Boyer & Petersen's (B&P's) article speaks to several fields of research including behavioral economics, evolutionary psychology, and political science. The authors lay out an important research agenda on folk-economic beliefs that is ripe for empirical testing. This piece is very much in the tradition of Gerd Gigerenzer (Reference Gigerenzer1996), who critiqued the heuristics and biases program of Daniel Kahneman and Amos Tversky. Like Gigerenzer, B&P go beyond a simple cataloguing of economic “mind bugs” and put forward evolutionary explanations for why people's economic cognitions do not align with rational choice theory. In this commentary, I make connections between B&P's theoretical framework and existing work on moral intuitions, taboo trade-offs, mental mind games, and others. B&P do not engage with these literatures. Even though their evolutionary approach is unique, it would have been helpful for them to compare and contrast their theory with existing approaches to understanding why people do not typically think like economists.
Consider, for example, Jonathan Haidt's (Reference Haidt2012) work on moral intuitions. People may not hold rigorously derived economic principles, but they have intuitions that serve them well. Many of these intuitions also fly in the face of utilitarianism, whose analysis of costs and benefits accords closely with the logic of economics. For instance, people value other ideals such as rights and fairness that often go against traditional economic theory. This is not to say that people are consistent Kantians or Rawlsians, but that folk-economic beliefs can be rationalized in terms of moral principles. These moral positions may or may not have an evolutionary basis or be culturally transmitted.
Price discrimination is a classic example. Humans believe that some goods and services should be allocated via markets whereas others should not (Fiske & Tetlock Reference Fiske and Tetlock1997). For example, people think it is okay to allocate scarce concert tickets to the highest bidder but not scarce kidneys. These distinctions do not abide by strict economic principles for efficient resource allocation, but they do have an intuitive logic and a basis in more rigorous moral arguments. For instance, price discrimination is viewed as taboo when some sort of harm is at play. It may be okay for a hardware store to raise the price of plywood before Labor Day, but not before an oncoming hurricane. Uber can surge its prices on most days, but not when there is an emergency. There is a belief that goods should sometimes be allocated through mechanisms less efficient than markets. Further, people have intuitions that price discrimination that disparately impacts historically underprivileged and protected classes is wrong even if economically efficient. For example, it may make economic sense to charge more for car insurance in black neighborhoods if there is higher risk, but this would likely strike most people as unfair. These moral intuitions relate to the more-sophisticated idea that utility cannot be easily compared across people. People do not believe that the rich man hails a taxicab in the rain because he gains more utility from being dry than the poor man (Binmore Reference Binmore2008). Yet, the ability to make interpersonal comparisons of utility based on revealed preferences is a key assumption of economic theory (Robbins Reference Robbins and Howson1997).
There is also a burgeoning literature in the psychology of conflict on mental models (e.g., Halevy et al. Reference Halevy, Chou and Murnighan2012). Researchers found that when ordinary people were asked to represent a conflict in matrix form, more than 70% intuitively chose a set of payoffs that mapped to one of four canonical economic games: Maximizing Difference, Assurance, Chicken, and the Prisoner's Dilemma. This is quite remarkable given that there are more than 576 possible payoff permutations. B&P's view of folk-economic beliefs does not really cover game theory and whether people conceive of common conflict situations as economic games.
Further, several of the empirical patterns B&P discuss could be explained by much simpler explanations that do not rely upon evolutionary psychology. For example, people's belief that social welfare programs are abused likely stem from both urban legends and elite discourse on the topic. There exist cultural memes such as the “welfare queen” that are propagated by politicians on the right. Other folk-economic beliefs not discussed by B&P could similarly be rooted in urban legends. For instance, economists generally believe that consumer-driven lawsuits can be socially efficient – even in the absence of company negligence – because they provide incentives for the party with more information to embed safety features into products (Calabresi & Melamed Reference Calabresi and Melamed1972). The strict liability in tort standard is justified using this logic. However, urban legends and elite communication on frivolous lawsuits, such as the famous case of the woman who spilled coffee on herself at McDonald's, generally shape people's economic beliefs when it comes to consumer torts (Malhotra Reference Malhotra2015).
Moreover, economists themselves have argued that basic economic decision-making may be genetically determined (Chen et al. Reference Chen, Lakshminarayanan and Santos2006). Research on capuchin monkeys has shown that capuchins react to price and wealth shocks as simple microeconomic models would suggest. However, they also exhibit common biases such as reference dependence and loss aversion. Hence, some behavioral biases seem to be present in primates that predate the features of early human societies noted by B&P.
Lastly, one wonders whether many of the evolutionary explanations offered by B&P could be rationalized using economic principles. Consider, for example, the institution of the “law merchant” in Medieval Europe (Milgrom et al. Reference Milgrom, North and Weingast1990). Trade was facilitated in fairs among merchants who rarely interacted. How could this occur without repeat play? A system of judges known as law merchants arose to enforce contractual violations and help traders develop reputations. In essence, the law merchant was an early-day Yelp. What appears to be evolutionary exchange was actually a market-sustaining equilibrium that had a rational economic basis.
In summary, B&P present an important contribution to our understanding of lay economic beliefs, which often exhibit logical inconsistency and do not accord with rigorous economic thinking. Nonetheless, I think it would have been helpful to engage more directly with other popular explanations that do not rely on evolutionary explanations. Doing so will help guide empirical scholars in testing many of B&P's theoretical claims.
