Good food for thought, but much to digest...

books:

	• The Mind of the Market: Compassionate Apes, Competitive Humans, and Other Tales from Evolutionary Economics Michael Shermer Times Books, 2007 - 336 pages average customer review:based on 26 reviews view larger image
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Monkey See, Human Do?

Shermer attempts to synthesize a wide range of findings about how humans often behave in a manner that refutes the idea of homo economicus, that is, a human being who makes rational economic decisions. Clearly, we often don't do that. Shermer gives many examples of this, most of which have been highlighted in a number of other works. Examples include: how we value something more once we posses it; how varied phrasing of identical choices leads to different behaviors; how we are generally unable to take future discounting into account.

Shermer weaves these findings from psychology, as well as numerous findings from primate behavior, into a story that claims that most of our aforementioned irrationality is the result of a mind that has not evolved quickly enough to meet current economic conditions. What worked well among hunter-gatherers millenia ago is just not suited to today's economic environment. While Shermer's theory is plausible, there are too many gaps to make it fully convincing. For example, in my opinion, the theory must apply universally to all aspects of human existence. By that I mean that if the "economic" brain did not evolve quickly enough, so then must other parts of brain have remained the same. If, for example, reading of print did not occur in history until relatively recently, why should our brains have evolved quickly enough to carry out that function, but not other functions? Shermer himself posits that we manage on many occasions to override our hunter-gatherer impulses; if so, what is the nature of this override feature and where did it come from?

Nevertheless, Shermer takes on a challenging topic with gusto, and provides enough interesting information on human behavior to make the book a worthwhile read.

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Good food for thought, but much to digest...

Michael Shermer is always an engaging and informative writer, and this book is no exception. There is quite a bit of good science in here, and plenty to stimulate discussions (I used the book as a summer reading with my biology graduate students, and we all enjoyed it). However, Michael at times gets a bit too close to the evolutionary psychology perspective on things (which I am very critical of), and his libertarianism shows up here and there (again, a position I don't share). Some of my students found that there are too many personal anecdotes, though of course that's a matter of personal stylistic preferences. Again, more than worth the money!

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The Title a Bit Misleading

The title of this book led me to believe that it would be an in-depth analysis of the psychology and behavior of the stock market. However, that is not really the subject of this book. Instead, the book advances a thesis regarding how to apply evolutionary principles to economic and political frameworks, and consisting mostly of a defense of free markets and democracy. Also, the author identifies some popular conceptions of evolution (social Darwinism, "nature red in tooth and claw," the "selfish gene") as "myths" that inaccurately characterize evolutionary concepts, and that he suggests that cooperative behavior is actually a more evolutionarily advanced strategy in species.

As I read the book, some questions occurred to me regarding the assertions made in the book:

1. The linkage of free market competitive ideology with evolutionary concepts and efficiency (Adam Smith's "invisible hand" paradigm) was developed in a era of continuous western expansion into new land frontiers, rich with resources and free land. This affected the relationship between "producers" and "consumers." The author suggests that free markets favor consumers over producers, and that favoring producers over consumers (via protectionism, tariffs, unionization, etc.) leads to stagnation and inefficiency. Whether or not this may be true, now that we live in a time of increasingly scarce material resources with fewer virgin frontiers to exploit, producers will necessarily gain greater power in the relationship with consumers (as with oil production, energy, technology, etc.) This skews the "free market" relationship the author describes and may therefore warrant governmental/outside regulation or mediation to keep the playing field level. This also has relevance to the tendency of some producers to gain a monopoly of resources, information, or access, which renders them effectively impervious to true competition and therefore causing consumers to be less likely to gain the benefits of free market competition in quality, price, etc.

2. The characterization of "producers" and "consumers" as separate entities may itself be somewhat inaccurate. Ideally, in our society all will possess both roles. Therefore favoring one over another, or speaking of them as opposed interests may inaccurately characterize our consideration of the topic of optimum structuring of markets.

It seemed to me that there were a number of ideological assertions made as statements of fact, with a lack of supporting evidence presented. However, I found the book to be interesting, engaging and thought-provoking, and would recommend it as stimulus for thought, reflection, and development of ideas.

(For another perspective on some of these concepts regarding free markets and democracy, I suggest "World on Fire" by Amy Chua.)

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Why Evolution Is Sound Economics

Michael Shermer's "The Mind of the Market: Compassionate Apes, Competitive Humans, and Other Tales from Evolutionary Economics" is yet another insightful, and provocative book from him, making the best, most persuasive case why accepting evolutionary theory ought to be sound economics for my fellow conservatives. Shermer persuasively argues that Charles Darwin and Adam Smith were essentially looking at the same phenomena, observing that evolution via natural selection is basically nature's "marketplace" operating under laissez-faire principles as expressed in Smith's concept of the "Invisible Hand". Shermer makes his arguments primarily from biology and psychology, without relying much on economics, and yet they are quite convincing. Indeed conservatives ought to be delighted with his cogently argued reasons why government intervention into national economies is often doomed to failure, arguing instead that natural processes inherent in the marketplace are often the only - and best - remedy for economic malaise. He also explains why "Social Darwinism" is a gross distortion of Darwin's thought, misapplied to social engineering and economics, and that both Earth's biosphere and the market are highly organized complex systems that have arisen from simpler ones, giving the false illusion of "being designed" by some external, omnipresent "Intelligent Designer". Without question, "The Mind of the Market" is a most remarkable book which deserves ample readership from the broad body politic, from both liberals and conservatives.

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reviews: page 1, 2, 3, 4, 5, 6

Bestselling author Michael Shermer explains how evolution shaped the modern economy?and why people are so irrational about money How did we make the leap from ancient hunter-gatherers to modern consumers and traders? Why do people get so emotional and irrational about bottom-line financial and business decisions? Is the capitalist marketplace a sort of Darwinian organism, evolved through natural selection as the fittest way to satisfy our needs? In this eye-opening exploration, author and psychologist Michael Shermer uncovers the evolutionary roots of our economic behavior.

Drawing on the new field of neuroeconomics, Shermer investigates what brain scans reveal about bargaining, snap purchases, and establishing trust in business. He scrutinizes experiments in behavioral economics to understand why people hang on to losing stocks, why negotiations disintegrate into tit-for-tat disputes, and why money does not make us happy. He brings together astonishing findings from psychology, biology, and other sciences to describe how our tribal ancestry makes us suckers for brands, why researchers believe cooperation unleashes biochemicals similar to those released during sex, why free trade promises to build alliances between nations, and how even capuchin monkeys get indignant if they don?t get a fair reward for their work.

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