If greed is good, as Gordon Gekko proclaimed in the 1987 movie Wall Street, then economics ought to be a superlative science.
After all, at the core of economic theory sits a greedy idealization of human nature known as Homo economicus. It’s a fictitious species that represents the individual economic agent, motivated by selfishness. H. economicus is completely rational, by which economists mean it’s out for itself. And selfishness is supposedly the smart strategy when competing for the resources needed to survive. As Gordon Gekko also mentioned, greed “captures the essence of the evolutionary spirit.” Just as evolution rewarded the fittest, economic interaction rewards the most self-interested.
Yet for some reason, everybody isn’t selfish.
In some cases, of course, apparent lack of selfishness is merely a ploy; behaving unselfishly now could increase profits in the future. But some people are just always less greedy than others.
“Even in one-shot interactions, humans are not as selfish as theory suggests,” write physicist-sociologist Dirk Helbing and colleagues. “A large body of experimental and field evidence indicates that people genuinely care about each other.”
It’s true that such caring can incur costs to the carer. Still, some people sacrifice their own interests in favor of others, and not just relatives. But such behavior seems at odds with Darwinian evolution — how could behavior evolve that reduced an individual’s “fitness” (in this context, wealth)?
Some theorists suggest that evolution also operates on groups — when individuals within a group cooperate, their group may have survival advantages over groups with rigid individual selfishness. But even apart from kinship or groups, evolution can still produce cooperative individuals, contend Helbing and collaborators Thomas Grund and Christian Waloszek, all of ETH Zurich.
To test their idea, they ran mathematical simulations of a “society” in which “agents” occupy squares on a grid. Each agent interacts only with its neighbors in the eight surrounding squares. Each interaction consists simply of deciding to cooperate or not with the neighbor. Payoffs for each agent are then calculated based on the rules of the famous Prisoner’s Dilemma game. Total payoffs are highest if everybody cooperates, but an individual always gets the best payoff by “defecting,” that is, refusing to cooperate.
All agents are selfish when the simulation starts. Agents then generate offspring; agents with the highest payoffs are most likely to reproduce. In the reproduction step, “mutations” can occur to give an agent some regard for others.
Typically, some agents will cooperate some of the time, but only if others around them also cooperate. These “conditional” cooperators play nice with others who play nice, but revert to defection when surrounded by selfish agents. On the other hand, sometimes a very friendly agent is born — an idealist who always chooses to cooperate, even when surrounded by defectors.
Such idealists aren’t likely to fare very well in the competition for payoffs, though. “Idealists will normally get miserable payoffs and have very small reproduction rates,” Helbing and colleagues note in a recent Scientific Reports paper describing the simulation. Idealists can survive, though, if they happen to be born in a locale hosting some conditional cooperators.
“Under such conditions, a single ‘idealist’ may quickly turn a defective neighborhood into a largely cooperative one,” Helbing and colleagues found. “This implies higher payoffs and higher reproduction rates for both idealists and conditional cooperators.” In that case, “friendliness is evolutionarily advantageous over selfishness.”
So sometimes idealists can even thrive — if their offspring stay close to home. When offspring move far away, selfishness remains the stronger strategy. But if offspring take up residence close to their parents, clusters of cooperators can grow.
In this way evolution can produce both selfish and other-centered humans. Migration far from birthplaces tends to produce Homo economicus; minimal geographic mobility supports Homo socialis. H. economicus makes choices without regard to others’ well-being; H. socialis weighs how each choice will affect the payoffs to others.
“We might characterize this as a situation of ‘networked minds,’ where everybody is trying to put himself or herself into other people’s shoes,” the researchers write. “Besides paying attention to networks of companies, economics should also consider networks of individual minds.” That advice is especially pertinent now, the scientists say, when people everywhere are linked by social and other media in an “information society.”
Of course, astute economists have always known that some people care about others. It was just harder to formulate economic theory incorporating complications like that. Even Adam Smith, whose Wealth of Nations in 1776 supposedly established the foundations for the “greed is good” philosophy, knew better. Just because markets can work when people have no regard for others, that doesn’t mean people don’t (or shouldn’t) have regard for others. After all, Smith’s first book — which he believed readers of Wealth of Nations should have read — was all about the importance of sympathy.