1 / 29

Human Nature and Economics

Explore the characteristics of good and bad behaviors in human nature and their impact on economics. Study the extent to which desirable ends are constrained by human nature, the concept of insatiability, the value humans place on nature, the role of fairness in social animals, and the influence of discounting. Examine whether humans are inherently competitive or cooperative, rational or emotional, and whether people are the same everywhere. Evaluate the potential of competition and cooperation to solve society's current crises.

mfoust
Download Presentation

Human Nature and Economics

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Human Nature and Economics

  2. Good and Bad • Write a list of 5 behaviors characteristic of a good person • Write list of 5 behaviors characteristic of a bad person

  3. Why Study Human Nature? • To what extent are desirable ends constrained by human nature? • Is insatiability a human characteristic? • Biophilia: have humans evolved to value nature? • Social animals—is fairness a desirable end? Do we care about others for their sake, not our own? • Discounting

  4. Why Study Human Nature? • To what extent are allocative mechanisms constrained by human nature? • Are we inherently competitive, cooperative, or both? • Are we rational, emotional, or both? • Are people the same everywhere?

  5. Will Competition or Cooperation Solve Society’s Current Crises? • Global Climate Change (finite waste sinks, finite services) • Natural resource depletion/biodiversity loss (finite raw material sources, finite services) • Peak Oil (finite energy sources) • Threat of global pandemics • Benefits non-rival and/or non-excludable • Solutions demand cooperation • Counter examples?

  6. What is the conventional economic model of human nature? • Homo-economicus • Self-interested • Insatiable • Rational • Competitive • Is this closer to your depiction of a good person or a bad person?

  7. Market Economics Driven by Competition • Assumes humans insatiable, always act in rational self interest, do not care what happens to others • Must design a system that leads to greatest good for greatest number • Rewards greed and selfish behavior • Invisible hand • “Virtue of Selfishness” • How do we test market theory?

  8. How do we test these assumptions? • Study history • Game theory and games • Experimental economics • Neuro-economics • Psychology and economics • Evolutionary biology

  9. Are People Insatiable? • Insatiable!

  10. Evidence from history, evolution and behavioral economics • Hunter-gatherer economies • Absolute vs. relative wealth • Widow birds • Status treadmill • Alternative forms of status

  11. Human Needs • Market goods only one of many human needs • Needs consistent across time and cultures • How we satisfy them differs • Satiation occurs • Pseudo-satisfiers

  12. Are People Rational?

  13. Split into two groups. Group 2 leave room

  14. Group 1 • Serious flu will kill 6000 people • Choice A: Conventional vaccine will save 2000 people • Choice B: Experimental vaccine has 1/3 chance of saving everyone, 2/3 chance of saving no one • Mark your choice and leave room

  15. Group 2 • Serious flu will kill 6000 people • Choice A: Conventional vaccine will result in death of 4000 people • Choice B: Experimental vaccine has 1/3 chance of saving everyone, 2/3 chance of saving no one • Mark your choice

  16. Are People Rational or Emotional? • Out of control trolley • Losses vs. gains • WTP vs. WTA • Is perfect rationality possible in a complex world?

  17. Do people care about the future?

  18. What are our attitudes towards the future? Discounting • Would you rather have $10 today, or $12 in one month? • The discount rate • Opportunity costs and investments • Pure time preference • Uncertainty • Richer future • ∑(Bt-Ct)(1+r)-t • What happens in your brain when you discount? • Who discounts the most?

  19. How do we Discount? • Hyperbolic discounting • Would you prefer $10 in 5 years, or $12 in 5 years and one month? • Social discount rates • Discounting the distant future • What happens in our brains when we discount? • Should we discount?

  20. Are we Purely Self-interested? • Game theory and experimental economics • Ultimatum game • Dictatorship game • Public goods game

  21. Or do we care about others? • H. comunicus, concern for fairness and community preferences • H. naturalis, concern for sustainability and whole system preferences

  22. Are we Competitive or Cooperative? Evidence from Neuroscience and behavioral econ • Neurotransmitters • Dopamine • Oxytocin • Neuroeconomics and prisoner's dilemma • Investment game • Oxytocin and trust • Altruistic punishment • Tit for tat

  23. Evidence From Evolution • Kin selection: Altruism, empathy, reciprocity evolve ifRB/C > 1 • C= cost of empathic behavior to individual • B=benefit to others • R= degree of relatedness • Group selection vs. individual selection • Pseudomonas species • Encompasses kin selection • Cooperation and energy abundance • Dictyostelium discoideum (amoeba) • Myxococcus xanthus (self-organized, predatory, saprotrophic, single-species biofilm called a swarm) • In humans, genetic and cultural evolution interact

  24. Are People the Same Everywhere? • Ultimatum game across cultures

  25. Why Does this Matter? • Desirable ends • Humans are satiable • We have a broad range of needs • Desired ends are in relationship to what others have • Allocative mechanisms • Non-rival resources are best provided through cooperation, and we are highly adapted to cooperate • Rival resources may be effectively allocated through competition • Modeling humans as solely cooperative or solely competitive is entirely inappropriate

More Related