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What About Equality?
This is a follow up to my post Beyond Homo economicus. Herb Gintis and Samuel Bowles wrote an article for the Boston Review entitled, "Is Equality Passé?" It is a fairly long article and goes over the evidence for Homo reciprocans, but in more detail than my post. Then Gintis and Bowles apply the model of Homo reciprocans to the issue of welfare, welfare reform and equality.
Their conclusion is that the current backlash against welfare, egalitarian policies and the subsequent welfare reform isn't so much about greedy people, but about bad policies and the issue of fairness. More specifically Gintis and Bowles argue that people want to help others, to be kind and make sure people have the basic necessities. But at the same time people care about the fairness of the programs that are in place to achieve these goals. Further, that the programs that are or were in place were viewed as being unfair.
But while strong reciprocity may support egalitarianism, it may also help explain the rising tide of opposition to welfare state policies in the advanced market economies in the past decades. Specifically, in light of the experimental regularities outlined above, we suspect the following to be true as well: egalitarian policies that reward people independent of whether and how much they contribute to society are considered unfair and are not supported, even if the intended recipients are otherwise worthy of support, and even if the incidence of non-contribution in the target population is rather low.
That is many of the people who oppose egalitarian policies aren't greedy rich people, but are people who feel the current policies are not fair. For example welfare with work requirements or community service requirements are probably more popular than simple welfare where the recipient is seen as providing no contribution to society.
Another policy that is in line with the notion of helping the less fortunate and at the same time promoting fairness is the Earned Income Tax Credit (EITC). With the EITC it "pays to work" whereas with more traditional forms of welfare increasing one's income could very well have lead to a decline in one's living standard.
At the same time it should be remembered that certain levels of inequality are healthy for an economy. The idea that the current levels of inequality in the U.S. are dangerous is in my veiw highly questionable. It is highly questionable because we have no idea what the danger point is. For example from 1967 to 1998 the increase in the Gini coefficient for household inequality is about 14%. If we use the variance of the log of income it is about 20% (link). So have we approached a "danger point"? Hard to say considering that we don't see people discussing this all that much.
Beyond Homo economicus
Note: Much of this post is based on Chapter 11 of Game Theory Evolving: A Problem-centered Introduction for Modeling Strategic Interaction by Herb Gintis. For those who find this post interesting, buying this book would be a good place to start. I have also included some of the citations by Gintis in this post so that the interested reader will know where to look for further information on www.jasminelive.online.
The standard model for human behavior in economics is that the individual maximizes his utility subject to a set of constraints. This view of human behavior is described as Homo economicus. But there are problems with this version of human behavior. For example, in public goods game experiments there often starts out with a high degree of cooperation that starts to decay later in the game. Also, there are problems with the way people make decisions under uncertainty. In this last case it is quite often the case that people don't make the right choice given that the model of human behavior is expected utility maximization.1 Of course this does not mean that Homo economicus is everywhere and anywhere a bad model for human behavior.
Homo economicus has provided a wealth of results when there are well defined markest (double continuous auctions) as well as oligopoly models (Davis and Holt 1993, Kachelmaier and Shehata 1992). So Home economicus is sometimes useful, but at other times it is not. For example, when there is not complete information and there are opportunities for strategic behavior many of the predictions derived from the Homo economicus fail to materialize. Sometimes, the agents will retaliate against defectors even when retaliation comes at a cost. Other time agents will take actions that will reduce their overall welfare but enhance equality. Further, it should be understood that these actions are not necessarily irrational in an over all sense, they are simply irrational given the Homo economicus hypothesis for human behavior. So, the standard assumption/hypothesis used in much of economics is one that needs re-working, or at least one should be careful when invoking that model.
Homo equalis
One new model for human behavior is Homo equalis. Homo equalis actually has preferences for equality and this will mean the behavior for Homo equalis will deviate from that of Homo economicus.
Homo equalis exhibits a weak urge to reduce inequality when on top, and a strong urge to reduce inequality when on the bottom.(Gintis 2000)
The orgin of Homo equalis is from the anthorpological literature (Gintis 2000). In small hunter/gatherer groups there are no centralized governments, and individuals that deviate from voluntary cooperation are often banished from the group or killed. As a result widespread sharing of resources (shelter, food, etc.) is common.
