The Mind of the Market: Compassionate Apes, Competitive Humans, and Other Tales from Evolutionary Economics
 

The Mind of the Market: Compassionate Apes, Competitive Humans, and Other Tales from Evolutionary Economics

by Michael Shermer

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... (read more)

Top tags: economicsethicseveryday economicshistoryliberty (all tags)

 

Member Reviews

  • Vance J
    • Rated 5 stars

    Big picture economics.

    Vance J wrote this review Sunday, June 22 2008. ( reply | permalink )
  • Brian Denton
    • Rated 4 stars

    A must read. Watch a talk about the book at cato.org.

    Brian Denton wrote this review Saturday, May 17 2008. ( reply | permalink )
  • Mary v
    • Rated 4 stars

    This book was incredibly thought provoking. I kept wanting to put it down and think through what he was saying, to the point where I would never finish the book. I don't like how much he "interprets" psychological studies (that pose as biologically studies). I think that the hypotheses he raises are worth thinking about even if we don't have a brain scan that shows that a certain part of the brain lit up when people looked at a set of cards.
    He explains some of the concepts that people have grabbed onto to justify certain behavior: like survival of the fittest or "the selfish gene". Having just read the Zonules of Zin, another neurobiology book, I was particularly struck with how both books rely on similar studies. And of how often someone coins a "witty" phrase (survival of the fittest; banality of evil) others grab hold of it without making much effort to understand its complexity.
    Unfortunately, I do feel like Shermer does too much "conclusion drawing" from the study results. And then extrapolating from those conclusions to support his theories.
    Having read many of his columns in Scientific American, it seems clear to me that he isn't a "conservative". The book certainly might suggest otherwise, if the reading isn't careful. For example, I think he is arguing that "conservatives" are right when they do not want the government involved in welfare. The individual should take care of those who need it (I suppose this is a freedom issue). Liberals, in contrast, take away freedom by allocating our tax dollars towards social welfare.
    He advocates for a "free market" approach, suggesting that government intervention in most situations is not the best option if you hope to optimize "freedom". He defines freedom in the following way: all people are free to think, believe, and act as they choose, as long as they do not infringe on the equal freedom of others (p. 232). It is the consumer's interests that should run the economy, not the producers. Problems occur when the reverse happens. He also argues that what might seem irrational today was actually rational in our ancient brains. He argues that there is a continual tension in human beings between the selfish desire for wealth and the social desire for equality. But this tension is beneficial in that it helps us strive for "advancement" while also attempting to care for one another.
    He compares Enron and Google as examples of "evil" and "good" companies. His explanation for the difference is the culture (group dynamics). And, he suggests a first line against evil: transparency, open communication and constant surveillance.
    He emphasizes the importance of social connnection from an evolutionary perspective. Extrapolating from that to the idea that religion forms to meet those social needs (or maybe doesn't form for that purpose, but serves it) which are evolutionary. For example, the more we know one another the less intervention we need from the outside to maintain our social contract. He further extrapolates that to the notion that where goods cross frontiers, armies don't (where technology crosses frontiers, where starbucks crosses, you get the idea). And, he concludes that democracy (and free market capitalism) is the best way to encourage these frontier crossings (he is careful to say there are exceptions to all these claims).
    If nothing else, the book provokes me to go find a bunch of econ books, particularly the notion of evolutionary economics.

    Mary v wrote this review Friday, April 25 2008. ( reply | permalink )
  • Ron  B
    • Rated 4 stars

    Shermer is the publisher of Skeptic magazine and founder/director of the international Skeptics Society. He's an atheist, which comes through this book. Despite that, I still like it, very much in fact. He writes in the Prologue that two principles guide the book:

    1) From Human Action by Ludwig von Mises, which Shermer labels Mises's Maxim: "One must study the laws of human action and social cooperation as the physicist studies the laws of nature;
    2) I have made a ceaseless effort not to ridicule, not to bewail, not to scorn human actions, but to understand them.

    Amen, two very good principles. Shermer draws on the new field of neuroeconomics to explain a range of human behavior that appears to defy the "rational homo economicus," and he does this quite well. I only wish he'd pay the rationality assumption its fair due--it may not be 100% true, as David Friedman and Steven Landsburg have pointed out, but it is still quite useful. Even physicists make assumptions that aren't true, but are helpful. If assuming rationality can explain 50% of human behavior, that's not a bad record at the horse track. We can use prospect theory, behavioral economics perhaps to explain the rest.

    The gap in the book is to explain human attachment to religion. It's one thing to study the physical world, quite another the spiritual, which cannot be measured with the scientific method. Shermer makes the case that Adam Smith's Invisible Hand and natural selection are both "bottom-up" systems, with no intelligent design. I totally agree with that from an economic perspective, which is why I have faith in the free market. I remain skeptical about natural selection, and don't think it explains why we're here or our attachment to religion.

    Nonetheless, if you like free markets, and want to be informed on some cutting edge economic research, Shermer has written a useful and engaging book.

    Ron B wrote this review Monday, March 31 2008. ( reply | permalink )
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