PDA

View Full Version : Group Selection



Chaos
2010-Jul-26, 11:21 AM
I am currently working on my diploma thesis (for economics; a diploma under the soon-to-be-former German system is very roughly equivalent to a Masterīs Degree) on the topic of overconfidence as displayed by entrepreneurs.

What makes this revelant to "real" science is that some economicsts, most notably Bernardo and Welch ("On the evolution of overconfidence and entrepreneurs", 2001) argue that there is a process of group selection at work in economies, because while entrepreneuts themselves are on average worse off for being entrepreneurs, the economy as a whole is better off, thus having more entrepreneurs is a selective advantage for economies.

This whole argument runs parallel to how Shermer, for example, in "The Science of Good and Evil", argues that systems of morality evolved because groups are at an advantage if they have a higher percentage of "solid citizens" compared to shirkers, and morality is the mechanism that makes someone a solid citizen even though that is to their individual disadvantage. The mechanism that Bernardo and Welch present for economies to make people entrepreneurs is, you guess it, overconfidence.

Now, while I know a thing or two about economics, I am unfortunately only an interested layman in matters of biology, and thus do not feel competent to judge the merits of this invocation of group selection - or of group selection as a whole, for that matter.

Are there any evolutionary biologists here who would be willing to answer by questions on this topic - and risk being quoted by name in my thesis, if it comes to that. Failing that, does anyone here know a place on the īnet where such evolutionary biologists hang out who are willing to talk to an interested layman? Even a book explaining group selection and the arguments for and against it to a non-biologist would be very helpful.

Strange
2010-Jul-26, 12:48 PM
I am not an evolutionary biologist, but ...

I struggle to see how this can apply to economics. If a population of organisms survives or expands better than another because individuals are altruistic, then that will select the genes that favor altruism (and vice versa). This means that a greater proportion of organisms will be altruistic.

Sounds like someone has taken an analogy and tried to apply it to the real world, but forgetting about the underlying mechanisms.

Evolution depends on two things: inherited traits and selection. I don't see how these apply to people's personal ambitions within a given economy. Even if having entrepreneurs is good for the economy as a whole, there is no obvious mechanism which will cause that to favor more entrepreneurial people in future. (Is there evidence that entrepreneurs breed better than non-entrepreneurs?)

There may be some positive feedback mechanisms around the fact that people talk about succesful entrepreneurs which may encourage more to have a go. Is there any evidence that happens more because entrepreneurs are good for the economy; or would it happen anyway because people like a success story?

caveman1917
2010-Jul-26, 04:47 PM
If a population of organisms survives or expands better than another because individuals are altruistic, then that will select the genes that favor altruism (and vice versa). This means that a greater proportion of organisms will be altruistic.

This is not true. When the population as a whole will behave more altruistically, there will be a positive pressure on the genes for 'freeriding', since that strategy will optimize in a highly altruistic environment. The pressure differential on selfish/altruism genes is mostly decided by the social environment of that organism, not by an external (ie outside social environment) pressure. A more accurate way of looking at it is that it will tend towards equilibrium.

ETA: here (http://physicsworld.com/cws/article/news/42540) is a reference of a simulation where that behaviour is tested.

ETA: it's important to always consider that evolution works on the level of the individual organism, not on the population as a whole.

Gillianren
2010-Jul-26, 05:23 PM
ETA: it's important to always consider that evolution works on the level of the individual organism, not on the population as a whole.

But its effects are felt by a population provided the trait is positive. We don't know who the first person was to be, say, lactose tolerant or to have sickle cell anemia, but we know that they were able to consume dairy in adulthood or be more resistant to malaria. And we know that now, many people are.

By the way, Chaos, your English is excellent. I just have one comment on it, which is that the English word is "economists." It looks like a typo, and goodness knows we all make those, but I thought I'd just point it out since it's in your field.

caveman1917
2010-Jul-26, 05:34 PM
But its effects are felt by a population provided the trait is positive. We don't know who the first person was to be, say, lactose tolerant or to have sickle cell anemia, but we know that they were able to consume dairy in adulthood or be more resistant to malaria. And we know that now, many people are.

Yes but those are traits that apply against external pressures (consume diary or malaria). The altruism/selfish traits apply solely against other individuals in the social environment, and so the pressure differentials are provided by the way they are distributed in the society. That's the reason we have selfish people in the first place. For the population as a whole altruism is most favourable, but to the individual in such a society means that selfishness is most favoured. And that is where evolution works, at that individual level. Then we have a pressure towards selfishness, but then some individuals that are altruistic have a relative advantage, and so forth. It's an equilibrium seeking system, because it's 'internal' to the society itself.