In terms of experimental game theory results such as the ultimatum game depending on the exact "shape" of the utility function of Homo equalis2 the offers that are made well vary, but will tend to be well above the sub-game perfect strategy of offering a split of ($9,$1) which the Homo economicus assumption predicts. The modal offer from experimental evidence is around 50% (i.e. an offer of ($5,$5)) with respondents rejecting offers below 30% (i.e., rejecting offers below ($7,$3)) (Camerer and Thaler 1995, Guth and Tietz 1990).
Another game where the results using Homo equalis measure up better than Homo economicus is the public goods game. In this game the players can put a dollar, form their private account, into the public pot. At the end of the round the experimenter will deposit $.5 for each dollar in the public account into the players accounts. The process is repeated ten times. Perfect cooperation will result in $50 in each players account (which the player can keep). If one player were to defect he'd have $55 and the rest of the players would have $45. If everybody defects each player keeps $10. The sub-game perfect equilibrium (and the predicted outcome with the Homo economicus hypothesis) for this game is for nobody to contribute to the public pot and for each player to get $10. The exeprimental evidence on the other hand have very different results. Further, with Homo equalis, again depending on the shape of the utility function, there can be substantial cooperation.
Homo reciprocans
I have blogged previously about Homo reciprocans, but there is more than that short post covers. The problem with Homo equalis is that while it does do a decent job of reproducing what is seen in game theory experiments it does not address the issue of what agents want to see in terms of the intentions of others. In other words, Homo equalis does say much about how "cheaters" are viewed. Typically cheaters are viewed poorly, and often times people will seek ways to retaliate against "cheaters" even at a cost to themselves. Homo reciprocans allows for this kind of behavior.
One chaturbate experiment that suggests that people care about the intentions of other players is where the proposer in the ultimatum game is a computer and the responders know this. In this case, the number of rejections fall significantly (Blount, 1995). the idea here being that the responder's rejections will have little punishment effect on a computer. The reciprocal nature of play can also be seen in much earlier research such as Robert Axelrod's competitions on game theory. The tit-for-tat startegy has play dependent on reciprocity.
Of course, the first objection that could be raised is that "co-operation" in the above sense is nothing more than "enlightened self interest". That is, in repeated game contexts with discount rates that are sufficiently low cooperative outcomes will result even with the assumption of Homo economicus. However, the problem is that the level of reciprocity that is observed in experimental games could be called strong reciprocity in that it applies in situations where the above doesn't have to hold. That is, there is a tendency to cooperation and punish even when there are costs to doing so. Further, this kind of behavior can be seen in things like one-shot games where the above arguments of "enlightened self-interest" in conjunction with Homo economicus should not hold.
Homo reciprocans offers up a story for such observations as rejecting proposals in the Ultimatum game. Note that with Homo equalis all of the results center around the proposals with regards to the Ultimatum game and not the rejections. With Homo reciprocans we actually can say something about both the proposer and the respondent. Further, Homo economicus behavior is an extreme case (this arises when the individual cares nothing about fairness of others behavior and kindness towards others).
Homo parochius
Homo parochius divides the world in two groups insiders and outsiders. This division can be along racial lines, ethnicity, language, nationality, and even random factors3. While the behavior of Homo parochius is generally condemned by society at large such behavior can often be elicited in experimental games suggesting that even with "moral training" against such behavior it is still present in many people. Some examples one form that is considered innocuous is hometown favortism. Most people in a community with a sports team will likely favor other individuals that support the hometeam. Homo economicus, Homo equalish, and Homo reciprocans all fail to capture this kind of behavior.
The traditional model/assumptions used in economics about the behavior of individual actors is clearly not sufficient to cover all areas where economic analysis can be applied. As such these new models offer additional "tools" to the researcher. One of the past objections to such models is that they are "ad-hoc". That is the models are constructed because this is what we observe in individual/group behavior. The problem with this approach is exemplified in the Phillips curve inflation/unemployment trade off. It is a purely empirical result that could vanish if policy is based on the model. However, as I noted in this post evolutionary game theory has provided a solid theoretical basis for why such models for individual behavior. Caring about reciprocity, equality and even insiders vs. outsiders could provide evolutionary advantages. Thus, this type of thinking becomes dominant while purely selfish (Homo economicus) loses ground or doesn't develop until later.
