Tuesday, January 8, 2008 | Science : Economics | print version

The Mind of the Market

by Michael Shermer

Michael Shermer's new book The Mind of the Market is available now through Skeptic.com.

Reposted from:
http://www.skeptic.com/eskeptic/08-01-08.html

Read an excerpt from The Mind of the Market:
http://www.michaelshermer.com/the-mind-of-the-market/excerpt/

Also see Michael Shermer's new website at:
http://www.michaelshermer.com/

How did we evolve from ancient hunter-gatherers to modern consumer-traders? Why are people so emotional and irrational when it comes to money and business decisions? Bestselling author Michael Shermer believes that evolution and evolutionary psychology provides an answer to both of these questions through the new science of evolutionary economics.

Drawing on research from neuroeconomics, Shermer explores what brain scans reveal about bargaining, snap purchases, and how trust is established in business. Utilizing experiments in behavioral economics, Shermer shows why people hang on to losing stocks and failing companies, why business negotiations often disintegrate into emotional tit-for-tat disputes, and why money does not make us happy. Employing research from complexity theory, Shermer shows how evolution and economics are both examples of a larger and still somewhat mysterious phenomenon of emergence, where one plus one equals three.

Along the way, Shermer answers such provocative questions as, Do our tribal roots mean that we will always be a sucker for brands? How is the biochemical joy of sex similar to the rewards of business cooperation? How can nations increase trust within their borders? Finally, Shermer considers the consequences of globalization and what will happen if nations allow free trade across their borders.

Throughout this entertaining and surprising book Shermer considers the morality of markets in a discussion of what he calls virtue economics. Although we are selfish and altruistic, cooperative and competitive, peaceful and bellicose, in the main the balance is heavily on the side of good over evil. For every random act of violence that makes the evening news, there are 10,000 nonrandom acts of kindness that go unrecorded every day. Markets are moral and modern economies are founded on our virtuous nature. The Enron model of business is the exception and the Google motto of "Don't Be Evil" is the rule. The Mind of the Market will change the way we think about the economics of everyday life.

Get it autographed!
Michael is happy to personally autograph your copy of the book. Simply, place your order in Shop Skeptic and in the "comments" section of the checkout process, tell us you'd like it signed. If you want the autographed personalized, just say so!

Michael Shermer US Tour:
For more details see:
http://www.michaelshermer.com/tour/

Cambridge, MA
January 8, 2008 at 7 pm

New York, NY
January 9, 2008 at 6 pm

Washington, DC
January 11, 2008 at 12 pm

Washington, DC
January 12, 2008 at 7 pm

Chicago, IL
January 14, 2008 at 6:30 pm

Philadelphia, PA
January 15, 2008 at 7:30 pm

Denver, CO
January 17, 2008 at 7:30 pm

Portland, OR
January 21, 2008 at 7:30 pm

Seattle, WA
January 23, 2008 at 7:30 pm

Mountain View, CA
January 25, 2008 at 7:30 pm

Menlo Park, CA
January 29, 2008 at 7:30 pm

Los Angeles, CA
January 30, 2008 at 12 pm

Pasadena, CA
January 30, 2008 at 7 pm

Del Mar, CA
January 31, 2008 at 7 pm

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1. Comment #109343 by nextstopearth on January 8, 2008 at 10:04 pm

I want to read it.

Other Comments by nextstopearth

2. Comment #109344 by Radesq on January 8, 2008 at 10:09 pm

This book looks like it could be good. I read the review and it talked about some interesting propositions about capitalism. I can't honestly say I would pick this up with an open mind though. I've just played the Monopoly board game too many times. Plus I live in the USA which I think favors the hyper capitalist rather than the free market.
edit --
I just looked up hyper capitalist and that may come with more philosophical baggage than I intended. All I meant to imply is that the ethic seems to be make as much money as possible for it's own sake, not for any other particular purpose.

