Abusing Evolution to Explain Economic Behavior

As a student of economics, I have had no problem in admitting the necessary principal theories in explaining a number of phenomena at hand. Indeed, the rise of behavioural economics on the one side and the fact that data is often unavailable in sufficient amount and of high quality to test general assumptions is a fact that a good number of professional economists would concede. Despite this necessary concession, I remain skeptical of the tendency to ascribe to evolutionary theory certain aspects of human economic and social behavior.

In this thoroughly enjoyable piece in Slate magazine, Tim Harford asks why there is a strong human tendency to resist price rises even when the fundamentals of supply and demand would make that price hike quite rational behavior. He cites the fact that manufacturers are loathe to raise prices for items such as PlayStations and X-box 360s in spite of the fact that such pricing action would equalize demand and supply and increase profits. I am fully agreed with him until he resorts to using purported behavioral instincts emerging from early evolution of the human species.

That evolution has real scientific backing cannot be gainsaid but I think that the evidence that it came with pre-programmed behaviour is not supported by science today. As Tim Harford clearly writes, the clever theories given for the existence of this odd behavior is unconvincing. This blogger finds the evolutionary explanation unconvincing too. Biology is a powerful instrument for explaining human behavior but that is no reason to use intuition to attempt explanations for economic behaviour.