For most traits that apply externally, it's easy to think of evolution in terms of populations. However that shortcut will fail on internal pressures.

caveman1917
2010-Jul-26, 05:52 PM
As to the main question, as far as i know group selection as a mechanism is somewhat on the fringe of accepted evolutionary theory. All instances in which it could be shown it turned out to be a secondary effect, emerging from 'normal' selection at the individual level. I wouldn't base anything in my thesis on group selection as a standalone mechanism.

I think Strange pointed out the main thing already. It is an advantage for economies to make entrepeneurship look like it's a lot better than it is, and providing impulses for it (low interest loans) etc. Having it portrayed optimally in the media (focussing on the succesful ones) and that sort of thing.

This however has nothing to do with group selection, or evolution in general. You might be better off looking for sociological factors for this effect.

HenrikOlsen
2010-Jul-26, 06:22 PM
Evolution depends on two things: inherited traits and selection. I don't see how these apply to people's personal ambitions within a given economy. Even if having entrepreneurs is good for the economy as a whole, there is no obvious mechanism which will cause that to favor more entrepreneurial people in future. (Is there evidence that entrepreneurs breed better than non-entrepreneurs?)
It would be Lamarchian evolution, since the mechanism is one of politicians recognizing that it's a good idea to have entrepreneurs in the society so they adjust e.g. tax laws to make it more attractive to be an entrepreneur, thus hopefully resulting in more of them. It does require rational politicians which is why it isn't always seen.

mike alexander
2010-Jul-27, 03:15 AM
Chaos, I can't help on an appropriate site or book, but I would be interested to know if anyone in your area has linked the phenomenon to gambling, especially in games that are controlled by chance alone. They appear similar to me.

Jens
2010-Jul-27, 05:03 AM
It would be Lamarchian evolution, since the mechanism is one of politicians recognizing that it's a good idea to have entrepreneurs in the society so they adjust e.g. tax laws to make it more attractive to be an entrepreneur, thus hopefully resulting in more of them. It does require rational politicians which is why it isn't always seen.

Yes, I think this would be the mechanism at work. It wouldn't be genetic evolution, but rather than in some economies, entrepreneurs would be "weeded out," i.e. sent to debtor's prison or whatever, whereas in others they would be given encouragement to soldier on, so it would be a process of social selection rather than genetic. What makes it a tad complicated as well is that while animals cannot change their genes to imitate others, economies can change their policies in imitation of others, so it's not always clear when one is being successful. Is China beating other economies? Well, in a sense, perhaps, but on the other hand they have relied on financing and technology on other economies, so it's not really a simple picture.

Chaos
2010-Jul-27, 10:30 AM
Thanks for the replies, everyone. Sorry for taking so long to react, but that e-mail notification thingy didnīt work like I thought it would, and I only just noticed there had been replies.


@Strange:
Sure, evolution in the narrowest sense, with genes and natural selection and stuff, is not at work here. However, it seems obvious to me, as it did to quite a few other economists, that there is something going on that has strong parallels with biological evolution - perhaps enough parallels to usefully apply what we know about biological evolution to "economic evolution".

For example, on one level, we have businesses; we can say that the market is the environment, businesses are individuals, and business ideas or business practices or aspects of the behavior of entrepreneurs and managers are equivalent to genes. Some such "genes" make a business more fit to survive in the market, some less so, and depending on the market and the economic mood of the time, selection pressure may be quite harsh, or not so harsh.
Sure, businesses donīt breed, and entrepreneurs do not breed better if they are successful - but the "genes" are passed on, and that is what matters. Because genes in biological evolution are inextricably linked to the individuals who carry them, we tend to overlook that it is not per se necessary for the individual to breed, but only in order to pass on the gene.
So, how do "genes" of businesses get passed on? Simply: successful entrepreneurs are the subject of studies, they write books, give talks, fund a business administration chair at a university, hold seminars and so on. Their ideas, their behavior, their business practices spread to other prospective entrepreneurs... if they are successful. Those that fail, donīt spread - in fact they do the reverse, that is, be spread as an example of what not to do.