Other Comments by Radesq

3. Comment #109348 by Chazzeroo on January 8, 2008 at 10:21 pm

The title got me hoping for political and economic philosophy from a noted libertarian, but neuroeconomics will more than suffice! I just attended a conference on the subject (it was at my school) — very interesting stuff.

Other Comments by Chazzeroo

4. Comment #109352 by Elles on January 8, 2008 at 10:32 pm

Ooh yay! Michael Shermer is coming to Denver!

Coolness... and... I'm calm now.

Other Comments by Elles

5. Comment #109374 by briancoughlanworldcitizen on January 8, 2008 at 11:48 pm

Guys, we Dawkins raiders have been "called out" by the atheists sucks brigade:-)

Give 'em erm .... hell ?

http://atheismsucks.blogspot.com/
http://richarddawkins.net/forum/viewtopic.php?f=20&t=33112&p=602964#p602964

Other Comments by briancoughlanworldcitizen

6. Comment #109377 by LoneStarAssman87 on January 9, 2008 at 12:00 am

I'm in chapter 3 of this book, and as with all Michael Shermer books I find it to be very informative. I hate that the tour won't come anywhere near me (Houston, TX), but I can't blame Shermer. I'm sure the destinations were chosen because they would bring in the most people.

(However, I won't be so forgiving if Professor Dawkins' schedulers have him avoid Texas (where a promotion of skepticism is so sorely needed) for this upcoming TGD book tour.)

Other Comments by LoneStarAssman87

7. Comment #109392 by room101 on January 9, 2008 at 1:35 am

Sorry to off topic --

briancoughlanworldcitizen:

Un-f******-believable.

Having read one of atheismsucks' blog leader's (William Hawthorne) statement announcing the impending atheist's raid on his site (looks like you and Steve Zara have already had a go at them), I find myself confused and confounded. Listen to what Hawthorne says:

If atheism were intellectually defensible, one would have expected these raiders to calmly present their arguments at our site for critical evaluation, try to answer objections, and carry on in a civil discussion to see if any truth (even a little bit) might be arrived at. Instead, what we found were lists of rhetoric and assertions without arguments, deceitful complaints that they'd been "censored", bickering about "ad homs", and so on and so forth

Assertions without arguments? Deceitful? Whaaaaaaaaaaaa??? That doesn't sound anything like the sane/rational/witty banter that you and Steve have abundantly provided us throughout this site. Either you guys had an off day or they make stuff up as they go ;o)

Also, I love this:

I think we should give the raiders a second chance here. Raiders, go ahead and present whatever arguments (not mere assertions) you have for atheism. (Here's a caveat: If you only post sound bites and rhetoric with no logical support, you will be called out for your intellectual shallowness, so don't complain about "ad homs" afterwards if this happens to you.)...If you feel that theism is unfalsifiable, you'll have to argue for a criterion of falsifiability and then argue why theism fails to satisfy the criterion.)

Then, this chucklehead explains what a proper logical argument is, and that we need to "Finally, and most importantly, double check to make sure your argument is valid (i.e. roughly the premises, if true, would logically necessitate the conclusion)." This can't be real, can it???

All in all, sounds like it's either going to be easy pickens, or a long, long, looooooooong, losing, uphill battle.

Other Comments by room101

8. Comment #109397 by robotaholic on January 9, 2008 at 2:05 am

Thank you Professor Richard Dawkins so much for you book "The God Delusion."

Thanks from the heart.

(the brain actually)

so much-

Other Comments by robotaholic

9. Comment #109403 by robotaholic on January 9, 2008 at 2:25 am

Your book makes it so plain that people shouldn't base their lives on Yaweh's rules. Yaweh is evil as described in the bible. We shouldn't and DON'T get our morals from scriptures.

I am tired of the idea that we get morals from the bible. The old testament is barbaric and the New Testament is just as bad. It claims that it's so superior but instead the theology and punishment idea that it preaches is just as bad as the old testament.

Somehow one persons "sins" can be redeamed by SOMEONE ELSE. This is viscious, sado massachistic and repellant. If we have sins why not just forgive them and get it over with god?

The God Delusion is an amazing book and I cannot say that enough.

