This is the first part of a mini-sequence of posts on zero-sum bias and the role that it plays in our world today.
One of the most pernicious of all human biases is zero-sum bias. A situation involving a collection of entities is zero-sum if one entity's gain is another's loss, whereas a situation is positive-sum if the entities involved can each achieve the best possible outcome by cooperating with one another. Zero-sum bias is the tendency to systematically assume that positive-sum situations are zero-sum situations. This bias is arguably the major obstacle to a Pareto-efficient society. As such, it's very important that we work to overcome this bias (both in ourselves and in broader society).
Here I'll place this bias in context and speculate on its origin.
It's always a little risky to engage in speculation about human evolution. We know so little about our ancestral environment that our mental images of it might be totally wrong. Nevertheless, the predictions of evolutionary speculation sometimes agree with empirical results, so it's not to be dismissed entirely. Also, the human mind has an easier time comprehending and remembering information when the information is embedded in a narrative, so that speculative stories can play a useful cognitive role even when wrong.
Anatomically modern humans appear to have emerged 200,000 years ago. In the context of human history, economic growth is a relatively recent discovery, only beginning in earnest several thousand years ago. The idea that it was possible to create wealth was probably foreign to our ancestors. In The Bottom Billion, former director of Development Research at the World bank speculates on the motivation of rebels in the poorest and slowest growing countries in the world who start civil wars (despite the fact that there's a high chance of being killed as a rebel and the fact that civil wars are usually damaging to the countries involved)
[In the portion of the developing world outside of the poorest and slowest growing countries...] growth rates may not sound sensational, but they are without precedent in history. They imply that children in these countries will grow up to have lives dramatically different from those of their parents. Even when people are still poor, these societies can be suffused with hope: time is on their side...If low income and slow growth make a country prone to civil war, it is reasonable to want to know why. There could be many explanations. My guess is that it is at least in part because low income means poverty and low growth mans hopelessness. Young men, who are the recruits for rebel armies, come pretty cheap in an environment of hopeless poverty ...if the reality of daily existence is otherwise awful, the chances of success do not have to be very high to be alluring. Even a small chance of the good life as a successful rebel becomes worth taking, despite the high risk of death, because the prospect of death is not so much worse than the prospect of life in poverty.
Neither the developed world nor the countries that Collier has in mind are genuinely good proxies to our ancestral environment, but like the people in the countries that Collier has in mind, our ancestors lived in contexts in which growth of resources was not happening. In such a context, the way that people acquire more resources for themselves is by taking other people's resources away. The ancient humans who survived and reproduced most successfully were those who had an intuitive sense that one entity's gain of resources can only come at the price of another entity's loss of resources. Iterate this story over thousands of generations of humans and you get modern humans with genetic disposition toward zero-sum thinking. This is where we come from.
For nearly all modern humans, the utility of zero-sum bias has lapsed. We now have very abundant evidence that the pie can grow bigger and that win-win opportunities abound. Both as individuals and as representatives of groups, modern humans have a tendency to fight over existing resources when they could be doing just as well or better by creating new resources that benefit others. Modern humans have an unprecedented opportunity to create a world of lasting prosperity. We should do our best to make the most of this opportunity by overcoming zero-sum bias.
This post should present experiments that demonstrate this "zero-sum bias", or at least thought experiments that more clearly describe what counts as instances of "zero-sum bias". As it stands, you begin by presenting a vaguely described hypothetical problem, and proceed by hypothesizing about "its" origin in evolutionary psychology. You build on sand.
That's true, but on the other hand, economists often present the theory of comparative advantage in a way that's either disingenuous or shows their own lack of deeper understanding of what it actually says. What they usually omit -- either out of ignorance or for ideological reasons -- is that the principle of comparative advantage is fully compatible with various realistic scenarios where great masses of people get completely screwed over by the emergence of trade involving a new party that enjoys absolute advantage over them.
This is true even when all the assumptions necessary to derive the principle of comparative advantage hold. However, to make things even worse, its derivation involves some highly questionable spherical-cow assumptions, and the question of what can happen when these are relaxed in various realistic ways is rarely asked. In particular, the fact of capital mobility can wreck the usual simple model of comparative advantage completely.
Now, you say:... (read more)
The point is that unlike what one commonly hears from the proponents of free trade, including many economists, comparative advantage by itself does not prove that everyone, or even a great majority, will end up better off -- since it says absolutely nothing about how the wealth produced in the new equilibrium will be distributed. Moreover, when the spherical cow assumptions are relaxed in some arguably realistic ways, not even the conclusion that the total produced wealth will increase is certain.
Mind you, I am not making an argument against free trade here, but merely pointing out that the theory of comparative advantage is typically used as a nearly thought-free shibboleth, not a sound argument. It simply cannot prove what its fans commonly claim it does. To make a valid argument for a free-trade position on any realistic economic issue, much more is necessary.
That essay by Krugman you linked is a typical example. It sounds as if a mathematician complained that people are incapable of grasping the Pythagorean the... (read more)
I think this might better be framed as a "relativity bias", or perhaps the "relativity heuristic"
We don't assume that someone else winning means we have to lose, we just estimate things based on relative rather than absolute reference level. The status game would be one obvious example of this, and Yvain wrote a great post on how judgments based on relativity power thought processes all the way down to the level of perception.
You can also see it in the somewhat famous studies that show someone will drive across town to save 5 bucks on a 10 dollar calculator, but not a 100 dollar jacket, the fact that we judge gifts based on their expense relative to their class rather than their absolute expense, and probably about 100 other studies that I'm forgetting at the moment.
I think you miss an important part of the ancestral environment that is a likely source of zero-sum bias. In the ancestral environment, material resources are far less important than status once you're not starving. The difference between the top and the bottom of the wealth distribution was much smaller than it is today. But holding more resources was still important - more resources means higher status (roughly anyway). And status is a zero sum game. So since all or most transactions essentially status transactions, zero-sum thinking was a good heuristic.
