Money, status, and social cognition

Via Instapundit, a link to a review of the new book Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. Looks like a very interesting book, covering topics ranging from why teachers and sumo wrestlers both cheat, to the economics of drug dealing.

On this latter subject, the review paraphrases the book's argument:

A chapter titled "Why Do Drug Dealers Still Live with Their Moms?" provides an analysis of the economic workings of a Chicago crack gang, based on data collected (initially at high personal risk) by a young sociologist named Sudhir Venkatesh. The upshot is that the crack trade, even at its market peak, was lucrative only for those at the top of a selling organization. The gang's foot soldiers made less than minimum wage and faced a 1-in-4 risk of being killed over four years. (In the same time, being a timber cutter, the most dangerous legitimate job in the U.S., carried a 1-in-200 risk.) These drug dealers struggled desperately to reach the gang's upper echelons, but few would make it.

From Instapundit:

My historian-brother often says that one of the most interesting phenomena that he's observed is the cross-cultural willingness of people to trade away economic benefits for status. I suspect that this is one example of that. So, in a surprisingly similar way, is being a politician. That's an obviously poor economic move for most folks. But one of the drug dealers in Price's book talks about how he likes the way he becomes the center of attention when he enters a room full of junkies. Politicians, I think, get the same thing, especially in the bubble-environments of Washington, or state capitals. I suspect, in fact, that people are, to varying degrees, hardwired to get an endorphin rush from that sort of attention, just as they're hardwired in varying degrees to respond to drugs.

As Reynold's readers comment, you can replace "crack" and "dealers" with "universities" and "professors" and come to a similar conclusion. People rarely maximize their monetary gains with their choice of careers or activities. After all, any of us could take an extra job at Taco Bell to turn our downtime into cash. If we were Scrooge McDuck-like packrats who did nothing but fill bank accounts, any extra dollar (or the employee burrito discount) would impel us. The fact is, people don't lust for money in this way. "The pursuit of happiness" is what most of us are spending most of our time planning, if not actually pursuing.

The thing that gets me is why anyone should expect that humans would be rational maximizers with respect to money, when money is a very recent cultural innovation. Status and prestige are much older influences on human behavior. Indeed, rank is a central component of many mammalian (even vertebrate!) social groups, and "status" is just another way of saying "rank" in human cultural terms. Determining rank must be an important part of the mental calculus of any social species, and humans if anything are beyond the capabilities of most. So there is every reason to think that humans should be adapted not to economic maximization, but instead to status enhancement -- mainly by seeking prestige from other people.

Sure, it is true that a lot of money can buy prestige and status of a certain kind. And if you just looove the feel of 1000-thread-count sheets and the looks you get when you drive an Astin-Martin, this kind of status may be exactly what you are looking for. But the pathways to status today are as varied as our lifestyles and interests. Consider the rewards that come with being the best-dressed Dr. Frank-N-Furter at the local Rocky Horror Picture Show revival. Or that comes along with the publication of an academic book. These things lead to prestige and status -- at least within a fairly loosely defined but circumscribed group of people -- but they certainly don't lead to economic benefit (when compared to the opportunity cost). Present-day human societies provide many channels for status-seeking, many of them non-overlapping. The effect is that most people can channel their activity into patterns that result in prestige-enhancement from some group of peers, at least sometime during their lives. And people for whom such courses are not available often face psychological consequences such as depression.

I think we can safely speculate that prehistoric human societies were the same as living ones in this respect. On one hand, population sizes and densities were smaller in the distant past, so that the same spectrum of options for prestige-seeking were certainly not available. That is to say, if your dream is to be a writer for the Dick Van Dyke Show and you live in Java around 200,000 BC, you're pretty much out of luck (unless you know Rose Marie's agent). But on the other hand, smaller population sizes mean fewer competitors for the range of behavioral specializations available. Less competition means more prestige for the same degree of talent, productivity, or knowledge.

Like societies in other primate species, such as chimpanzees, humans do not compete for status as a zero-sum game. Status is a product of a complex network of social interactions, and its cumulative effect is not easily predictable from the interactions themselves. This makes it a difficult calculation, and therefore leads to the hypothesis that our minds -- along with the minds of other social species -- possess special adaptations to perform such calculations. The adaptive value of such mental functions would be to shape decisions in a way that tends to increase status, and thereby fitness to the extent the two are correlated. Loosely put, this is the "social brain hypothesis," described by Robin Dunbar (1998; 2003).

There is, however, an important distinction to be made. The "social brain hypothesis" was proposed to explain brain size -- predicting that more social species will have larger brains for their body size.

