BEHAVIORAL AND BRAIN SCIENCES (2018), Page 1 of 65 doi:10.1017/S0140525X17001960,e0 Folk-economic beliefs: An evolutionary cognitive model Pascal Boyer Departments of Psychology and Anthropology, Washington University in St. Louis, St. Louis, MO 63130 [email protected] www.pascalboyer.net Michael Bang Petersen Q1 Department of Political Science and Aarhus Institute of Advanced Studies, Aarhus University, 8000 Aarhus C, Denmark [email protected] http://au.dk/en/michael@ps Abstract: The domain of “folk-economics” consists in explicit beliefs about the economy held by laypeople, untrained in economics, about such topics as, for example, the causes of the wealth of nations, the benefits or drawbacks of markets and international trade, the effects of regulation, the origins of inequality, the connection between work and wages, the economic consequences of immigration, or the possible causes of unemployment. These beliefs are crucial in forming people’s political beliefs and in shaping their reception of different policies. Yet, they often conflict with elementary principles of economic theory and are often described as the consequences of ignorance, irrationality, or specific biases. As we will argue, these past perspectives fail to predict the particular contents of popular folk-economic beliefs and, as a result, there is no systematic study of the cognitive factors involved in their emergence and cultural success. Here we propose that the cultural success of particular beliefs about the economy is predictable if we consider the influence of specialized, largely automatic inference systems that evolved as adaptations to ancestral human small- scale sociality. These systems, for which there is independent evidence, include free-rider detection, fairness-based partner choice, ownership intuitions, coalitional psychology, and more. Information about modern mass-market conditions activates these specific inference systems, resulting in particular intuitions, for example, that impersonal transactions are dangerous or that international trade is a zero-sum game. These intuitions in turn make specific policy proposals more likely than others to become intuitively compelling, and as a consequence exert a crucial influence on political choices. Keywords: cultural transmission; cultural beliefs; economic psychology; evolutionary psychology; folk-economics; heuristics and biases; political psychology 1. The domain of folk-economic beliefs about how it actually works. Second, we propose to make sense of folk-economic beliefs by considering the environ- 1.1. What folk-economic beliefs are ment in which many, if not most, human cognitive mecha- The term folk-economic beliefs denotes a large domain of nisms evolved. explicit, widespread beliefs, to do with economic and The study of folk-economic beliefs should be distin- policy issues, held by individuals without systematic train- guished from other domains of investigation. Microeco- ing in economic theory. These beliefs include mental rep- nomics addresses actual choices of agents in conditions of resentations of economic topics as diverse as tariffs, rents, scarcity, independently of whatever mental representations prices, unemployment, and welfare or immigration poli- trigger these behaviors in actual individuals, and also of the cies, as well as mental models of interactions between dif- representations they may form of their behavior upon ferent economic processes, for example, inflation and reflection. Another field, behavioral economics, often unemployment. uses experimental designs as a way to elucidate tacit moti- Our perspective on the origins and forms of folk-eco- vations and capacities that direct economic choices, in con- nomics is based on two major assumptions. First, we texts where experimenters can manipulate incentives and argue that folk-notions of the economy should not be information flow between agents (Plott 1974; Smith described solely in terms of deviations from normative eco- 1976). Finally, neuro-economics elucidates the brain nomic theory. That has, unfortunately, been the common systems involved in appraising utility and making economic approach to the subject. Folk-views are generally described decisions (Camerer et al. 2007; Loewenstein et al. 2008). as the outcome of “biases,”“fallacies,” or straightforward The scope of a study of folk-economics is quite different ignorance. But describing how human cognition fails to from these three fields (see Figure 1). It focuses on work according to some norm of rationality tells us little people’s deliberate, explicit beliefs concerning economic © Cambridge University Press 2018 0140-525X/18 1 Boyer & Petersen: Folk-economic beliefs political science External information about economic phenomena Political Folk-economic