What is evolutionary economics?
I am called an evolutionary economist often enough that I have been tempted to write a post titled “Why I am not an evolutionary economist”. In the absence of that post, Peter Turchin quizzed Ulrich Witt on what evolutionary economics is, and provides a useful description:
[T]here are two main currents in evolutionary economics, which have developed largely independently of each other. One research direction, within which Ulrich himself has been working, begins by questioning the assumption of homo economicus, a rational agent that choses those actions that yield the best balance of rewards versus costs. Real human beings behave in a very different way. …
However, it’s not enough to say that we fail to measure up to the lofty standards assumed by the rational choice theory. What would be particularly interesting is to understand in what ways our behavior deviates from ‘perfect rationality’ and why we evolved to behave in these ways. In the last couple of decades the fields of evolutionary psychology and behavioral economics have been making great strides in answering such questions.
The second current in evolutionary economics is sometimes called the ‘Universal Darwinism’ … Darwin developed his theory to explain biological evolution. But his basic insight has a lot of value when considering the dynamics of economic agents (especially, organizations such as firms and corporations) competing in the market. In biological organisms evolutionary ‘fitness’ is maximized when they increase their chances of survival and reproduction. Firms also have fitness, which is maximized when they increase their revenues and cut costs.
I haven’t heard evolutionary economics described in this split way before, and have tended to see both “currents” as encompassing the cultural evolution of economic systems. Witt (and others) place the evolutionary focus on the evolved human tendencies that underlie the economic dynamics. The second approach (as epitomised by Nelson and Winter’s seminal work) places the evolutionary emphasis on the dynamics themselves. Importantly, Witt’s approach displays some skepticism toward Darwinian approaches to cultural evolution, with non-Darwinian considerations such as diffusion and learning also playing roles.
Unlike Turchin, I would not describe evolutionary psychology or behavioural science (I prefer “behavioural science” to “behavioural economics”) as having made great strides in this area. Behavioural science is a body of work crying out for the theoretical backbone that evolutionary biology could provide. Yet evolutionary biology is not considered in most behavioural science work. It is why we have so many lists of heuristics and biases and so little theoretical unification (giving a bias a name is not theory). Evolutionary psychology has been more fruitful, but is not often enough turned toward economic applications or the empirical findings of behavioural science.
The work of Witt is a rare example of those evolutionary insights into human behaviour being used in an economic context (here is another), but I wonder if the limited spread of these ideas through economics is due to it being within the evolutionary economic framework. Evolutionary economics is a heterodox field on the fringes of economics, so combining the evolutionary approach to human behaviour with a second heterodox approach creates one barrier too many.
Then again, many of those working on the evolution of preferences have expressly taken more orthodox approaches (for example, Arthur Robson notes this on his homepage), but are also some way from transforming economics. In that case, the extent of their impact might be attributed to the failure of that evolutionary approach to explain many of the empirical observations developed by behavioural scientists. Evolutionary approaches have a habit of generating rational preferences.
What does give me hope is that much recent work at the frontiers of behavioural science is driven not by economists or psychologists, but by evolutionary biologists. At times it seems as though they are repeating empirical work done by others before them, but with an evolutionary framework with which to analyse it, those observations take on a whole new light.
As for the label for my work, I am tending towards “Darwinian economics”. I’m not sure if it will work, but it avoids the baggage that comes with “evolutionary economics”, “bioeconomics” and other labels with longer traditions. It is also less of a mouthful than “the integration of economics and evolutionary biology”.