modules (technologies, plans) with higher fitness are replicated and spread. Much research in evolutionary economics also has strong links to complexity theory. However, evolutionary economics it is not directly concerned with evolutionary biology.

I tend to argue for the intersection of evolution and economics at a deeper level than that generally examined in evolutionary economics. I suggest there are three stages of evolutionary economics.

1. The metaphor: Economies are like evolutionary systems. The metaphor is the domain of popular books, magazine articles and conversation at the pub.

2. Economies and biological systems are both complex adaptive systems. This is where the field of evolutionary economics tends to operate. Economic activity occurs in an evolutionary system, as opposed to being just like one in Stage 1. Selection in the system is often at the level of businesses and the modules of their business plans.

3. Economies and biological systems are the same system. Economic activity is undertaken by evolved (and evolving) people, with traits and preferences reflecting their evolutionary past. As an extension to Stage 2, businesses are made up of parties with biological interests (shareholders, creditors, employees) and interact in social orders that emerged from interactions between those parties.

There is much useful research being undertaken at Stage 2, and in many cases it is the most useful level of analysis, but economics will only be an evolutionary science when it incorporates Stage 3.

Following the feedback, I have added a couple of evolutionary economics and complexity theory books and articles to the reading list.

Over the last three to four decades, the social sciences have been subject to increasing examination under an evolutionary framework. Leading the charge into consumer and marketing theory has been Gad Saad, a pioneer of evolutionary consumer psychology who was responsible for the first evolutionary psychology papers to appear in any consumer and marketing journals.

The Evolutionary Bases of Consumption is Saad’s “academic book”, in which he argues that introducing an evolutionary framework into the analysis of consumer behaviour and marketing theory can provide an explanation for consumption patterns that cultural critiques struggle to provide. It is a convincing and thorough effort, and full of interesting references.

For someone familiar with the evolutionary psychology literature, many of Saad’s arguments do not come as a surprise. The value in Saad’s book is the detailed cataloguing of the literature behind many of the claims, rather than providing an easy front to back read. The description of it as an “academic book” is how I expect I will use it, as a source of arguments and references.

Saad uses consumption in the broad sense that an economist would, with it encompassing almost all human activities. He maps consumption across four Darwinian modules: reproduction, survival, kin selection and reciprocation. For reproduction, mating itself is a consumption choice, while consumption also serves as a signal to mates. Consumption underpins survival of both oneself and ones kin, with humans having evolved preferences for fatty foods, sugar and sharing with relatives. Consumption also forms the basis of many reciprocal relationships.

While Saad does not explicitly put the text into an economic framework, the analysis is ripe for economic applications. Consumption is shaped by preferences shaped by evolution. Saad has provided much material that could be used in examining those preferences, and the book provides many interesting hypotheses that economists might find value in testing.

Given the depth of the literature already in place in these fields, much of the book involves a critique of findings developed under the standard social science model, which involves assumptions such as the malleability of human nature and a belief that culture cannot be broken down into components. For example, in Saad’s discussion of advertising, it is noted that women in advertisements tend to be young and attractive, the men older than the women, the men taller than the women and so on. This pattern is present across societies, and any cultural explanation concerning trained gender roles suffers from trying to note why there are universal patterns across such seemingly diverse cultures.

My main critique of the book is related to a mismatch between what I expect were Saad’s objectives in writing the book and what I wanted to get out of it. For an outsider with no familiarity with the literature in the consumer behaviour and marketing fields, there was questionable value to having the existing academic approaches explained only for them to be pulled down again. It was important for Saad to address these academic approaches, reflecting years of battles to have evolutionary psychology accepted in the consumer and marketing fields. However, it means that the evolutionary framework gets less space than it should.

The evolutionary explanations also get less space than might be expected simply due to the state of the field in 2007. Many of the arguments made by Saad, while logical under an evolutionary framework, had not been fully tested at the time of writing. Even though the book is only five years old, it already feels like there is much new literature that could be included to bolster the arguments. Many of Saad’s conjectures have now been tested (often by himself) and the book would benefit from their inclusion. Due to this, I hope that there is second edition of this book planned. This might also provide the opportunity for the book to be more forward looking and set its own agenda without having to spend so much time dealing with the failings of the consumer and marketing fields.

I should also note that I have not yet read Saad’s The Consuming Instinct: What Juicy Burgers, Ferraris, Pornography, and Gift Giving Reveal About Human Nature. Released last year and benefiting from much of the more recent research, I have been told it is worth the read.

In 2010, Martin Nowak, Corina Tarnita and Edward O Wilson had their paper The evolution of eusociality published in Nature. They argued that inclusive fitness could not explain eusociality, and that competition between groups was required as an explanatory factor. The anti-group selection forces were quick to mobilise. Apart from the many blog posts and column inches, Nature published a response with 137 signatories defending the concept of inclusive fitness. One paragraph by Carl Zimmer captures (for me) where the argument is at:

Nowak et al respond to all the criticism and don’t budge in their own stand. They claim that their critics have misinterpreted their own argument. And they claim that sex allocation does not require inclusive fitness. Oddly, though, they never explain why it doesn’t, despite the thousands of papers that have been published on inclusive fitness and sex allocation. They don’t even cite a paper that explains why.

Despite the lack of traction for group selection in the evolutionary biology world, there appears to be a resurgence in the social sciences and popular press. For example, Jonathan Haidt, author of the recently released The Righteous Mind: Why Good People Are Divided by Politics and Religion, argues that humans have been subject to and shaped by group selection. Haidt is getting plenty of relatively unimpeded coverage in the popular press.

This resurgence is about to hit a new high with the upcoming release of The Social Conquest of Earth by Edward O Wilson. While I am sure it will receive a skeptical reaction from most of Wilson’s fellow biologists, it is already getting a welcome reception in parts of the media and from some social scientists. Take this piece by Jonathan Gottschall in the Huffington Post. Gottshall writes:

Of course, it would be a great distortion to suggest that people are — like ants — selfless all of the time. But the vision of rigid selfishness that arose from biology’s rejection of group selection was an equally great distortion. The real picture is more complex. Natural selection occurs at the level of groups and individuals. Between-group competition favors selfless genes while competition inside groups favors selfish genes. As Wilson and a colleague wrote, “Selfishness beats altruism within groups. Altruistic groups beat selfish groups. Everything else is commentary.”

My perception is that there is a growing gap between the relative standing of group selection in the social science and evolutionary worlds. This is particularly the case for discussion of the evolution of cooperation and altruism in humans. How wide will this gap grow before a serious response emerges from the evolutionary sciences to the claim that human cooperation is shaped by group selection? There have been some good papers (pdf) on this in the past, but these types of arguments are not getting much column space.

I have added a new page with a suggested reading list for those interested in the intersection of economics and evolutionary biology. It is here, and you can see it in the menu bar across the top of the page.

The list is a work is progress, and I plan to update it as new sources emerge or are suggested (or when I realise what oversights I have made). I also intend to constrain it to the best sources, rather than being a complete list on every thought on the topic.

So if you have any suggestions, please let me know. Comments can be made at the bottom of the reading list page.