choices beliefs ? Mental Systems Economic behavior micro-economics behavioral economics Fig. 1 - Colour online Figure 1. A summary of the systems and representations involved in forming folk-economic beliefs. External information about economic matters triggers activation of specific mental systems, which results in both economic behavior and explicit folk-economic beliefs. The latter’s effects on behavior cannot be assumed. Different fields, represented as clouds, focus on different parts of these processes. The model presented here is about the causal arrow linking specific mental systems to the occurrence of folk-economic beliefs in people’s minds. facts and processes, for example, that foreign prosperity is good or bad for one’s own nation, that welfare programs are PASCAL BOYER studied philosophy and anthropology in necessary or redundant, that minimal wages help or hurt Paris and Cambridge. He is Henry Luce Professor at the poor, that rent controls make prices go down or up, Washington University in St. Louis. Boyer studies the and so forth. evolved cognitive processes that underpin the acquisi- tion and transmission of cultural material. In particular, One should not assume that folk-economic beliefs he has used experimental and anthropological methods (henceforth FEBs) have direct and coherent effects on to account for the recurrent contents and the diffusion actual economic behaviors. Many FEBs are about macro- of religious representations. He is the author of Tradi- economic processes – for example, the level of unemploy- tion as Truth and Communication (1990, Cambridge ment, or the need for foreign trade, or the need for a University Press), Religion Explained (2001, Perseus nation to balance its budget – that are unrelated to Books), and Minds Make Societies (2018, Yale Univer- people’s everyday transactions. Also, even FEBs that do sity Press). bear on micro-economic realities, for example, on “fair” prices or wages, may remain insulated from the psycholog- MICHAEL BANG PETERSEN studied political science at ical processes that drive actual economic behavior, as we Aarhus University, Denmark, and evolutionary psychol- explain below, which is why people may recommend spe- ogy at the University of California, Santa Barbara. He is fi a Professor of Political Science at Aarhus University. ci c policy outcomes and behave in ways that contradict Working within the emerging field of evolutionary polit- that choice (Smith 2008, p. 165). ical psychology, he investigates how evolved psychology Figure 1 summarizes the different domains of thought structures modern-day attitudes on a range of political and behavior and the research programs involved. topics, including criminal justice, social welfare, redistri- bution, immigration and partisanship. Petersen is the author or co-author of numerous publications in these 1.2. Why folk-economic beliefs (FEBs) matter areas, including: “The Behavioral Immune System Shapes Political Intuitions” (American Political Science Understanding FEBs is of crucial importance, even if they Review, 2017); “Healthy Out-group Members are Rep- do not govern people’s economic behavior, because they resented Psychologically as Infected In-group play a critical role in political choices. Perceptions of Members” (Psychological Science, 2017); and “The macro-economic developments influence how favorably Deservingness Heuristic and the Politics of Health ” people view the government and how they cast their Care (American Journal of Political Science, 2017). votes (Nannestad & Paldam 1994). The translation of infla- Petersen has received several awards, including the tion, unemployment, and income dynamics into political Erik Erikson Early Career Award from the International ’ Society of Political Psychology, and is a member of the choices is mediated by people s beliefs about the economy, for example, whether rising unemployment is Young Academy of the Royal Danish Academy of Sci- fl ences and Letters. affected by government policy (Pef ey 1984; Rudolph 2003a, 2003b). Similarly, economic beliefs underpin people’s answers to such questions as: Is it a good idea to 2 BEHAVIORAL AND BRAIN SCIENCES, 41 (2018) Boyer & Petersen: Folk-economic beliefs increase welfare benefits, impose tariffs on imports, cap Second, because FEBs are politically consequential, rent increases, or institute minimum wages? Folk-eco- readers may wonder whether studying them is by itself a nomic beliefs constitute a largely unexplored background political project. That would be the case if, for instance, against which most information about policy is acquired, widespread beliefs were contrasted with a supposedly processed, and communicated among nonprofessionals true picture of the economy, and if that picture was associ- (Rubin