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Economics versus Fiction on Human Nature

The views expressed are those of the author and are not necessarily those of Scientific American.


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Economics and fiction both seek to describe and explain our behavior. Measured against what makes fiction feel realistic, the tales of mainstream economists aren’t believable. Their mono-motivated cartoon characters don’t ring true, matching neither experience, nor experiment. Fortunately, the reality deficit of economics’ unreliable narrators is being fixed by a more “naturalistic,” less fictionalized approach.

Economic orthodoxy says we are by nature rational, self-interested utility maximizers. Our everyday experiences, and essentially the whole of the arts, as well as a great deal of empirical science, all testify that that is a mischaracterization of most humans. Most cultures are sociocentric. Individualism is a WEIRD sampling error. Even WEIRD cultures have measurable mixed motivations: A Dutch study found that 20% of respondents were “individualists,” (maximizing their absolute payoff) 65% were “cooperators,” (maximize joint payoffs) and 7% “competitors” (maximizing relative payoffs).

A “naturalistic” economics must incorporate our evident behavioral heterogeneity—and address the empirically observable emotions that novelists know drive our actions (including both the logic of “self-regarding” motives, like greed, and of “other-regarding” ones, like sympathy). No realistic account of human behavior can exclude different character types and multiple motives.

“Utility,” supposedly what we all seek at all times to maximize, is a vast oversimplification of our goals. Jerome Kagan says, we want money, status, power, or other goods, for “the feelings that achieving those goals permits.” Reducing what Lord Shaftesbury called the “thousand other springs” of human motivation to “utility” seems a flagrant fictionalization. And as Tom Sedlacek notes, utility has the taint of tautology. It easily becomes a self-fulfilling assumption. Whatever we do, was done to maximize it.

Self-deficient by nature, we only survive socially and cooperatively. Out-cooperating others is what we do. We are the giraffes of non-kin cooperation. Yet economists typically ignore the mechanisms that evolved to solve the central challenges of group survival. Leaving out what matters most in fiction, economists ignore the social emotions (fast thinking) that guide us towards prosocial cooperativeness. No credible fiction would do that.

Fiction’s functions include transmitting a culture’s wisdom, its social coordination rules (its morals), its character types, and conventional scenarios (plots). The self-only single character-type stories of economics risk encouraging excessively individualistic behaviors that work against the logic of group survival (e.g., the misnamed tragedy of the commons. Cultures that don’t impose limits on and police group-damaging individualism, that don’t successfully balance self-interest with group cooperation, don’t thrive.

Robert Frank (of “Darwin’s wedge” fame) has tried to incorporate empirical emotional motivations into his economic thinking, see his book Passions Within Reason, The Strategic Role For The Emotions. He knows what every good storyteller knows: We’re equipped with social emotions that drive the logic of how we resolve life’s complex, conflicting demands. If only the supposedly scientific literature of economics included characters as realistic as those of fictional literature! Then we could escape the “theory-induced blindness” of its dull one-note stories.

Illustration by Julia Suits, The New Yorker Cartoonist & author of The Extraordinary Catalog of Peculiar Inventions.

Previously in this series:

It Is in Our Nature to Be Self-Deficient
Inheriting Second Natures
Our Ruly Nature
It Is in Our Nature to Need Stories
Tools Are in Our Nature
We Fit Nature To Us: Evolutions two way street
Justice Is In Our Nature
Behavioral Telescope Shows How Cooperation Works
Selfish Genes Also Must Cooperate
Game Theory And The Golden Punishment Rule
Revolutionizing Economics by Evolutionizing it.
Science’s Mobile Army of Metaphors
Greek Myths About Human Origins
Evolutionary Economics And Darwin’s Wedge

Jag Bhalla About the Author: Jag Bhalla is an entrepreneur and writer. His current project is Errors We Live By, a series of short exoteric essays exposing errors in the big ideas running our lives, details at www.errorsweliveby.comwww.errorsweliveby.com. His last book was I'm Not Hanging Noodles On Your Ears, a surreptitious science gift book from National Geographic Books, details at www.hangingnoodles.comwww.hangingnoodles.com. It explains his twitter handle @hangingnoodles Follow on Twitter @hangingnoodles.