Oh and why should gold and silver be sacred to the "lord"- this is utterly barbaric and so obviously man made.

If any god commanded me to 'exterminate' any people I would tell 'it' to do it itself.

The bible is a farce. The religious upbringing of children is a form of child abuse when accompanied by enforced ignorance. I experienced that type of upbringing and remarkably escaped once an adult. I wouldn't wish that on my worse enemy!

Other Comments by robotaholic

10. Comment #109426 by Vinelectric on January 9, 2008 at 3:34 am

Brian

Comments are moderated. If I were you I'd ignore them. Waste of time.

Other Comments by Vinelectric

11. Comment #109431 by 42nd on January 9, 2008 at 3:48 am

For every random act of violence that makes the evening news, there are 10,000 nonrandom acts of kindness that go unrecorded every day.

I call shenanigans on that. It's just throughly untrue it's almost funny. Remember that 5% of people on this planet are psychopaths, and they cause a lot more than one in ten thousand act of violence. Not that the rest of us are all that great either.

Don't get me wrong, I am pro-capitalism, but we need some regulation here and there, too. If anyone is interested in some further information about what markets can and can't do this is good resource: http://www.uwgb.edu/DutchS/PSEUDOSC/NoLibert.HTM

The free market is absolutely superb at creating abundance through technology. To the extent that technology can also improve quality at the same time, it provides quality. The tremendous growth in computers is a prime example.

When quantity or price collide with quality, it's no contest. In a clash between adequate quality and low price versus high quality and higher price, quality loses every time. If you want a car that will last forever, buy a Rolls Royce. If you want one good for ten years or so, any car dealer can help you. Could you build a car that lasts fifty years at current prices? Maybe, but once you saturate the market, then what? Your continuing sales will be a fraction of current car sales. So why bother? You can earn a profit selling pretty good cars that last ten years. Just try to buy, say, a CD player with durable all-metal parts, or a VCR with every single function having its own, clearly labeled button. Even if you'd be willing to pay extra, you can't find them. The consumer demand for cheap products has driven many higher quality products out of the market. Sometimes it's merely a matter of taste, other times it really is an objective loss of quality. Many tech writers are convinced that the Betamax video tape format was technically superior to VHS, but VHS won and Betamax lost.

Other Comments by 42nd

12. Comment #109484 by windweaver on January 9, 2008 at 5:58 am

Shermer is a vociferous libertarian who has called on atheists to support Ron Paul for the presidency. The reaction to his call can be seen in this link:
http://atheists.meetup.com/30/boards/view/viewthread?thread=3957078
And here's a critique of Paul by Ron Jacobs:
http://www.zmag.org/content/showarticle.cfm?SectionID=90&ItemID=14678

Other Comments by windweaver

13. Comment #109486 by annabanana on January 9, 2008 at 6:03 am

I'm going to have to quit my job so I have time to read all of these books. Either that or find a job that pays me to read them. Wouldn't that be great?

Other Comments by annabanana

14. Comment #109488 by Diacanu on January 9, 2008 at 6:07 am

Neuroeconomics??

Neuroeconomics????

Neuro-fucking-economics???

Let's mix cosmology with weather prediction while we're at it.

Or dowsing and sandwich making.

Hell, let's have pickle flavored coffee.

Why not? All bets are fucking off now.

Other Comments by Diacanu

15. Comment #109495 by Tyler Durden on January 9, 2008 at 6:12 am

Comment #109486 by annabanana:

Either that or find a job that pays me to read them. Wouldn't that be great?

Anna, that job with the New Yorker is all mine, hands off ;-)

I find working in IT gives me loads of time to read (online at least), and it still looks like I'm working.

Other Comments by Tyler Durden

16. Comment #109496 by annabanana on January 9, 2008 at 6:13 am

windweaver, Thanks so much for that critique on Paul. I just wish at the end of it he hadn't completely turned around and said that a vote for Paul was better than a vote for any of the other candidates...

