The Rational Animal: How Evolution Made Us Smarter Than We Think (3 page)

This irrational bias is known as
loss aversion
—the tendency for people to focus more on losses than they do on gains.
This bias was discovered by Nobel Prize winner Daniel Kahneman and his colleague Amos Tversky, two pioneers in the field of behavioral economics, the marriage of economics and experimental psychology.
Behavioral economists are rigorous scientists who typically work in a laboratory, conducting experiments on people’s behavior.
Although rigorous, the prototypical behavioral economist also has a sense of humor and loves to root out human foibles, point a spotlight at them, and have a good chuckle over our shared irrationalities.
Imagine someone in a white lab coat but wearing a Rolling Stones T-shirt underneath—the one with the big red tongue hanging out.

From the behavioral economist’s perspective, our brains are rather flawed contraptions.
In contrast to the rational economist’s view, which sees the mind as a polished Rolls Royce with a purring V-12 engine and a state-of-the-art navigation system, the mind looks to a behavioral economist more like a rusty Yugo schlepping along on three cylinders with a compass sticker to help navigate.
Behavioral economists have
demonstrated in countless studies that our overworked brains are often incapable of making the logical choices expected by rational economists.
While people might aspire to be rational, everyday choices made by us folks down in the real world simply do not adhere to the cold, hard principles of rational economics.

There are enough books and scientific articles exposing our mental flaws to fill up an entire library.
If you look up “list of cognitive biases” on Wikipedia, you will find ninety-seven different mental defects identified so far.
Since you may need a good chuckle as you wait in your broken-down Yugo for the AAA truck, let’s check out a few of our comical faults.

First take a gander at the
gambler’s fallacy
, an irrational tendency to think that past events influence future probabilities.
This fallacy shows up when people flip a coin and get heads five times in a row, then guess that the next flip has an especially high chance of coming up tails.
That’s silly, of course, since the next flip still has a 50 percent chance of landing heads or tails, no matter what happened earlier.
In John Irving’s novel
The World According to Garp
, the hero, Garp, makes this error when he decides to buy a house right after a small plane crashes into it, reasoning that the chances of another plane hitting the house have just dropped to zero.
And when one of our wives was expecting a third child after having two girls in a row, several people were confident that she was “due” to have a boy.

And then there’s the
hindsight bias
, the irrational tendency to react to new information with the feeling that “I knew it all along.”
Before presidential elections, people are moderately confident that their candidate is going to win.
But a few months later, when the count is in, those who supported a Mitt Romney or a John Kerry say they knew all along that he was going to lose!

Our brains are further riddled with biases like the
clustering illusion
, the tendency to see patterns where none exist, as when people are convinced a basketball player’s string of three-pointers is evidence of a “hot hand,” even though statistics reveal it’s merely a random streak of luck.
Here’s one you can try at home: flip a coin twenty times, record the sequence of heads and tails, and then ask one of your buddies if he can see “the pattern.”
If your friends are like most
people, they will quickly see a meaningful pattern in the sequence, even though it is random.

The gambler’s fallacy, hindsight bias, and the clustering illusion are merely the tip of the irrationality iceberg.
There’s also the baserate fallacy, the false-consensus illusion, the conjunction fallacy, the Barnum effect, the pseudocertainty effect, the ultimate-attribution error, the ostrich effect, and about ninety others.
Based on all the evidence of mental errors, behavioral economists have disagreed strongly with traditional depictions of people as rational, computer-like Econs.
From the behavioral economist’s perspective, you don’t have to be a Kennedy to make bad decisions.
Hundreds of studies have demonstrated how people’s decisions are often simple-minded, irrational, and self-defeating, even when those people are so-called experts.
All these inherent mental deficiencies suggest that, rather than being ultrarational Econs, we real people are often more like thickheaded morons.

