October 01, 2007
Large Genetic Component To How People Play Economic Game

Genes may play a big role in determining how people make economic choices.

An international team of researchers including an MIT graduate student has demonstrated for the first time that genes exert influence on people's behavior in a very common experimental economic game.

Traditionally, social scientists have been quite hesitant to acknowledge a role for genes in explaining economic behavior. But a study by David Cesarini, a Ph.D. student in MIT's Department of Economics, and by colleagues in Sweden indicates that there is a genetic component to people's perception of what is fair and what is unfair.

The paper, published in the Oct. 1 advanced online issue of the Proceedings of the National Academy of Sciences, looked at the ultimatum game, in which a proposer makes an offer to a responder on how to divide a sum of money. This offer is an ultimatum; if the responder rejects it, both parties receive nothing.

Because rejections in the game entail a zero payoff for both parties, theories of narrow self-interest predict that any positive amount will be accepted by a responder. The intriguing finding in the laboratory is that responders routinely reject free money, presumably in order to punish proposers for offers perceived as unfair.

To study genetic influence in the game, Cesarini and colleagues took the unusual step of recruiting twins from the Swedish Twin Registry, and had them play the game under controlled circumstances. Because identical twins share the same genes but fraternal twins do not, the researchers were able to detect genetic influences by comparing the similarity with which identical and fraternal twins played the game.

The researchers' findings suggest that genetic influences account for as much as 40 percent of the variation in how people respond to unfair offers. In other words, identical twins were more likely to play with the same strategy than fraternal twins.

"Compared to common environmental influences such as upbringing, genetic influences appear to be a much more important source of variation in how people play the game," Cesarini said.

This result makes more plausible an argument of Gregory Clark that selective pressures helped create the conditions that brought about the industrial revolution. Yes, there are genetic differences out there that influence economic decision making. So there are genetically caused behavioral differences upon which natural selection can act. See Clark's book A Farewell To Alms and the Gene Expression Interview of Clark.

What I want to know: Did they test the IQs of the players? I'd expect smarter people to make different judgments about the choices of how to play the game. How much of the genetic factor they measured is intelligence and how much is it a wired in algorithm for how to make choices or maybe some wired in emotional reaction?

I would also like to know whether the twins who made smarter choices in the game have lower discount rates for their decision making.

Looking to the future (hey, isn't that the point of my writings?) what I would really like to know: Once the genetic variations that influence economic decisions are identified and offspring genetic engineering becomes possible will people choose genetic variations that will improve the economic performance of their kids? Sure, many will opt for intelligence enhancement. But will they also go for, say, genetic variations that make people put more effort toward longer term goals? Will they thrill to the idea of choosing genes to make Johnny and Jill into little misers and workaholics? Will genes that make us goal oriented be chosen over the genes that make people happy in Margaritaville?

Also, will the choices parents make vary by economic class? Will the upper classes embrace offspring genetic engineering for maximal economic success while lower classes go for looks, athletic ability, and just plain fun happy attitudes? Will the economic classes therefore grow even further apart than they are already growing now?

Share |      Randall Parker, 2007 October 01 07:39 PM  Brain Economics

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