A lead article on the news this week was a grim international scientific report on the decline in global biodiversity. Yet another bleak scientific study about the state of our planet. The report basically stated that the human obsession with production and consumption is killing off countless species, including sharks, bees, elephants and gorillas. It could eventually destroy us as a species.
Meanwhile I spent the day teaching my students that human wellbeing is largely determined by the production and consumption of good and services. A standard economic textbook states that human happiness is determined by maximising the consumption of goods and services. National wellbeing is determined by GDP which measures the total output of goods and services of a country. Politicians pay homage to maximising economic growth which is basically measured by increases in GDP. Simon Kuznets, who developed this measure in the 1930s, was highly critical of using it as a measure of human welfare. Yet somehow it has become the scorecard of national well being. Any politician who deviates from this script invites ridicule despite its severe limitations. We are a strange species.
Scientific evidence is mounting that we are destroying the world we live on and possibly ourselves as a species. Teaching Economics 101 is like teaching children how to build a campfire in a school that is burning down. Slightly depressing.
Economics 101 paints a very reductive view of human nature. Almost a laughable caricature of human reality. People seek to maximise their satisfaction in life by consuming goods and services. Our existence is defined by our production and consumption. The importance of family, friends, culture, religion, connectivity and our natural environment are never mentioned in standard economic textbooks.
Here’s an alternative view of us as a species. We were a bunch of apes that emerged from the savannahs of Africa many millennia ago. We slowly spread across the globe in a fragile process that eventually established us as the dominant species on this planet. For the moment.
The evolutionary traits that allowed us to establish our current dominance still shape our behaviour. Yet we seldom overtly acknowledge them. They provide a fascinating lens to understanding our behaviour. Far more relevant than standard economic theory.
We are tribal in our behaviour. We define ourselves by the groups we identify with. This is because our early survival depended on our tribal affiliations. Individual apes stood little chance of survival on their own. Modern tribalism takes the form of nation states, politics, religions, sports teams, and even schools and work places. National tribalism has prevented any meaningful progress in resolving key global issues such as climate change, refugee flows or resource depletion. It’s still us versus them. A study of world history shows the concept of nation states is a relatively recent development. It is not the natural eternal state of the world that we think it is. In the western world the official concept of nation states generally dates from the Treaty of Westphalia in 1648 following the end of the 30-year war in Europe. Yet the self-interest of nation states currently prevails, preventing any meaningful progress on global issues. No country or leader wants to be seen as a soft touch.
The human mating instinct dominates much of our behaviour, especially in our prime years. Our reproductive urge is huge in shaping our behaviour. This encourages conspicuous consumption to signal superiority as a potential mate. A Porsche trumps a hop card. A shapely figure and pretty face trumps a doctorate, as shallow and sexist as this sounds. It is likely why young males indulge in risky behaviour and have such a high mortality rate.
Alpha males were the primary actors in the financial crisis of 2008. Silverback male financiers were the dubious stars in this crisis. Chest beating and aggressive behaviour still shapes the behaviour of modern male primates.
We are generally myopic in our behaviour. For much of our existence, life was nasty , brutal and short. Short term gratification prevailed. We are generally not long term in our thinking hence the lack of urgent widespread concern about what the scientists are telling us. This likely explains the prevalence of obesity in developed countries where calories are now easily available where once they were scarce. It explains our inability to save for our retirements.
Herd behaviour shapes our behaviour. Our behaviour is influenced by those around us. We operate as part of a herd. Modern marketers understand this implicitly. Economics 101 teaches that we are all individual decision makers unaffected by the decisions of others. People at dinner parties are unaffected by discussions of rising house prices or school choices for their children. They make their own informed independent decisions based on objective data.
Economics 101 teaches that Asset markets for property or shares are not subject to irrational exuberance based on the mania of crowds. The financial crisis of 2008 was an unexplained anomaly according to standard economic theory. Markets are meant to be efficient based on the informed independent rational choices of thousands of people.
This may sound strange but I am a bit disillusioned by what I am teaching my students on a daily basis. It is not giving them a sound understanding of the real world we live in. It is not providing a bigger picture for them. The market economy is just a part of our reality as humans. The economy is a theoretical concept. Maybe we should be teaching evolutionary studies in our schools. Teaching our young people about what actually shapes and drives their behaviour and the behaviour of others. A greater understanding of actual human motivations may allow us to be more realistic in how we address the huge issues that confront us.