DEEP RATIONALITY: HUMANS AS ANIMALS

But are people really bumbling morons, persistently making foolish decisions that go against their self-interest?
A closer look at the Kennedy clan suggests that their decisions weren’t quite so foolish after all.
Despite all the tragedies that transpired during the half century between the two plane crashes that claimed the lives of Joe Jr.
and John Jr., the Kennedy clan has hardly been cursed.
After the Chappaquiddick incident, Teddy Kennedy went on to become the fourth-longest-serving senator in US history and a powerful force on the world political stage, right up until his death at the ripe old age of seventy-seven.
And the next generation of Kennedys includes US representatives, lieutenant governors, highly successful businessmen, film producers, and philanthropists.
These descendants are similarly cursed with abundant wealth, opportunity, and social connections to other rich and powerful people.
So despite occasional bad judgments, Joe Kennedy’s descendants seem to have made plenty of good decisions as well.

Although the Kennedys may not be ultrarational Econs, they are certainly not morons.
The same goes for the rest of us.
Although some
of our particular decisions are annoyingly ill informed, we manage to get by reasonably well.
And the decisions of our sometimes feckless parents and their uneducated and uncouth predecessors were, at the very least, good enough that we are now here to talk about them.
The fact that you are calmly reading a book instead of scouring the forest for morsels of food and worrying about deadly predators is a testament to our sophisticated brains.
Homo sapiens
is the most successful member of the great ape family and arguably the most successful species on the planet, possessing an enormously powerful brain that has allowed humans to thrive in an incredible range of environments.
How could it be, then, that modern science has declared the most inventive organism on our planet an irrational fool?

The debates about whether human decisions are rational or irrational have been handicapped by a crucial limitation: they have largely ignored the fact that humans are part of the animal kingdom.
By focusing only on our exalted species and ignoring our place in nature, we have missed the forest for the trees.
But by panning out with our cameras, to see where
Homo sapiens
is situated in the context of other primates, other mammals, and other members of the animal kingdom, we can get a new perspective on ourselves.

This wide-angle view is the one adopted by our third scientist: the evolutionary psychologist.
Trained in experimental psychology, anthropology, and evolutionary biology, the evolutionary psychologist looks at the big picture, examining the commonalities and differences between animals and humans from all corners of the globe.
Picture someone in a khaki shirt and sporting a pair of binoculars, with a copy of Darwin’s
Origin of Species
jutting out of a tattered backpack.
Of course, all evolutionary psychologists don’t fit this stereotype (some wear suits and work in marketing departments), but they do all share that important connection to Darwin’s ideas, which inspires them to think about human beings in the same way evolutionary biologists think about other animals.

Biologists assume that all animals have brains designed to maximize evolutionary success, which they call “fitness.”
Evolutionary psychologists apply this same presumption to the human animal.
This doesn’t mean people are always consciously wondering: How does this
choice improve my reproductive success?
But it does mean that, as in the case of all other animals, natural selection has endowed modern humans with brains designed to make decisions in ways that consistently enhanced our ancestors’ odds of passing their genes to the next generation.
The decisions made by you, me, and the Kennedys are informed by an underlying wisdom developed over millennia, during which our ancestors successfully solved the problems of existence and exchange.
This means that our modern skulls house Stone Age brains, designed to operate in the environments inhabited by our ancestors and to make decisions in ways that solved the types of problems those ancestors regularly confronted.

From the evolutionary psychologist’s perspective, the classic rational economists and the modern behavioral economists got the story partly right but also partly wrong.
Behavioral economists are right that our decision making is biased in ways that sometimes lead us to make silly choices.
But this does not mean that our decisions are typically foolish.
And rational economists are correct that our decisions are profoundly rational and smart, just not in the way they have long presumed.

