University of Minnesota - UMN Executive Leadership Insights
The Mind of the Market
Book

The Mind of the Market

Compassionate Apes, Competitive Humans and Other Tales from Evolutionary Economics

Michael Shermer
Times Books, 2007
Buy book or audiobook

Read offline

Amazon Kindle

Editorial Rating

8

Qualities

  • Applicable

Recommendation

This is a lively, entertaining, useful and uneven work. Author Michael Shermer ranges over an array of disciplines to synthesize current understanding of the intersection of economics and evolution. He defines and debunks homo economicus, or the economic man, a theoretical creation who behaves in a purely rational fashion. Shermer weaves personal experiences with interviews of researchers, summaries of classic texts, and contemporary experiments and observations of such well-known businesses cases as the Enron debacle. Readers with knowledge of behavioral economics or negotiation will find some familiar material in this book. For others, Shermer’s connections among biology, psychology, economics and ethics will be enlightening. He overreaches at times, making sweeping claims for the power of the market, but you don’t have to agree with every conclusion to enjoy the work. getAbstract recommends this to readers who are interested in behavioral economics, self-knowledge or the machinations of markets.

Summary

Evolution’s Insights into Economic Man

For too long economics worked with the model of homo economicus. Economists assumed that this “economic man” was purely rational and “selfish, self-maximizing, and efficient” when making decisions. Put that view to rest. Instead, realize that a range of disciplines, chief among them evolutionary theory, have added profoundly to scientific understanding of seemingly irrational choices. Choices that seem irrational in modern industrial societies were quite rational for humans living in tribes, as did the vast majority of early people. “Reciprocal altruism” is an example of the dichotomy. Playing fair and helping others may seem outdated to people in modern industrial societies, but such practices are critically important to small tribes in hostile environments.

The economic lives of hunter-gatherers and modern humans differ greatly. Tribal peoples earned roughly $100 per year. A village might have only 300 material items. By contrast, contemporary “consumer-traders” in New York City average $40,000 per person per year, and their “village” contains “around ten billion” material items. What’s more, this shift in standard ...

About the Author

Michael Shermer is a columnist for Scientific American and the author of several books including Why People Believe Weird Things.

Comment on this summary