The views expressed are those of the author and are not necessarily those of Scientific American.






Comments 4 Comments

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  1. 1. sghorwitz 10:20 am 08/9/2013

    Sigh. Errors abound in this piece. To say that we “maximize utility” says NOTHING about what gives utility. Economists do NOT assume it’s money/wealth. It can be love. It can be family. It can be ANYthing. Just like the complexity of fictional characters, I might note. One read of an introductory textbook would have made this clear.

    More important: Austrian school economists (and some others) don’t think we actually “maximize” anything. We are purposive, project creators. We have goals and we seek the best means to achieve those ends, judged in our ignorance in the face of a world of uncertainty. Yes, we try to do “the best we can,” but we are not cold calculators.

    Even more important: the case for the market does NOT hinge on homo economicus or human rationality. One read of Hayek and you understand that we need markets because of our *ignorance* not our “rationality.” Markets don’t work because we’re rational; we’re more rational because markets work.

    Finally, anyone who says economists don’t take cooperation seriously reveals that they have not read economics seriously. No other institution in human history has made more human social cooperation possible and productive than has the market. Social cooperation is exactly what we attempt to explain and understand.

    Specialization by comparative advantage and exchange through the market enable us to cooperate with millions of others to get the things we desire. It also civilizes us and promotes peace through interdependence. The whole point of economics is to explain and understand this process and the ways is forwards peace and prosperity.

    People who want to raise criticisms of economics should really take a look through an intro textbook first.

    Link to this
  2. 2. terrymac 11:13 am 08/9/2013

    Market discovery (broadly speaking) is the best-known method to elicit cooperation among people who have different values. If one thinks markets are only about money, or only about maximizing individual utility, one is not thinking economically. Mother Theresa sought to maximize her conception of utility.

    Link to this
  3. 3. JediBear 12:50 pm 08/9/2013

    I don’t think the apparent verisimilitude of conventional narratives renders them superior to economic models. For one, they don’t seek to predict the behavior of large groups of people and are as such useless as models to guide public policy.

    In fact, fictional narratives and characters are often if not always profoundly unrealistic. This is because the purpose of a conventional fictional narrative is to entertain rather than inform, because they have no empirical constraints, and because “truth” and “truthiness” are different things.

    In short, while economics may have self-evidently absurd simplifying assumptions, at least it is intended to model reality and does so with varying degrees of success.

    When we move outside of fiction-for-entertainment into the world of fiction-for-policy-validation, things take an ugly turn, and we can and do justify antisocial policies by making up credible-seeming caricatures and vivid-but-unrealistic threats. These prey on our cognitive biases to subvert our prosocial impulses.

    You appear to be assaulting a straw man. In particular, you don’t seem to actually understand the idea of utility, which can absolutely represent human preferences for prosocial behaviors. Sedlacek’s argument that utility is tautological is ludicrously specious, since that only emerges from his having defined it (as economists don’t) only in terms of itself.

    The single character type recognizes that humans are more alike than different and that if you zoom out far enough, the average behavior of an actor is a reasonable approximation of the behavior of any individual actor.

    All scientific models contain simplifying assumptions. In this sense, they are all “false,” but this falsity does not deprive them of usefulness.

    Can you make economics better by incorporating what we know about humans? Absolutely. There’s an entire field of mainstream economics that is working to do just this. Google “behavioral economics.”

    Mainstream economics is in reality very different than you imagine it to be.

    Link to this
  4. 4. marclevesque 10:46 am 08/11/2013

    sghorwitz,

    “read of Hayek and you understand that we need markets because of our *ignorance* not our “rationality.” Markets don’t work because we’re rational; we’re more rational because markets work.”

    For those who are curious about Hayek’s ideas on markets and reason, the first paragraph on the following page might be helpful.

    http://www.firstprinciplesjournal.com/articles.aspx?article=1513&theme=home&page=3&loc=b&type=ctbf [Hayek on the Role of Reason in Human Affairs]

    I’m not supporting his views. In my opinion, and from the little I read, he’s often too dualistic, and at times the word ‘market’ gets stretched close to the meaning of a word like ‘life’ or it becomes a synonym for an ‘activity based on human nature’, but still, he has very interesting insights and points of view.

    Link to this

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