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Boyer & Petersen's (B&P's) article speaks to several fields of research including behavioral economics, evolutionary psychology, and political science. The authors lay out an important research agenda on folk-economic beliefs that is ripe for empirical testing. This piece is very much in the tradition of Gerd Gigerenzer (Reference Gigerenzer1996), who critiqued the heuristics and biases program of Daniel Kahneman and Amos Tversky. Like Gigerenzer, B&P go beyond a simple cataloguing of economic “mind bugs” and put forward evolutionary explanations for why people's economic cognitions do not align with rational choice theory. In this commentary, I make connections between B&P's theoretical framework and existing work on moral intuitions, taboo trade-offs, mental mind games, and others. B&P do not engage with these literatures. Even though their evolutionary approach is unique, it would have been helpful for them to compare and contrast their theory with existing approaches to understanding why people do not typically think like economists.
Consider, for example, Jonathan Haidt's (Reference Haidt2012) work on moral intuitions. People may not hold rigorously derived economic principles, but they have intuitions that serve them well. Many of these intuitions also fly in the face of utilitarianism, whose analysis of costs and benefits accords closely with the logic of economics. For instance, people value other ideals such as rights and fairness that often go against traditional economic theory. This is not to say that people are consistent Kantians or Rawlsians, but that folk-economic beliefs can be rationalized in terms of moral principles. These moral positions may or may not have an evolutionary basis or be culturally transmitted.
Price discrimination is a classic example. Humans believe that some goods and services should be allocated via markets whereas others should not (Fiske & Tetlock Reference Fiske and Tetlock1997). For example, people think it is okay to allocate scarce concert tickets to the highest bidder but not scarce kidneys. These distinctions do not abide by strict economic principles for efficient resource allocation, but they do have an intuitive logic and a basis in more rigorous moral arguments. For instance, price discrimination is viewed as taboo when some sort of harm is at play. It may be okay for a hardware store to raise the price of plywood before Labor Day, but not before an oncoming hurricane. Uber can surge its prices on most days, but not when there is an emergency. There is a belief that goods should sometimes be allocated through mechanisms less efficient than markets. Further, people have intuitions that price discrimination that disparately impacts historically underprivileged and protected classes is wrong even if economically efficient. For example, it may make economic sense to charge more for car insurance in black neighborhoods if there is higher risk, but this would likely strike most people as unfair. These moral intuitions relate to the more-sophisticated idea that utility cannot be easily compared across people. People do not believe that the rich man hails a taxicab in the rain because he gains more utility from being dry than the poor man (Binmore Reference Binmore2008). Yet, the ability to make interpersonal comparisons of utility based on revealed preferences is a key assumption of economic theory (Robbins Reference Robbins and Howson1997).
There is also a burgeoning literature in the psychology of conflict on mental models (e.g., Halevy et al. Reference Halevy, Chou and Murnighan2012). Researchers found that when ordinary people were asked to represent a conflict in matrix form, more than 70% intuitively chose a set of payoffs that mapped to one of four canonical economic games: Maximizing Difference, Assurance, Chicken, and the Prisoner's Dilemma. This is quite remarkable given that there are more than 576 possible payoff permutations. B&P's view of folk-economic beliefs does not really cover game theory and whether people conceive of common conflict situations as economic games.
Further, several of the empirical patterns B&P discuss could be explained by much simpler explanations that do not rely upon evolutionary psychology. For example, people's belief that social welfare programs are abused likely stem from both urban legends and elite discourse on the topic. There exist cultural memes such as the “welfare queen” that are propagated by politicians on the right. Other folk-economic beliefs not discussed by B&P could similarly be rooted in urban legends. For instance, economists generally believe that consumer-driven lawsuits can be socially efficient – even in the absence of company negligence – because they provide incentives for the party with more information to embed safety features into products (Calabresi & Melamed Reference Calabresi and Melamed1972). The strict liability in tort standard is justified using this logic. However, urban legends and elite communication on frivolous lawsuits, such as the famous case of the woman who spilled coffee on herself at McDonald's, generally shape people's economic beliefs when it comes to consumer torts (Malhotra Reference Malhotra2015).
Moreover, economists themselves have argued that basic economic decision-making may be genetically determined (Chen et al. Reference Chen, Lakshminarayanan and Santos2006). Research on capuchin monkeys has shown that capuchins react to price and wealth shocks as simple microeconomic models would suggest. However, they also exhibit common biases such as reference dependence and loss aversion. Hence, some behavioral biases seem to be present in primates that predate the features of early human societies noted by B&P.
Lastly, one wonders whether many of the evolutionary explanations offered by B&P could be rationalized using economic principles. Consider, for example, the institution of the “law merchant” in Medieval Europe (Milgrom et al. Reference Milgrom, North and Weingast1990). Trade was facilitated in fairs among merchants who rarely interacted. How could this occur without repeat play? A system of judges known as law merchants arose to enforce contractual violations and help traders develop reputations. In essence, the law merchant was an early-day Yelp. What appears to be evolutionary exchange was actually a market-sustaining equilibrium that had a rational economic basis.
In summary, B&P present an important contribution to our understanding of lay economic beliefs, which often exhibit logical inconsistency and do not accord with rigorous economic thinking. Nonetheless, I think it would have been helpful to engage more directly with other popular explanations that do not rely on evolutionary explanations. Doing so will help guide empirical scholars in testing many of B&P's theoretical claims.