Other Comments by annabanana

17. Comment #109501 by annabanana on January 9, 2008 at 6:17 am

Diacanu, What's wrong with neuroeconomics, or cosmoclimatology for that matter?

Tyler Durden, hey I suggested it first ;)

I work in government, so I have a little bit of time to read online...

Other Comments by annabanana

18. Comment #109511 by Diacanu on January 9, 2008 at 6:25 am

annabanana-

I dunno, I don't respect economics as a "science", in the first fucking place for one.

Secondly, I'm personally fed up to my eyebrows with libertarians and their church of the dollar sign, so everything out of them is like a turd in my raisin bran to me.

Other Comments by Diacanu

19. Comment #109517 by annabanana on January 9, 2008 at 6:32 am

lol...I understand, I date one.

I don't think economics is science, but it's kind of like an extended phenotype, I suppose. A product of the human mind, so naturally the human mind can be scientifically explored...right?

Other Comments by annabanana

20. Comment #109518 by al-rawandi on January 9, 2008 at 6:33 am

Diacanu,

That is probably because you don't understand economics.

Secondly economics isn't a "science" so much as a form of psychology and sociology with a little mathematics.

If you understand greed and fear, you can understand economics to a reasonable degree.

Other Comments by al-rawandi

21. Comment #109523 by Diacanu on January 9, 2008 at 6:37 am

annabanana-

lol...I understand, I date one.

Tch, fuckin' hell.

Like I need to know they get all the cute girls on top of everything else.

Bad start to the day all around.

Other Comments by Diacanu

22. Comment #109524 by epeeist on January 9, 2008 at 6:37 am

Comment #109392 by room101

Then, this chucklehead explains what a proper logical argument is

Unfortunately he gets it wrong, he mistakes a sound argument for a valid one.

Other Comments by epeeist

23. Comment #109525 by Diacanu on January 9, 2008 at 6:38 am

al-rawandi-

If you understand greed and fear, you can understand economics to a reasonable degree.

I do and do.

S'hy I don't give it any respect.

Other Comments by Diacanu

24. Comment #109527 by Epinephrine on January 9, 2008 at 6:40 am

Diacanu -

It sounds like a misnamed field of study. Surely you'd agree that neuroscience/cognitive science underlies our decision making/value assigning capacities, and studying this could be filed under some neologism like "neuroeconomics".

Heck, recently in Science (26 October, 2007 - a journal that one would have a hard time saying *isn't* about science) the cover story was "Advances in Neuroscience: Decision Making", and it examined issues like social decision making from a game theoretical perspective *, neurocomputational models of the frontopolar complex and so on - so it's pretty much a legitimate field of study, despite it being poorly named. As someone with both neuroscience and game theory under my belt it's not surprising that I found this an interesting special section.

* Sanfey, Alan G. (2007). Social Decision Making: Insights from Game Theory and Neuroscience, Science, 318, 598-602.

Other Comments by Epinephrine

25. Comment #109529 by epeeist on January 9, 2008 at 6:41 am

Comment #109518 by al-rawandi

Got to say I think "reasonable" is an underestimate.

Having worked in the banking industry for a while I can confirm that there is a good reason for the collective noun for bankers to be "a wunch".

Other Comments by epeeist

26. Comment #109530 by Diacanu on January 9, 2008 at 6:43 am

Epinephrine-

I got no problem with the underlying theory, it's the inevitable ideological bullshit it'll be purposed to that has me skeptical.

Other Comments by Diacanu

27. Comment #109531 by annabanana on January 9, 2008 at 6:47 am

Diacanu,

Not to worry, I'm sure there are cute girls wherever it is that you are who aren't dating libertarian economists. My roommate is a single, hot, atheist...so there have to be more floating around somewhere.

al-rawandi, I know you and Diacanu have had your share of quarrels, but speaking to him like that is only going to start another one...