@Gillianren:
Yes, a typo... the bane of everyone trying to express themselves through a keyboard. I hope someday the propensity to make typos is sufficiently selected against to weed it out of the gene pool :doh:


@caveman1917:
Sure, but you cannot deny that there is also a process of mutation and selection going on at the level of societies. It may or may not be biological, but I think it is close enough to evolution that we can call it that. I doubt, though, that here the mutation is always random, and the selection is always natural, at least these days. Certainly some changes in societies look suspiciously like they are (more or less) intelligently designed... :shifty:


@HenrikOlsen:
You mean Lamarckism? Heredity of acquired traits? Because in "economic evolution" that is certainly happening.


@mike alexander:
I have no idea. The experiments Iīve seen showed that, whenever the subject understand the chances, they tended to be risk-averse; overconfidence implies the subject doesnīt understand the chance of winning or losing, and overestimates it, and I donīt recall seeing experiments about that.


@Jens:
Thatīs another level of "economic evolution" - the worldīs political and economic scene is the environment, national economies are the individuals, and aspects of policy, especially economic policy, are "genes". Thereīs certainly selection pressure, especially in bad times, there may or may not be random mutation but changes to genes certainly do happen - though again they look much like "intelligent" design. We can observe that communist policy "genes" are probably selected against, to pick just one example, although so far the selection pressure has not been strong enough to make them go extinct.

Strange
2010-Jul-27, 10:50 AM
So, how do "genes" of businesses get passed on? Simply: successful entrepreneurs are the subject of studies, they write books, give talks, fund a business administration chair at a university, hold seminars and so on. Their ideas, their behavior, their business practices spread to other prospective entrepreneurs... if they are successful. Those that fail, donīt spread - in fact they do the reverse, that is, be spread as an example of what not to do.

Much as I detest the whole concept of "memes", this almost sounds like a valid application of the idea :)

Strange
2010-Jul-27, 10:52 AM
This is not true. When the population as a whole will behave more altruistically, there will be a positive pressure on the genes for 'freeriding', since that strategy will optimize in a highly altruistic environment.

Fair enough. As I say, not my area, but the important point is that there is a mechanism for inheritance. And, therefore, I think one has to be cautious about how far one can apply these ideas to other areas; never forgetting you are making an analogy.

Ivan Viehoff
2010-Jul-27, 12:46 PM
entrepreneuts themselves are on average worse off for being entrepreneurs
Really? Why? Is this generally true, or just applies to economies with a lot of social welfare and labour security?

Chaos
2010-Jul-27, 01:08 PM
Much as I detest the whole concept of "memes", this almost sounds like a valid application of the idea :)

Dang... memes! Why didnīt *I* think of that?

Chaos
2010-Jul-27, 01:16 PM
Really? Why? Is this generally true, or just applies to economies with a lot of social welfare and labour security?

Thatīs generally true, at least in Western Europe and the US. I donīt - yet - know the number from memory, but much more than half of all start-ups fail within a few years, and those that donīt do not always generate more profit than the owner would have gotten as a salary had he stayed employed. The statistics donīt account for non-monetary benefits of entrepreneurship, such a the joy (or not) of running your own business, being your own boss and so on; however depending on whose numbers you take, those benefits would have to be anywhere from enormeous to huge, in order to make entrepreneurs better off on average than non-entrepreneurs.

Starting a business is risky, and most first-time entrepreneurs underestimate both the effort and the risks involved... as well as such trivial things as, if a field of business is easy for them to get into, itīs also easy for others to get into, hence they will face strong competition.

caveman1917
2010-Jul-27, 02:32 PM
@caveman1917:
Sure, but you cannot deny that there is also a process of mutation and selection going on at the level of societies. It may or may not be biological, but I think it is close enough to evolution that we can call it that. I doubt, though, that here the mutation is always random, and the selection is always natural, at least these days. Certainly some changes in societies look suspiciously like they are (more or less) intelligently designed... :shifty:

I don't deny that :)
I'm saying it is an abstraction to look at it on that level, and one must be carefull because in some circumstances that abstraction will fail. For example it would work in Gillian's example concerning diseases, but it would fail in Strange's example concerning altruism.

In general i'm just saying i would not use the mechanism of group selection as a causal basis. It can be used as an emergent overarching model though.
I was also saying to be carefull when that is supposed to go in your thesis, while you can probably dig up some references concerning group selection from a while ago, it is important to understand most (all) of those have been discredited later. I was just pointing that out ;)

HenrikOlsen
2010-Jul-27, 03:42 PM
Starting a business is risky, and most first-time entrepreneurs underestimate both the effort and the risks involved... as well as such trivial things as, if a field of business is easy for them to get into, itīs also easy for others to get into, hence they will face strong competition.
I once heard starting a successful business compared to making Grizzly Soup, there's a hard part and an easy part.
To make Grizzly Soup, first you have to find and kill a Grizzly, then there's a hundred recipes that'll get you the rest of the way.
To make a successful business, first you have to find something you're better at than all the others, the rest of it is just work. If you're only slightly better that the rest it's hard work, if you're not it's very hard work and you have to be best at working very hard to be successful.