Note that this does not make Homo economicus worthless or unimportant. In the public goods games for example a percentage of the players do play according to Homo economicus and this could be one reason why the cooperation in early stages deteriorates to the point where in later stages everybody is playing according to Homo economicus.
While the above address some of the problems noted in the first paragraph that face economic theory, it does not address them all. Further, there is still resistance in the economics profession to these ideas. However, as the evidence continues to mount and with Daniel Kahneman's Nobel award, the momentum, in my view, is with those who favor incorporating these new ideas into economics.
Reduce Taxes to Reduce the Deficit?
I have to agree with Mark Thoma that this argument is highly suspect (well Mark simply says suspect, not highly suspect). Mark points to this quote from a Bloomberg article,
President George W. Bush urged Congress to make permanent the tax cuts enacted during his first term and draft legislation to bolster the Social Security program, after the lawmakers return from their August break. "The tax relief stimulated economic vitality and growth and it has helped increase revenues to the Treasury," Bush said in his weekly radio address. "The increased revenues and our spending restraint have led to good progress in reducing the federal deficit."...
In looking at the data presented by Jim Hamilton, it doesn't look good for this claim. While the idea of reducing tax rates can increase tax revenue is theoretically possible it just hasn't happened all that often. Further, Bush's track record in regards to controlling/reducing spending is...shall we say goddamned freaking awful (and that is being polite)?
Is there a reason to make the tax cuts permanent? Maybe, but the idea of reducing the deficit is just not one of them. I'd like to see tax rates lower because I'd also like to see the government doing less (i.e. cut spending). But given what we have seen from Bush this is just not going to happen.
Common Creationist Claptrap
Andy at the World Wide Rant points to a post by LaShawn Barber that repeats and oft heard Creationist load of baloney. In reply to the naysayers LaShawn has it all figured out:
Not too difficult to figure out, Bryan. The ungodly are afraid that God might really exist. As I’ve said before, secularism is a religion, too. But why raise your blood pressure over government schools anyway? They’re run mostly by degenerates.
These kinds of responses are so commonplace amongst the Creationists you'd think they get some sort of faxed talking points on it or something.
And no, the reason I and many others object to Intelligent Design (ID) is not because it might prove the existence of God (so much for faith), but that the theory of evolution is much more likely to be the true explanation (note the small "t" on true). I know I've gone over this before on www.jasminlive.mobi, but here it is one more time.
A theory or hypothesis should be judged on how likely the hypothesis is to be true given the data. That is given two hypotheses H1 and H2 and evidence (denoted by E) we want to know the relation:
Prob(H1|E), and
Prob(H2|E).
Problem is we don't observe this. Instead we observe Prob(E|Hi). That is, we observe the probability of observing the evidence given one of the hypotheses. Further it is a basic result of probability theory that Prob(E|H1) does not equal Prob(H1|E).1 So we have to use Bayes Theorem to determine P(Hi|E). When we have done this for both hypotheses we can then compare probabilities and we should, idealy go with the hypothesis that engenders the larger probability given the evidence.
Now, in looking at ID what evidence is there for ID? The null set, IMO. Sure some might point to the flagellum of certain bacteria, but there are arguments that indicate the flagellum could have come about via evolution. The Type Three Secretory System pretty much sinks the Irreducible Complexity (IC) argument since we have a subset of the parts of the flagellum doing something useful. Hence the IC argument does not really work. Some could point to Dembski's Explanatory Filter, but that is a fatally flawed methodology and has not even been used in a realistic manner on the flagellum.2 Other than that there isn't any other biological evidence. Behe's other examples like the blood clotting cascade have been successfully rebutted. One could point to the anthropic principle (that the universe is fine tuned for life), but a care application of Bayes theorem again shows that this bit of evidence is actually evidence against design and in favor of naturalism. So the evidence in favor of ID is the null set. Further, the probability of a null set is zero. So it is pretty much the case that P(ID|null set) = 0. This is why so many critics of ID point out the lack of evidence, experiments, and predictions. Without these ID gives you nothing for evidence. Evolutionary theory on the other hand has lots of evidence. So, it should be trivial at this point which theory we present to in a science class: the one with explanatory power and is most likely correct.
