Trivers on biology in economics

In The Folly of Fools: The Logic of Deceit and Self-Deception in Human Life, Robert Trivers asks “Is economics a science?”  He answers:

The short answer is no. Economics acts like a science and quacks like one - it has developed an impressive mathematical apparatus and awards itself a Nobel Prize each year - but it is not yet a science. It fails to ground itself in underlying knowledge (in this case, biology).

Trivers notes the cost of this:

[T]he first piece of reality they should pay attention to - and this has been obvious for some thirty years now - is biology, in particular evolutionary theory. If only thirty years ago economists had built a theory of economic utility on a theory of biological self-interest - forget the beautiful math and pay attention to the relevant math - we might have been spared some of the extravagances of economic thought regarding, for example, built-in anti-deception mechanisms kicking in to protect us from the harmful effects of unrestrained economic egotism by those already at the top.

Take the use of utility in economics. Economists assume that economic agents maximise utility. But what is utility? Trivers makes the point that biology has a theory, which is over one hundred years old, of what utility is. The concepts of reproductive success, or more particularly, inclusive fitness provide the answer. Rankings between goods by an economic agent could be assessed against this fitness objective. Trivers notes this might not always give the answer, but it is pointless to miss the obvious linkages.

Trivers also has a short shot at the invisible hand metaphor. He notes that biology has hundreds of examples of where the pursuit of self-interest can have dramatic negative effects on group wellbeing. This reflects the recent arguments of Robert Frank.

Trivers saves some sharper criticisms for behavioural economics, where he makes a point I have made before on this blog:

One recent effort by economics to link up with allied disciplines is called behavioral economics, a link with psychology that is most welcome. But as usual, economists resolutely refuse to make the final link to evolutionary theory, even when going through the motions. That is, even those economists who propose evolutionary explanations of economic behavior often do so with unusual, counterlogical assumptions. For example, a common recent mistake (published in all the best journals) is to assume that our behavior evolved specifically to fit artificial economic games.

This point is fair, as many interpretations of experimental games ignore the environment in which the relevant traits may have evolved. For much of our evolutionary history, humans lived in small bands where one-shot games with anonymous strangers would have been rare. For example, we might interpret punishment in the ultimatum game to indicate that people having an innate sense of fairness for which they are willing to bear a cost. However, this could equally be interpreted as a strategy that would maximise personal fitness in a small band through the repeated encounters the two people are likely to have. It may not be a sense of fairness driving their action, but rather pure self-interest.

We should be careful, however, not to take this critique too far. As a reading of Daniel Kahneman’s Thinking, Fast and Slow demonstrates, the findings of experiments are often shown to apply though many real-life situations. A methodological limitation does not imply that we cannot learn anything. We did not evolve to play economic games, but it is an evolved human that is playing them.

The growing use of experimental games by evolutionary biologists reflects this, which was my main takeaway from the Social Decision Making: Bridging Economics and Biology conference last year. While it seems that evolutionary biologists are a few years behind economists in obtaining some results, their (generally) superior methodologies and use of evolutionary biology as the starting framework for the experiments gives me some confidence that they will draw the required links.

As a final note, Trivers also writes chapters in which he makes a similar point about the lack of biology in anthropology, psychology and psychoanalysis. One observation by a biologically inclined anthropologist friend of Trivers describes the situation. “[T]hey think we’re Nazis and we think they are idiots”. That is a fair summary of where we are at.