Other Comments by annabanana

28. Comment #109532 by annabanana on January 9, 2008 at 6:50 am

Diacanu,
I forgot to mention, you've obviously missed my post in reference to you on the dinosaur article...maybe it'll cheer you up ;)

Other Comments by annabanana

29. Comment #109536 by Epinephrine on January 9, 2008 at 6:52 am

Diacanu -

Ah - I thought by your tone you were attacking the idea that neuroscience doesn't mix with other fields, such as economics. What ideologies would Shermer be pushing?

Perhaps we can get together over a dill-mocha? ;)

Other Comments by Epinephrine

30. Comment #109538 by al-rawandi on January 9, 2008 at 6:56 am

Anna,

I was trying to reaffirm his theory of greed in the market. It is the driving force for many in the market.

I would agree with you that it isn't science in the classic sense, & your definition is correct, it is a product of the human brain. So we can study the brain and understand human behavior in many fields.

Other Comments by al-rawandi

31. Comment #109540 by al-rawandi on January 9, 2008 at 6:59 am

epeeist,

Forgive me... "Wunch"?

I work in finance there is a mix of douche bags and decent people. Although I must admit heavily weighted to the former.

I think the predatory personalities get publicity. Warren Buffett seems an enigma, gave away 35 billion... I am at a loss to explain that one.

Other Comments by al-rawandi

32. Comment #109542 by annabanana on January 9, 2008 at 7:01 am

al-rawandi,

Yes, I need to be learning more about economics as it comes up here ever so often and I feel as if I sometimes have nothing to offer on the matter. (Not that my input is required for every conversation here)

I see you've been outrunning the tigers lately. There must be a plethora of chubby guys where you work to distract them...

Other Comments by annabanana

33. Comment #109544 by Diacanu on January 9, 2008 at 7:03 am

annabanana-

Thanks for the pep talk, you're a doll.
;)

Other Comments by Diacanu

34. Comment #109545 by epeeist on January 9, 2008 at 7:03 am

omment #109540 by al-rawandi

Forgive me... "Wunch"?

From the immortal (not literally) Reverend William Archibald Spooner.

A wunch of bankers...

Have you considered using a picture of Quark from DS9 for your avatar ;-)

Other Comments by epeeist

35. Comment #109548 by annabanana on January 9, 2008 at 7:08 am

Anytime, Diacanu

Other Comments by annabanana

36. Comment #109550 by Diacanu on January 9, 2008 at 7:11 am

Epinephrine-

Ah - I thought by your tone you were attacking the idea that neuroscience doesn't mix with other fields, such as economics.

It was a little of both.

Notice how I compared economics to dowsing in my second example. ;)

What ideologies would Shermer be pushing?

Hard to explain, since "libertarianism", is almost as abused a word as "love".

Hmm, guess that's how to explain it.

Libertarianism has its good parts, hell, it's got liberty in the name.

The bullshit the word is purposed to in practice though....

Blind faith in any -ism is a foolish game.

This book seems to be doing that with capitalism.

Seems to, I haven't read it.
The description doesn't make me hopeful though.

Other Comments by Diacanu

37. Comment #109552 by Tyler Durden on January 9, 2008 at 7:13 am

Comment #109531 by annabanana:

My roommate is a single, hot, atheist...

Cool, bring her over to Europe when you visit us - Dublin, Ireland is the place to be :)

"NEW on RD.net - Date an Atheist!" :-)

Other Comments by Tyler Durden

38. Comment #109555 by annabanana on January 9, 2008 at 7:16 am

Hahahaha, we should tell Josh to set up a dating thread on the forum. Instead of Christian Singles, it'll be Atheist Singles.

And she is coming with me to Europe...

Other Comments by annabanana

39. Comment #109557 by Steve Zara on January 9, 2008 at 7:19 am

"Date an Atheist!"

Well, I am just about 48, so that dates me at 1960.

Other Comments by Steve Zara

40. Comment #109559 by Diacanu on January 9, 2008 at 7:20 am

Skepticon-

Yes, exactly, couldn't say it better myself!

Other Comments by Diacanu

41. Comment #109560 by beauroland on January 9, 2008 at 7:20 am

Wow, what a bunch of humorless babies over at atheismsucks! They should call themselves aatheists.
But then people might think they're alcoholics.