This has the corollary mentioned above that if it's easy to do, there's a lot of people you have to be better than of you don't want to work very hard (running a pizza or kebab shop is one of the common examples I see in textbooks on the subject).

Incidentally, I've been self employed for 12 years now, all but the last couple of years making far less than what I could have made as a full-time employee.
For me the benefit of, to a large extent, being able to manage my own time has far outweighed the money I could have made otherwise.

Chaos
2010-Jul-27, 05:47 PM
I once heard starting a successful business compared to making Grizzly Soup, there's a hard part and an easy part.
To make Grizzly Soup, first you have to find and kill a Grizzly, then there's a hundred recipes that'll get you the rest of the way.

LOL!


To make a successful business, first you have to find something you're better at than all the others, the rest of it is just work. If you're only slightly better that the rest it's hard work, if you're not it's very hard work and you have to be best at working very hard to be successful.

This has the corollary mentioned above that if it's easy to do, there's a lot of people you have to be better than of you don't want to work very hard (running a pizza or kebab shop is one of the common examples I see in textbooks on the subject).

The papers Iīve read usually use the restaurant business as an example for a market that is easy to get into, so that sounds about right.


Incidentally, I've been self employed for 12 years now, all but the last couple of years making far less than what I could have made as a full-time employee.
For me the benefit of, to a large extent, being able to manage my own time has far outweighed the money I could have made otherwise.

My hat is off to you for your success... and your perseverance.

Gillianren
2010-Jul-27, 06:15 PM
Yes, a typo... the bane of everyone trying to express themselves through a keyboard. I hope someday the propensity to make typos is sufficiently selected against to weed it out of the gene pool :doh:

Not with the odious new belief that spellcheck will cure all our ails, it won't. And again, your English is very good, but that word seemed a relevant one to double check that you knew how to spell it.

Chaos
2010-Jul-28, 02:18 PM
Incidentally, I've been self employed for 12 years now, all but the last couple of years making far less than what I could have made as a full-time employee.
For me the benefit of, to a large extent, being able to manage my own time has far outweighed the money I could have made otherwise.

By the way, Henrik, if you donīt mind telling us... now, looking back, would you say you were overconfident when you became an entrepreneur, i.e. that you overestimated the income, or underestimate the risks or the effort?

Cougar
2010-Jul-28, 06:31 PM
You appear to have chosen an appropriate user name for an economist. :) Here are some selected papers by Brian Arthur:





"Complexity and the Economy," Science, 2 April 1999, 284, 107-109. PDF MS Word

"The End of Certainty in Economics," Talk delivered at the conference Einstein Meets Magritte, Free University of Brussels, 1994. Appeared in Einstein Meets Magritte, D. Aerts, J. Broekaert, E. Mathijs, eds. 1999, Kluwer Academic Publishers, Holland. Reprinted in The Biology of Business, J.H. Clippinger, ed., 1999, Jossey-Bass Publishers. HTMLPDF MS Word

"Positive Feedbacks in the Economy," Scientific American, Feb. 1990. Pdf

"Competing Technologies, Increasing Returns and Lock-in by Historical Events," Economic Journal, 99, 106-131,1989. Pdf

"Increasing Returns and the New World of Business,"Harvard Business Review, July-Aug 1996. Pdf MS Word

"Bounded Rationality and Inductive Behavior (the El Farol Problem), American Economic Review, 84,406-411, 1994. Html Pdf

"Complexity in Economic and Financial Markets," Complexity, 1, 20-25, 1995. Pdf

Preface to the book: Increasing Returns and Path Dependence in the Economy, Univ. of Michigan Press, Ann Arbor, 1994. Pdf

"Process and Emergence in the Economy," introduction to the book The Economy as an Evolving Complex System II, edited by Arthur, Durlauf, and Lane, Addison Wesley, Reading, Mass, 1997. Html Pdf

"Cognition: The Black Box of Economics," The Complexity Vision and the Teaching of Economics, David Colander, ed., Edward Elgar Publishing, Northampton, Mass, 2000. PDF MS Word