Further, we must remember that we are talking about . Granted who are 15, 16 and 17 years old, but still they are . I dare anyone to go out and ask 10 teenagers at random about Bayes theorem. Hell...ask what a theorem is first; after all if they can't answer that they'll never get the question about Bayes theorem. Or even try asking them about Popper and the falsification of hypotheses. I'd be willing to bet that very few people who did this would get answers that were even remotely satisfactory. The point is that at that age do not have the the maturity nor the training to understand these kinds of methodological issues. Most are wondering what they'll do for the weekend, where the good party with all the booze is, etc. Teaching this just isn't a smart move.
So this is why we don't teach ID, astrology, or numerology in high school science courses. They have not evidence supporting them, and the idea of hoping that 16 year old the nuances of probability theory just isn't going to work by and large.
Oh and as a side note: no, secularism is not a religion. Religions are concerned not only with things like ethics, human identity and the existence of a divine being, it also has dogma. Secularism has no dogma. What I believe is based on the evidence. If the evidence indicates I should switch from one hypothesis to another that is what I should do. Religion does not operate this way. No amount of evidence will sway a person who strong in their faith about the existence of God. Also, note that it is simply ridiculous to equate secularism with modern liberalism. I am by no means a liberal and I'm also a secularist. I know this is a favorite tactic of some conservatives, but it is intellecutally lazy if not outright dishonest.
Update: Sadly Bryan Preston also gets it exactly wrong, IMO.
That is science--the constant competition of, refinement of, discarding of and creation of ideas. The libertarians' collective reaction to President Bush's very modest statement indicates to me that they aren't much interested in science as science. They don't want to countenance any thought that a theory they support for all sorts of reasons might have weaknesses that should be addressed. To them, it's settled science, so why even entertain questions? But the thing about science is, it's never settled. If it's settled, why continue it? And why teach it?
First off, as I tried to show above, there is nothing supporting the notion of ID. In a competition it loses. This is why IDist are pressing for political solutions vs. going into the lab and actually doing...you know...science. So, fine competition is the way to go here, but be reasonable and look at the evidence for the competitors. On the one hand we have evolution with so much evidence there is almost no way to present it in a simple and concise manner. On the other hand we have ID which has bupkiss. If this was one of my son's swim meet's evolutionary theory would be done with the race, out of the pool and off to get a drink while ID was drowned at the bottom of the pool.
Further, the weaknesses of the theory are not the issue here. Every theory has its weaknesses...should we chuck them all? Buh-bye chemistry, meteorology, physics, and geology? I never did like that plate tectonics anyways...all those earthquakes...definitely much better to think it is the Earth God who is angry at us and must be appeased. This also highlights the differences between real science and the psuedo-sciences like ID. Scientists look at weaknesses as opportunities for further research. IDist look at weaknesses in ID as something to be denied.
As for science being settled, Bryan is sort of right here, but also wrong as well. Sure evolutionary theory is not settled. I've heard there is a debate of sympatric vs. allopatric evolution. I'm sure there are other controversies as well. But...aren't these weaknesses? Gee, I thought that was bad...gasp...could Bryan be trying to have his cake and eat it too?!?! I think so.
The Energy Bill
Well in case anybody is wondering, I think the recent energy bill passed by Congress and which President Bush will likely sign is nothing other than a horrible mish-mash of pork. When you read through the legislation it is money for this unprofitable industry, subsidies for that unprofitable industry, and while we are at it, lets throw some money to that unprofitable industry over there too. We'll cloak in the rhetoric of jobs creation and reducing our dependence on foreign oil, but when you get right down to it, the bill will do little or nothing. After all, $150,000,000 over ten years (for some piddly subsidy) or even $15 billion is a drop in the bucket compared to what the U.S. spends on foreign oil in one month.
Further, I find it amusing that it is the Republicans that are talking about a national plan. I thought national plans were something we saw with communist regimes. Usually it is the Republicans who are telling us that Americans know how to spend their money better than some politician or bureaucrat in D.C. Guess we can put that claim to rest. With the new batch of Republicans we get a centralized top down approach. So much for the Republicans standing for limited government and markets.