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5/13/2003
"Economics as an Evolutionary Science," by Arthur Gandolfi, Anna Sachko Gandolfi and David Barrash

Reviewed by Paul Derosa

Economics and evolutionary biology have run along parallel tracks for the better part of two centuries; Economics as an Evolutionary Science is an overdue effort to engineer their explicit intersection.

The fields share a common origin in the Scottish Enlightenment of the 18th century and in the writings of David Hume, who anticipated key elements of both Darwin and Adam Smith. Darwin also owed some of his early inspiration to a reading of the economist Thomas Malthus, whose emphasis on the struggle for survival in an environment of scarcity suggested natural selection. More generally, both economics and evolutionary biology are grand studies in maximization. In one, the volume of useful goods and services is being maximized, in the other, reproductive fitness. They use similar mathematical methods and have arrived independently at several similar conclusions. Evolution’s reciprocal altruism, for example, bears a strong resemblance to the economist’s gains from trade. Quantitatively oriented economists from time to time find the solutions to their problems in the pages of Biometrica as do biologists in Econometrica.

In attempting a formal synthesis of these two subjects, the authors of Economics as an Evolutionary Science are venturing onto a controversial terrain. Economics and evolution touch sensitive nerve endings. They always have aroused strong feelings, and they have enlisted many adversaries. Initially, these adversaries were on the right, and for poor Darwin, who can’t seem to satisfy anyone, many of them still are. Even though he subscribed to the conventional beliefs of his time, Darwin, upon the publication of On the Origin of Species, was denounced for serving the forces of sedition by undermining faith in organized religion. Adam Smith’s critics had more material concerns, but essentially the same complaints. His Wealth of Nations was conceived, and accurately recognized, as an attack upon mercantilism, whose beneficiaries included many of the strong business interests of his period. His advocacy of laissez faire promoted a dispersal of economic power from the London clubs to the market place.

Times change, and in recent decades Darwin and Smith have come under attack from the left. To be completely fair, the left for a long period overlooked the social side of Darwinism and, given its secular orientation, was well disposed toward the theory, so long as it applied to nature’s domain exclusive of human beings. This last qualification, however, proved to be strategic. Even though he didn’t refer to them in The Origin of Species, Darwin always knew he was writing about humans. His personal correspondence is filled with little empirical observations relating natural selection to the actions of his children and friends. In the 1960s, E.O. Wilson and Richard Dawkins picked up on these thoughts and founded the field of sociobiology for the explicit purpose of applying Darwinian models to the study of human behavior. When Wilson and Dawkins dared to say what Darwin would not, the left awakened to its oversight, and the cries of fascism rang out.

Economics has experienced a similar, if slightly less acrimonious fate. After a period of embrace during the Keynesian ascendancy, the left has become increasingly disillusioned with the power of economics to promote the egalitarian program. At the same time, practicing economists could not help but be swayed by the real-time failures, in differing degrees, of central planning in both Eastern and Western Europe. They further alienated the left by drifting away from centrally directed models of growth and by reacknowledging that, despite their seeming indifference to inequality, free markets and free trade are the best hopes of the world’s poor.

Aside from differences in the particular grievances that are listed against them, evolutionary biology and economics share a common element that unites their critics. This element is their common heritage in skepticism and empiricism, which binds these two disciplines at the hip and, to the mind bred on Continental rationalism, renders them guilty of an original sin. The evidence of their sin is that each presumes to offer a theory for an elaborate order that develops and endures without the aid of either a guiding intelligence or a moral objective. In the case of evolutionary biology it is a natural order, which, once started, evolved from a one-cell creature to the full glory of nature, motivated by little more than random chance and the logic of natural selection. In economics it is a social order by which millions of anonymous individuals, pursuing no end more noble than self-interest, cooperate through the marketplace to satisfy one another’s material needs. Both fields evoke the watch but exclude the watchmaker, or, in the words of Hume, they find Design without Mind. Of all the offenses of which evolutionary biology and economics are putatively guilty -- their indifference to inequality, their justification of hierarchy, their concentration on gender conflict -- all are subordinate to this most grievous crime of denying a role for rational direction. For in so doing, they deny the utopian possibility, which the hand of rational man must surely bring to pass. Indeed, it is on this point that Darwin’s diverse critics touch fingers, for in rejecting Darwinism in favor of the creation myth, the religious right is signing up behind the mother of central planning fables.

