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November 29, 2004

New Paradigm Introduction: Biology and Economics

I just heard a talk by Oliver Curry at the Workshop on evolutionary biologyand economics. Some of my notes might be worth putting up on my weblog.

What matters, I think, is what questions evolutionary biology helps answer that economists cannot answer well now. It's hard when you're calling for a start to work, but if you can find just one or two examples of where biology helps, that would be a good invitation.

Here's a way to approach it: Rather than say, "You need to learn a lot more complicated theory", say "Here are some exmaples where a simple addition to your theory explains something you couldn't explain before". "Why young men overestimate their ability" is one example. Most examples I can think of involve explaining tastes rather than thinking, but you could have examples both thinking and tastes. Economists *are* interested to some extent in explaining tastes.

Note, though, that even the "Young men overestimate" idea doesn't need the gene-- it just uses evolution and the simpler idea of "organisms try to maximize reproductive fitness".

The "invitation to learn a new tool" approach is why economics has been so successful in law. It has proven useful for explaining lots of things that didn't have good explanations before. Lawyers can bring it in for specific applications without having to use it for everything, though some then decided to learn it systematically and use it for everything.

As opposed to behavioral economics, evolution adds an explanation for behavior rules, and a suggestion that the rule would be the same for all humans, as oppposed to history-dependent (culture-dependent). Thus, we avoid having a big collection of entirely unrelated rules. We could have a research rule of saying that you should always try to find an evolutionary explanation for a behavioral rule.

Posted by erasmuse at November 29, 2004 12:56 PM

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