A reader reminded me of this post, from ten years ago. An excerpt:
He sketched a pyramid, taken from his latest book, with the human mind at the bottom, beliefs in the middle, and economic behavior on top. Traditional economics only looks at the top of the pyramid. Masonomics wants to look at all of it, which means ignoring boundaries between economics and other disciplines, including sociology, political science, and psychology. I think that Tyler’s pyramid would fit well with Doug North, who in turn would credit Hayek.
I have sometimes described this in computer terms. We have hardware, consisting of our sensory apparatus and basic instincts. We have an operating system, as shaped by evolution. We have cultural apps running on top of that. And economic behavior is a subset of cultural apps.
And economic behavior is a subset of cultural apps.
I think economic behavior is more fundamental than that. We are a big-brained, social species that has lived and evolved in conditions of shared scarcity for our entire existence as a species. Harold Lasswell supposedly defined politics as “who gets what when and how”. But that’s economics, too. It’s not clear that the two were ever separable in human societies for as long as there have been any.
Money is newer, of course. But even there — here’s a well-known study about fairness in monkeys. Though less appreciated, I think, is that it is also a demonstration that monkeys can grasp the concept of an exchange (‘paying’ for a bit of food with a rock):
https://www.youtube.com/watch?v=meiU6TxysCg
There was also a study of Raccoons (that I can’t find a link to right now) who were taught to trade tokens for food and the great thing was that the Raccoons started washing the tokens like they do their food (perhaps a bit like a miser running gold fingers through his hands).
…oops. Make that ‘gold coins through his fingers’. Where’s my edit?
I like chimps playing the ultimatum game with raisins> who behave more like homoeconomicus than humans do.
The question I find interesting is whether Neanderthals and pre-Great-Leap-Sapiens behaved more like chimps or modern humans in the ultimatum game.
oops. forget the closing tag. we really need an edit function on these posts.
I personally really like Kling’s Cultural Apps analogy at the top tier. The middle tier, both Cowen’s Beliefs and Kling’s Evolution Shaped Operating System, is a bit fuzzy. I guess its because I’m unsure of where you’d slot technology/techniques. Are they Beliefs or Cultural Apps?
Maybe technology/techniques can be thought of more simply as tools (think hominin evolution) but that doesn’t make the slotting problem any easier. Its hard to do Ian Morris style cliometrics without a central focus on energy (including food energy). If energy dominates the evolution of civilization how can the social sciences ignore it?
Maybe economics needs to incorporate more of the type of analysis Vaclav Smil does as some kind of expansion of Adam Smith’s focus on corn/grains.
While our minds focus on projects to be solved, we should never lose sight of the existence of the innumerable variables and the vitality that is omnipresent in all our endeavors. While many things in life can be thought of as machines to be built and repaired, Life itself is not a fixed machine to be created, oiled and tweaked. We naturally tend toward the former way of thinking because it is easier to do so, and may serve our practical purposes, which is all the more reason to resist the static tendency and focus more on the dynamic, all-inclusive element, particularly in those things that really matter, such as public policy.
I find these metaphors helpful, emphasizing as they do what is, as you suggest, ultimately Hayekian metaphysics.
Nature that fram’d us of foure Elements,
Warring within our breasts for regiment,
Doth teach us all to have aspyring minds:
Our soules, whose faculties can comprehend
The wondrous Architecture of the world…
-Christopher Marlowe
With Arnold’s formulation from his young mdr days, he stands at the threshold, but has not entered, the world of complexity theory. Consider the following, from an essay entitled The Star Gazer & the Flesh Eater: Elements of a Theory of Metahistory, by David C. Krakauer, in a collection of essays edited by Krakauer and entitled History, Big History and Metahistory:
“The social sciences have been drawn to elaborate theoretical frameworks that seek to capture regularities at many scales of space and time with little explicit mention of random processes…
…We can measure the complexity of a time series in terms of both its regular and random components. Complex time series traditionally have properties of both. This leads to two contrasting views of complexity, one emphasizing the random and the other, the regular”
The bulk of the essays in the collection, including Krakauer’s, are awesome reads.
Additional passages from that essay:
“Many disagreements in the study of complex systems turn on the relative contribution of extrinsic perturbations versus intrinsic dynamics….
…When we bring together …sub-systems, each in equilibrium with respect to their intensive qualities, we observe flow between the systems measured in terms of variation in their extensive properties”
Additional passages from that essay:
“Many disagreements in the study of complex systems turn on the relative contribution of extrinsic perturbations versus intrinsic dynamics….
…When we bring together …sub-systems, each in equilibrium with respect to their intensive qualities, we observe flow between the systems measured in terms of variation in their extensive properties”
I feel like economics as a whole has a huge blindspot when it comes to drawing on other disciplines. In this case it is economic anthropology- that’s right, a whole field dedicated to these types of issues, including the following:
-what biologically driven behaviors shape our economic decisions?
-how has our relationship with our environment shaped our perception of scarcity throughout time
-how do social systems promote, or make taboo certain forms of economic activity?
Most of the error I see coming from economics and derivative forecasts, is that they ignore the elephant in the room, which is that miscalculation always comes down to “a human problem”. You cannot map a human mind like a machine, let alone a whole group of humans to predict behavior. You can however make a much more precise effort by synthesizing economic and anthropological constructs.