Sociobiology, now called evolutionary psychology, is the application of Darwinian models to the study of human behavior. It deals with such issues as mate selection, relations between the sexes, family relations, social status, and other matters which once were the exclusive domain of sociology. Economics, mainly through the work of Nobel laureate Gary Becker and his associates, has investigated many of the same subjects and also has approached sociology’s mansion, albeit by a different road. Work in both fields stands out from mainstream sociology, and while many evolutionary psychologists now profess liberal politics, they still seem to unable to avoid a politically incorrect view of the world.

Anna and Arthur Gandolfi and David Barash, two economists and an evolutionary psychologist, (GGB) have opened the door to what could become an intellectual party. They are combining two fields, each of which has a more compelling theory than anything now found in sociology. Their effort undoubtedly will be labeled reductionist, but they nonetheless offer the hope of bringing to the study of sociological problems a more powerful apparatus than has so far been brought to bear.

Some flavor of their work can be obtained from their demonstration of how evolutionary psychology can support economic theory in shoring up one of its weaker points. No professor of economics looks forward to the point in the introductory course when he or she has to reconcile economics’ insistence on the primacy of self interest with their students’ real world experience with acts of altruism. Evolutionary biologist Robert Trivers comes to their rescue on this issue with his theory of inclusive fitness. Trivers’ argument is richly nuanced and difficult to summarize without doing it injustice, but, briefly, it asserts that while genetic survival requires self-interest, the concept of rational self-interest can be extended to include a measure of altruism. Individuals can weigh the cost of any act against its genetic benefits to determine whether on balance it raises or lowers the incidence of one’s own genes in the future gene pool. Those acts that confer benefits beyond their cost raise the probability and should be undertaken. Those that do not should not. One can imagine individuals within a species who are endowed with altruism beyond rational bounds, in the sense of causing them to engage in acts that reduce the probability of their genetic propagation. To the extent these individuals act systematically, they place their own genes at a reproductive disadvantage. They must necessarily disappear, leaving only those individuals who are self-interested in Trivers’ sense.

The existence of low-hanging intellectual fruit such as this does not, however, mean that uniting economics and evolutionary psychology will be easy, and GGB have no illusions that it will. Their effort to bring about a formal synthesis makes stimulating reading for anyone interested in the social sciences, but the way forward is far from clear. One of the obstacles is the insistence of evolutionary psychology that, despite the variety of ingenious, indirect, and even self-deluding strategies it might provoke, genetic survival in the sole motivating force of all behavior. Such purity is too reductionist even for economists. GGB, making the best of things, treat this insistence as a potential advantage, an example of theoretical parsimony. Why resort to a more elaborate theory, they ask, without seeing how far the simple one will carry you?

Accordingly, the authors devote a good deal of ingenuity to creating a formal model and putting it through its paces. The device they use is to employ the utility maximization framework of economics and incorporate genetic fitness as one of its main arguments. They apply their theory to analyzing such problems as family size, investment in offspring, parental bequests, population demographics, and several other issues that for some time have comprised the common ground of the social sciences. Their results will be very familiar to readers already aware of the work of Becker and company. Most of the smooth trade-offs that fall out of the purely economic analyses still prevail in the extended model, but there is much that is new. Evolutionary psychologists, for example, may be surprised to learn that financial bequests are a substitute for both number and quality of offspring as a means of genetic self-perpetuation. It seems financial market development and the introduction of safe vehicles for intergenerational wealth transfer have a role to play in controlling the birth rates in developing countries.

In this regard, as in other areas, the authors could have done more to highlight the contrasts between their conclusions and those already found in the conventional literature. More generally, GGB have reduced the potential impact of their work by restricting themselves to theoretical argument. The logic on none of these models is sufficiently compelling to eliminate potential contenders on purely theoretical ground. Eventually the fight will be won or lost on the field of empirical testing. If GGB hope to deflect professional and lay opinion on these matters, they’ll have to reduce the difference between theirs and contending explanations to testable hypotheses and confront the data. Paul DeRosa Mt. Lucas Mgmt. Corp.