Four reasons why evolutionary theory might not add value to economics
In the lead article to a recent Journal of Economic Behavior & Organization special issue, Evolution as a General Theoretical Framework for Economics and Public Policy, David Sloan Wilson and John Gowdy examined four reasons why someone may not need to consult an evolutionary framework in examining economic and policy questions. The four arguments are riffs on the same theme, but the distinctions between them are worth making.
The first reason is that smart people will come to similar conclusions even if they use different approaches. Wilson and Gowdy note that this argument does not hold because people do not always come to the same conclusion. The neoclassical view of absolute utility maximisation differs from the evolutionary measure of relative fitness, and this relative measure should be reflected in economists’ utility curves. Smart economists have not come to the same conclusions as people using evolutionary theory.
This possibility of drawing different conclusions is why I am a fan of the evolutionary approach, although I would offer a different example, that of behavioural economics (or behavioural science). Many behavioural and neoclassical economists haven’t come to the same conclusions. And given the lack of theory in behavioural science (giving an observed bias a name is not theory), not only have people come to different conclusions, but they lack a theoretical basis to reconcile them.
The second reason provided by Wilson and Gowdy relates to design. If an object or process is well designed, it does not matter what process designed it - be that evolution or god. But as Wilson and Gowdy point out, knowing the design process will tell you if there actually is design. And if you don’t know if there is design, you may come to the wrong conclusions about causative processes. As an example, if you see that children resemble their parents, what is the causative process? By not knowing about the evolutionary design process, you may miss a major pathway by which this resemblance occurs.
The third reason has some truth. Why speculate with evolutionary theory when you can study the real thing? An example that I have posted about before is that estimates of time preference from evolutionary models tend not to reflect empirical measures. So why spend time finding the basis when you can measure the actual trait? Essentially, there are limits to what can be achieved without theory. Wilson and Gowdy ask us to imagine trying to examine adaptations in a bird by just looking at the brain. The behavioural science example also provides an illustration. Studying the real thing has gotten behavioural science to a certain point, but theory is likely needed to pull the list of heuristics and biases into something coherent. And even if theory has not generated rates of time preference that reflects empirical estimates, theory is likely required to deal with observations such as preference reversals.
Finally, Wilson and Gowdy take on an argument that I regularly hear, being that we don’t need to consult every branch of the sciences all the time. Biologists don’t consult with quantum physicists on a regular basis. Wilson and Gowdy’s response to this question is nice, and reflects a theme through the article that for many economists it makes sense not to have an evolutionary framework as part of their analysis. But the problem arises if every economist does not have an evolutionary framework, or if those economists who do use an evolutionary framework never have their work incorporated across the broader field. In that case, there is potential for simply coming to the wrong conclusion (see point one) as the foundation block of the analysis is wrong. As an example, most people don’t consider the basis of their utility functions - they typically use standard forms. But what is the basis of that standard form?
This point also relates to some of the recent debates I have had about obesity. Feel free to come up with an explanation that has no reference to the physical processes of weight gain, or the evolutionary processes that shaped them. But if the explanation is inconsistent with these processes, something is likely wrong with your explanation.
My series of posts on the Journal of Economic Behavior & Organization special issue, Evolution as a General Theoretical Framework for Economics and Public Policy, are as follows:
Social Darwinism is back - a post on one of the popular press articles that accompanied the special issue, a piece by David Sloan Wilson called A good social Darwinism.
Four reasons why evolutionary theory might not add value to economics (this post) - a post on David Sloan Wilson and John Gowdy’s article Evolution as a general theoretical framework for economics and public policy
Economic cosmology - The rational egotistical individual - a post on John Gowdy and colleagues’ article Economic cosmology and the evolutionary challenge
Economic cosmology - The invisible hand - a second post on Economic cosmology and the evolutionary challenge
Economic cosmology - Equilibrium - a third post on Economic cosmology and the evolutionary challenge
Design principles for the efficacy of groups - a post on David Sloan Wilson, Elinor Ostrom and Michael E. Cox’s article Generalizing the core design principles for the efficacy of groups