"Myths and Realities of the High-Tech Economy," Talk given at Credit Suisse First Boston Thought Leader Forum, Sep 10, 2000. PDFMS Word

"The Economy as an Evolving Complex System II.," W. Brian Arthur, Steven N. Durlauf, and David A. Lane, (Eds.), Proceedings Volume XXVII, Santa Fe Institute Studies in the Science of Complexity, Reading, MA: Addison-Wesley, 1997. Review by Gerald Silverberg, Maastricht. PDFMS Word

All of them appear to be available HERE (http://tuvalu.santafe.edu/~wbarthur/Papers/Papers.html).

Ivan Viehoff
2010-Jul-29, 02:28 PM
Thatīs generally true, at least in Western Europe and the US. I donīt - yet - know the number from memory, but much more than half of all start-ups fail within a few years, and those that donīt do not always generate more profit than the owner would have gotten as a salary had he stayed employed.
So in parts of the world where employment prospects are poor, or salaries are low, which might be most of the world, it is possible that entrepreneurship is rewarding.

But even in the developed world, I think one would have to look at those figures carefully. I don't find the datum "half of start-ups fail" very convincing as a demonstration. I think a lot of people close unsuccessful businesses, and then move on to setting up another one, until they settle into one that works. (Or, as in the case of my greatgrandfather, fail serially and never succeed... yet he fed his family and lived in a house. Who actually lost the money, him, or his financial backers?)

Chaos
2010-Jul-29, 03:09 PM
So in parts of the world where employment prospects are poor, or salaries are low, which might be most of the world, it is possible that entrepreneurship is rewarding.

But even in the developed world, I think one would have to look at those figures carefully. I don't find the datum "half of start-ups fail" very convincing as a demonstration. I think a lot of people close unsuccessful businesses, and then move on to setting up another one, until they settle into one that works. (Or, as in the case of my greatgrandfather, fail serially and never succeed... yet he fed his family and lived in a house. Who actually lost the money, him, or his financial backers?)

Well, first of all, youīll have to see what the study if they say "worse" off. It is in fact quite easy to be worse off as an entrepreneur than as an employee, if you include the higher workload and higher insecurity, especially if you give a lower priority to the non-monetary perks of self-employment. However, you can be worse off than an employee but still be better off than an unemployed person. A lot of the one-man (or just as frequently, one-woman) businesses created by microfinance in the third world succeed wonderfully compared to being unemployed and starving, but I am sure many of them would be considered a failure compared to a regular, decently paid job, if such were available.

Jens
2010-Jul-30, 05:12 AM
You appear to have chosen an appropriate user name for an economist.

Which reminds me of a joke. How many economists does it take to change a light bulb?

two plus or minus seven.

Ara Pacis
2010-Jul-30, 06:57 AM
Analogy is always suspect, and I'm not even sure if the biological equivalent you're describing is collaboration, sybiosis or parasitism. Moreover, it's not even clear if an entrepreneurial enterprise is intended to be competitive with the extant "group" or if is intended to fill a vacuum, a new need. Similar to biology, you might have organisms competing for one resource and a new organism might evolve to consume the uncontested byproducts instead. In this case I think biologic evolution is entirely the wrong metaphor. Group dynamics, sociology and psychology are probably a better way of explaining it with words already useful to the discussion.

It would also be useful to define "entrepreneur". Are you referring to a sole proprieter, a partnership, or a corporation? Just because a group of businesspersons incorporate doesn't mean that their defining attitude, goals, and balance-sheet is not entrepreneurial. Is an entrepreneur someone who spends their own money and does their own work, or someone who convinces others to give him money so that he can hire others to perform that work?

Chaos
2010-Jul-30, 02:53 PM
It would also be useful to define "entrepreneur". Are you referring to a sole proprieter, a partnership, or a corporation? Just because a group of businesspersons incorporate doesn't mean that their defining attitude, goals, and balance-sheet is not entrepreneurial. Is an entrepreneur someone who spends their own money and does their own work, or someone who convinces others to give him money so that he can hire others to perform that work?

An entrepreneur in this context is someone who becomes starts a business... no matter what its form. A small corporation - say if two or three partners pool their resources and incorporate - is perhaps less entrepreneurial, and certainly less risk-friendly, than a sole proprietorship, but hardly not entrepreneurial.

And an entrepreneur can very well convince others to give him money, and still stay an entrepreneur - think of venture capital firms.