How do we account for greed in a Malthusian world?
In my last post I argued that the root cause of human sinfulness is living as biodegradable creatures in a world of potential scarcity. This situation makes the human species feel vulnerable and anxious.
But how can this model explain human acquisitiveness in times of plenty? Why is corporate greed rampant in capitalistic economies? Where does greed come from if we are well off? How can Malthus explain American consumerism? Don't we have to posit some kind of intrinsic selfishness to explain all this?
No doubt we are selfish. But again, I'd like to argue that the selfishness gets into us from the outside, from the Malthusian context.
Why are we so acquisitive? An Augustinian treatment would claim that it is due to some intrinsic defect, Original Sin. I've argued that a better place to look for an answer is in the Malthusian predicament humans find themselves in. In short, is human acquisitiveness best explained by an appeal to intrinsic human "selfishness" or by examining how acquisitiveness might be a perfectly logical response to surviving in a Malthusian world?
So, let's ask one more time: Why are humans so acquisitive? The answer, obviously, is that humans discount the future hyperbolically.
You probably want me to unpack that.
To start, it is a fact that we discount the future. As they say, a bird in the hand is better than two in the bush. An immediate reward is more valuable than a delayed reward, even if that delayed reward has a higher value. For example, let's say I offer you a choice:
Choice A: $100
Choice B: $200
Which would you choose? Well, any idiot can make that choice. Okay, then, how about this choice:
Choice A: $100 right now
Choice B: $200 a year from today
Most people take the $100 right now. Why? They discount the future. Although $200 is, in absolute value, more than $100 it is not as valuable in relative terms because it is one year in the future. The $200 has been discounted and is now perceived as less valuable than the $100.
How much less? Well, that is an important psychological question. The issue of human acquisitiveness rests upon how steeply humans discount the future. Let me try to illustrate this. Choice A is $100 right now. Next, I'll offer a variety of choices for Choice B, each at a different time horizon. Look through the list and decide when you'd move from Choice A ($100 right now) to one of the following:
a) $200 a year from today
b) $200 six months from today
c) $200 three months from today
d) $200 one month from today
e) $200 two weeks from today
f) $200 one week from today
g) $200 three days from today
h) $200 one day from today
i) $200 12 hours from now
h) $200 one hour from now
i) $200 30 minutes from now
j) $200 one minute from now
h) $200 right now
At what point, (a) through (h), do you pick Choice B?
As we noted, at time offerings around (a)-(c) people would rather just take the $100 than wait so long for $200. They discount the future. Conversely, when we look at time offerings around (i)-(j) it seems pretty easy to wait a bit for the $200. That is, as the time horizon for the offer approaches the present the discounting is less and less. We see the $200 as $200 and, thus, prefer it to $100.
In short, time and value are inversely related: Immediate payoffs are more valuable than distant ones. As the offer moves away from us in time we increasingly discount it. As it approaches us in time the discount decreases.
The question for psychologists is what does this discount curve look like? How much do people discount the future? What we are looking for is the shape of what is known as the "discounting curve."
Simplifying greatly, the discounting curve can take one of two shapes. It can be either exponential or hyperbolic in shape. The difference between the exponential and hyperbolic discounting curves is simply this:
If people start moving to Choice B early in the example above--in the (a)-(d) range--then they are discounting the future, but not very much. The discounting curve is shallow (i.e., exponential).
If people start moving to Choice B very late in the example above--in the (e)-(h) range--then they dramatically discount the future. The discounting curve is steep (i.e., hyperbolic).
If you want a graphical representation of what is going on, I made this slide to illustrate the two curves:
Value is on the horizontal axis and Time is on the vertical axis. The graph shows the value of $100 right now (Present) and $200 offered some time in the future. The graph shows that the future is discounted: The curves representing the value of the $200 are both below (i.e., less valued) the $100 being offered right now. The interest of the graph is in how the curves behave as we move through time, left to right. If you put your finger on the exponential curve starting at the left and moving to the right you notice that very quickly your figure goes above the $100 line. That is, the exponential line discounts the future but not by much. The "true value" of the $200 is quickly experienced and preferred. By contrast, if you trace the hyperbolic curve you remain under the $100 line longer. We are steeply discounting the future on this curve. The $200 offer only takes on its true value when the offer is immediately at hand.
Graphs aside, the sum of the matter is this: If people are exponential discounters then we can wait. If we are hyperbolic discounters then we can't wait.
What does all this have to do with human acquisitiveness? Well, the scientific consensus, from scores of studies on this topic, is that humans discount the future hyperbolically. We prefer a bird in the hand to two in the bush. Smaller and immediate rewards are seen as more valuable than larger more distant rewards.
It is the hyperbolic discounting curve that sits behind what the Greeks called akrasia, or "weakness of will." Specifically, we find it difficult to reach our long-term goals because we discount the future so steeply. We give in to short-term temptations, even when we know that the short-term payoff is less valuable than the long-term goal. It's all driven by the hyperbolic discounting.
Why, it might be asked, are we so weak-willed? Why do we discount hyperbolically? The answer brings us back to Malthus. In a time of plenty our hyperbolic discounting psychology is maladapted. We eat too much, spend too much, consume too much. It is hard to save, hard to wait. But evolutionary psychologists have argued that a hyperbolic discounting curve would have been ideally suited to life during human pre-history. That was an age characterized by food scarcity, famine, and a lack of food preservation technology. In those stone age cultures if a large food source was found (e.g., a mammoth kill, berries in season) then gorging yourself has a kind of adaptive logic. Tomorrow, the food will be either gone or spoilt. In that world, a bird in the hand is truly better than two in the bush. Consume the resources now while you have the chance. Who knows what tomorrow might bring?
The point is, all this human acquisitiveness--the gluttony, the akrasia, the consumerism--isn't due to an intrinsic Augustinian defect. It is, rather, an adaptation that humans acquired through eons of struggling in the Malthusian situation. And with this understanding of the psychological machinery we can now explain a wide variety of phenomena from failing to stay on a diet to credit card debt to corporate greed.
It's all the logical outcome of hyperbolic discounting, a trait ideally suited to existence in a Malthusian world.
Next Post: Part 3
How do we account for greed in a Malthusian world?