Other Comments by beauroland

42. Comment #109564 by konquererz on January 9, 2008 at 7:23 am

Don't care about the atheism sucks blog, they are intellectual trogledites that don't deserve to have this explained to them.

As for Shermer's book, I'll be getting it. I wonder if he will sign it "To my good friend and confidant"

LMAO!
Thats right, me and Shermer are pals! (I wish)

Other Comments by konquererz

43. Comment #109565 by epeeist on January 9, 2008 at 7:24 am

Comment #109560 by beauroland

Wow, what a bunch of humorless babies over at atheismsucks!

I don't know why they insist on up front moderation, it makes for a very slow paced conversation. It looks as though their moderator has gone to bed at the moment, which means nothing is happening at all.

And I don't get the feeling that there are large numbers of them. They appear to be a small self-congratulatory club.

Other Comments by epeeist

44. Comment #109566 by al-rawandi on January 9, 2008 at 7:26 am

epeeist,

Got it, sort of.

Quark, that is a good suggestion. I am glad a few people get Star Trek around here.

I left the office the other day and said "You have the bridge number one."

People thought I had lost it. Maybe my Patrick Stewart impression was pretty poor.

Other Comments by al-rawandi

45. Comment #109570 by Diacanu on January 9, 2008 at 7:34 am

Tyler Durden-

"NEW on RD.net - Date an Atheist!" :-)

Hmm, I'd never thought of it much until now, but yeah...I don't know if I could put up with dating a religionist....

No...don't think I could.

Any more than I could put up with a chick into witchcraft or somesuch.

As if my perpetual singleness wasn't tricky enough...

Other Comments by Diacanu

46. Comment #109574 by Roger Stanyard on January 9, 2008 at 7:57 am

Annabanana: "I don't think economics is science, but it's kind of like an extended phenotype, I suppose. A product of the human mind, so naturally the human mind can be scientifically explored...right?"

I've never felt economics is a science although my first degree is a BSc in Economics. The best I could say is that economics as a subject is a product of the age of enlightenment and because it is very heavily reliant on mathematics and quantitative evidence, is akin to science in its methodology.

It also uses the hypothetico-deductive model which Popper argued was the scientific method but, IIRC, others disgree with Popper over this.

Strictly speaking economics is not based on greed. It's the world that it describes, theorises about and models which is based on greed. As pedants, we could argue about this.

Other Comments by Roger Stanyard

47. Comment #109575 by Philip1978 on January 9, 2008 at 8:09 am

How is the biochemical joy of sex similar to the rewards of business cooperation?

Is he doing it right? :)

I might actually give this book a go sometime later, I think I need to study evolution a bit more first before I can get into this a bit more. I have read a book on the brain and the changes it goes through from birth to old age but I think I need to know Theory first, right Professor, you seem like a knowledgeable chap on this subject, I might go for one of your books first! :)

Diacanu

My perpetual singleness isn't tricky - it seems to come naturally hehehe! :)

Philip

Other Comments by Philip1978

48. Comment #109587 by annabanana on January 9, 2008 at 8:35 am

Diacanu:I don't know if I could put up with dating a religionist....

I know I can't, I'm having a hard enough time with my deist...

And Roger Staynard, point taken. I'll concede with you there.

Other Comments by annabanana

49. Comment #109609 by annabanana on January 9, 2008 at 9:08 am

This is somewhat related:

http://www.forbes.com/business/2008/01/08/health-republican-plans-oped-cx_ybr_0108health.html

I hated it, although, I know some of you may agree with it.

Other Comments by annabanana

50. Comment #109616 by Tyler Durden on January 9, 2008 at 9:26 am

Comment #109587 by annabanana

I know I can't, I'm having a hard enough time with my deist...

Is he the one vying for the church wedding? :)

I dated a religionist, she got upset when I asked her why God would bless America - did he hate all the other countries? It all ended in tears! Needless to say I slept on the couch that night!!

Other Comments by Tyler Durden