Of course, like your theory, this is highly speculative.
No, and it's not even to have as many offspring as possible. It's to have as many copies of his genes in future members of the species.
Consider to male proto-humans, Adam and Bob. Adam has sex with his sister, they have 6 children, but all die without reproducing.
Bob never has sex, but is a good uncle to his brothers' and sisters' kids, 4 more of which survive to reproduce than would have done without his interventions.
Which one was more effective at passing on his genes?
"Today’s human population is descended from twice as many women as men."
From an address to the APA on gender differences delivered shortly after the Harvard/Summers business. Long and only tangentially related, but worth a full reading, IMHO.
It's not bulletproof in present context. The author doesn't cite primary sources and isn't an authority in the field. Still, given the extent and... energy of the backlash underway when it was delivered, I doubt that an uncorrected version would still be available from FSU's official web servers if an easy refutation was available.
The flip side of this is when people assume that anything bad must have a counter-balancing "silver lining" that evens the overall outcome to exactly zero. This happens particularly often, for example, when I suggest that if it were possible to completely eradicate clinical depression then we should do so.
Interesting topic, interesting quote. However, I am not sure we should regard the third-world rebels as victims of zero-sum bias -- they might understand that their country would be a better place if people worked together on building it up, but the chances of that happening soon, are rather low.
I'd say it's more of a tragedy-of-the-commons problem, where people are less interested in the negative sum of rebellion or piracy or ..., but are more interested in how much they personally gain. Which is of course not so much different from the developed world o... (read more)
You have neglected the negative-sum lose-lose situation being mislabled as win-lose.
War is the classic lose-lose situation that is mislabeled as win-lose. No one "wins" a war. After a war, everyone is worse off, just some are more worse off than others.
I think the problem is that the zero-point shifts, where if you survive a war, you feel like you have won something where in reality you just didn't lose your life.
What is the difference between what Aristotle called the vice of envy and the zero-sum bias? I wonder if these two concepts are aiming at the same thing, and if we can learn about one by reading what has been said about the other.
Important and interesting theory. Have you read this article by Paul Graham Mind the Gap? It touches on the aspects of zero-sum economic environments, and argues that the big change happened with the creation of the middle class in Europe. This was the first time it was possible to create wealth and keep the profit to yourself. The possibility to accumulate a fortune by creating wealth is just a couple hundred years old.
Maybe it’s a bit on the side but the “Daddy model” in the article seems to me like zero-sum bias.
See "folk economics" and Bryan Caplan's research for evidence of zero-sum bias. And Robert Wright's Non-Zero for a discussion of how human progress has come from increasingly positive-sum interactions.
This post feels a bit lacking as it just briefly introduces a bias and explains why it is there, but doesn't talk about how to overcome it or the harm that it does. Zero-sum bias results in tons of bad laws, for example. And it can be self-perpetuating - very high marginal tax rates are often justified by assuming the earner just got lucky or too... (read more)
The ridiculous amount of activity by the untrained and uninformed on the stock markets seems to suggest that people could use a significantly higher amount of "zero sum" bias there. There are tons of people who would not peg their investment skill in the top 1%, who nonetheless think they have a good chance of making money in short term trades. There certainly seems to be the thinking that the stock market is a source of profits for one and all, regardless of investment skill and understanding.
This bias however is most prevalent in the idea that getting rich cannot possibly be a noble act, a point extensively addressed in Paul Graham's essays.
Upvoted, as this is an extremely important topic.
I am not sure that zero-sum or positive-sum games translate very well to the hypothetical early human society. You need more analysis to be convincing. What does it mean to have more resources when food cannot be stored and any surplus must be shared with others in the hope that they will do the same in the future? What does ownership or control of resources mean where only what can be carried can be protected? How does game theory cope with gift giving rather than trade? How does game theory work within families? etc.
But how do you resolve a situation where there is actually only enough of a resource for one individual or group in a positive-sum manner? The historical record is clear that there are zero-sum situations, and in those situations there can be only one winner.
I don't believe you when you say we live in a world of abundant resources or that we can simply create new resources or that we can design a perpetual motion society of "lasting prosperity".
An argument between you and me over your thesis would not end in two winners. I think it's a silly, ideological, unscientific proposal that is unquantifiable in all its essentials.
It should. When two people disagree, something is amiss, and when the truth is more clearly discovered, both learn something, maybe a little bit for the person who was right, much more for the person who was wrong. And the only way to discover that you are the person who was wrong, the person who would benefit the most, is to make yourself perceptive to good argument.
If you don't think that arguing about ideas can/should be positive-sum, this may not be the site for you.
The only person you should try to be better than, is the person you were yesterday
Our ancestors hunted together and lived in groups. If it had been a zero sum game there would be no point in living in groups.
The zero-sum bias seems to be also responsible for the the concept of karma which is a ubiquitous concept (not just amongst Hindus). The roots of this can be found in the ancient religious texts like the Bhagvad Gita and go on to support what multifoliatrose says in the post.
Not to be a cynic, but:
Zero-sum is not an illusion.
Every single thing has opportunity cost.
It may not be another person that pays if I pick up my toys, and go found my own community elsewhere.
It may be fewer trees and less open land.
We're all in this together, on the same planet, sharing the same air and water. Nothing is positive-sum if it involves using physical resources.
With no mention of the evolution of empathy, compassion and altruism, (let alone no mention of George Price's work or Frans de Waal's insights), I'm unsure that you can draw the conclusion we move upwards from a zero-sum bias.
In fact it is our adaptability across a range of elements that gives us the ability to be zero-sum, -two-some, and more-some.