[P]arsimony and biological common sense would suggest that it is group size that drives brain size evolution rather than brain size driving group size and that group size itself is a response to an ecological problem (most probably predation risk (van Schaik 1983, Dunbar 1988, Hill & Dunbar 1998)). Although the hypothesis has been tested by determining how neocortex volume constrains group size and other social indices, the evolutionary logic is that the need to maintain coherent groups of a particular size has driven neocortex volume evolution through its demands on cognitive competences. The most succinct and parsimonious causal sequence with fewest unsupported assumptions is that the window of opportunity provided for more intensely bonded social groups and the social skills that underpin this was the crucial selection pressure for the evolution of large brains, even though simple ecological pressures (e.g., the shift to a more frugivorous diet) may have been instrumental in kicking off the process. In these terms, any associated ecological skills may be seen as the outcome of the opportunity provided by an increase in general purpose intelligence generated off the back of the social requirements. To argue the reverse sequence (that large social groups are a by-product of having evolved large brains to solve simple ecological problems) is, as with the various ontogenetic hypotheses, to leave unanswered the problem of the costs of social living (Dunbar 2003:169).

If the relationship between social group size and brain size--or more specifically, neocortex size--could be quantified, then it would be possible to predict the group size of an extinct species based on the size of its brain. This is precisely what Dunbar has attempted for fossil hominids, and for living humans. Such an estimate for a population or species has become known as the "Dunbar number", and has found application in areas of the social sciences beyond animal behavior (most interestingly, in predicting characteristics of clandestine terrorist networks based on the kind of communication possible between the members).

This trend appears to hold across large taxonomic groups, like the primates. But within family level taxa, like the hominoids, it is unclear how much predictive power the hypothesis may have. In particular, the small social groups of orangutans appear to be a poor fit to the model when compared to their brains, which are similar in size to those of chimpanzees. So in the effort to predict characteristics of past species of hominids based on the size of their brains, the logic of the "social brain hypothesis" faces some perhaps insuperable problems.

I'm more interested in the aspects of mental flexibility and variability that arise as a consequence of selection for increased social tracking. As social groups grow in size, the number of binary interactions that any one individual needs to trace increases exponentially. The focus on this number of interactions is what drives the Dunbar model, along with the expectation that each of those interactions may require the investment of energy to maintain social status. But an increasing number of interactions is not the only change associated with larger social groups. We may also expect an increase in the number of kinds of interactions. This is a qualitative change that accompanies the quantitative change resulting from increasing population size.

Human evolution may or may not have seen the an increase in group size compared to our Miocene ancestors. Chimpanzee communities today number somewhat larger than human hunter-gatherer groups, on average. But chimpanzee committees themselves are comprised of smaller groups of individuals who may rarely see each other and the course of a month or longer. And human hunter-gatherers may coalesce into larger groups for social purposes. The complexity of social interactions within each of these species is beyond that of most other social species, factoring the variation in time spent with other individuals and the gradation of possible interactions from cooperation to aggression to reconciliation. Human evolution may not have seen an increase in group size, but it certainly saw an increase in the flexibility of interactions with individuals who were members of other groups. It also saw an increase in the degree of behavioral differentiation of individuals within groups. There were without doubt knowledge specialists for each of the components of ancient human cultures. This probably included specialists in tool manufacture, in hunting, in plant foraging, in midwifery, in negotiation with other groups, in knowledge of the landscape, and many other realms.

The possibility of specialists in different types of knowledge creates an "Information economy" in which people may attain and secure status on the basis of what they know about a specialized activity. If people can monopolize special information, then they can make themselves indispensable. And where different kinds of information are indispensable, different group members can leverage a more egalitarian social role.

To see this system in action, one need look no farther than the plot of any good story. Take for instance Homer's Iliad. In the descriptions of the war planning and decision-making, we see a very small subset of an ancient society--only the warrior class of ancient Greece. But even within this limited set, different individuals have different attributes that are essential to the enterprise. Agamemnon brings political power and finesse, Achilles brings martial skill and the intense loyalty of his followers, Odysseus brings clever planning and deceit, and Nestor brings a measured eye for tradition and restraint. Is it possible that in this microcosm of the story we can see the interactions within human social groups since the dawn of humanity? Clearly at the least it illustrates the ways that humans angle toward the unique role in their societies, that may defy ready quantification.

Returning to the issue of money, clearly economic advantage is one of the ways that we compete for social status today. Perhaps the majority of interactions that we have with other individuals have to do with the exchange of currency, or the social expectations that come from labor, consumerism, or other economic relations. And money even becomes part of our close social relationships, between family and friends. But few of us define ourselves in terms of money. Most people find other things that are more important to them. The discussion of money itself is something of a social taboo in our society, with most people considering it ill-mannered to directly raise the issue of how much someone makes, or how much they paid for something valuable. We play games of status around the issue of money, avoiding it almost whenever possible.

These games are an intricate result of our mental adaptations. The quest for social prestige and status is played on the field where the rules are fluid. Today's rules are different than those of the Stone Age, but the way we count our chits is mostly the same.


Dunbar RIM. 1998. The social brain hypothesis. Evol Anthropol 6:178-190.

Dunbar RIM. 2003. The social brain: mind, language, and society in evolutionary perspective. Annu Rev Anthropol 32:163-181.