LOSS AVERSION IN MONKEYS AND MEN

Which would produce a stronger emotional reaction: finding $50 on the street or discovering that a $50 bill was missing from your wallet?
If you’re like most people, you’ll be more affected by losing money.
Although people are reasonably happy to find money, they are really upset to lose it.
This is the idea behind loss aversion: people are more psychologically moved by a loss than by an equal-sized gain.
To an economist, loss aversion is irrational because $50 is worth exactly $50, whether it’s coming or going.
But is loss aversion all that foolish?
Let’s consider it from an evolutionary perspective.

Until recently, it was presumed that only humans were “irrationally” loss averse.
But new evidence suggests loss aversion may run much deeper in our evolutionary lineage.
In a series of experiments, Venkat Lakshminarayanan, Keith Chen, and Laurie Santos at Yale University gave capuchin monkeys tokens they could use to “purchase”
tasty apple slices.
Despite never having taken Econ 101, the monkeys quickly learned how to use the tokens as money.
But the researchers then threw in a clever twist: they gave the monkeys a choice between buying apple slices from two different people.
Person 1 always showed one apple slice and gave it to the monkey in exchange for a token.
Person 2, on the other hand, always showed the monkey two apple slices but gave only one of the slices for a token.
From an economic perspective, both were offering the exact same deal: one apple slice for one token.
But by first offering two, then only delivering one, Person 2 focused the monkeys on what they were losing—the second apple slice.
The monkeys strongly preferred dealing with Person 1, even though Person 2 was offering, from an economic perspective, the exact same deal.
Just like humans, monkeys hate to feel like they’re losing out.

Would human (and monkey) brains come prewired to be loss averse if this bias led our ancestors to persistently make bad decisions?
Probably not.
It makes more sense that our brain arrives with a built-in bias because this bias has historically led to decisions that enhance fitness.
Natural selection is a pretty efficient process, so if a behavior is found widely in humans and other species, it’s a better starting guess to presume it is adaptive rather than to assume it’s merely dumb.

When considered in terms of evolutionary success, many of the seemingly irrational choices that people make do not seem so foolish after all.
Most animals, including our ancestors and modern-day capuchin monkeys, lived very close to the margin of survival.
Paleontologists who study early human civilizations have uncovered evidence that our ancestors faced frequent periods of drought and freezing.
When you are living on the verge of starvation, a slight downturn in your food reserves makes a lot more difference than a slight upturn.
Anthropologists who study people still living in hunter-gatherer and simple horticultural societies have discovered that they regularly make choices designed to produce not the best opportunity for obtaining a hyperabundant supply of food but, instead, the least danger of ending up with an insufficient supply.
In other words, people everywhere have a strong motivation to avoid falling below the level that will feed themselves and their families.
If our ancestors hadn’t agonized over losses and instead had taken too many chances in going after the big
gains, they’d have been more likely to lose out and never become anyone’s ancestor.

Although we may not be living under the same conditions as our Ice Age progenitors, we did inherit our brains from them.
So to understand how we behave in the modern world, it is essential to look at the broader picture.
Evolutionary psychologists try to pull together the different threads, to interweave the diverse findings from psychology and economics with those from anthropology and biology.
When we look at the deeper logic of decisions across the entire animal kingdom, it becomes clear that decision making in all critters, including us, is geared to promote deep-seated evolutionary goals.
This is important because it suggests that many of our decision biases, errors, and misjudgments might not be design flaws; instead, they may be design features.

PROXIMATE VERSUS ULTIMATE REASONS FOR BEHAVIOR

Imagine you have a friend who just spent $5 on a triple-chocolate fudge brownie, and you want to know the reason behind her purchase.
So you ask her, “Why did you buy that?”
She might simply respond, “I was hungry.”
If she were feeling more analytical, she might mention that she loves the taste of chocolate and couldn’t resist the delectable scent of a freshly baked brownie.

Your friend’s explanations for her behavior refer to something biologists call
proximate causes
.
The word “proximate” here is related to the word “proximity.”
These causes point to relatively up-close and immediately present influences—to what I am presently feeling or thinking, for example.