Centuries of economic hypotheses have been based on the premise of rational actors: when given a choice between two items, people select the one they value more. But as with many simple premises, this one has a flaw in that it is demonstrably untrue.
Yet that was never really the case. Too many exceptions mean a rule was never a rule anyway - there are lots of examples where people act against their own apparent interests. One of these biases — the mere fact of possessing something raises its value to its owner — is known as the "endowment effect."
A new paper seeks to address whether this bias is truly universal and speculates that it may have been present in humanity's evolutionary past.
A classic endowment effect experiments involves giving participants one of two items, such as a chocolate bar and a mug, and then asking whether they would like to trade for the other. As the starting item is selected at random, there should be a 50 percent chance that participants initially receive the item they like best and thus a 50 percent chance that they will trade.
"We wanted to examine whether the endowment effect was something that occurs in non-WEIRD societies, since they represent the vast majority of human populations that have ever existed," Apicella said. "Even if it's not a perfect window into our past, it's at least a different perspective than what you get when you study your average college student. The fact that the Hadza remain relatively isolated from Western culture, media and ideals makes them a good group with which to investigate the history and universality of biases like the endowment effect."
A biological basis for the endowment effect would be of particular interest to evolutionary psychologists, as experiments to test its presence in non-human primates, such as orangutans, chimpanzees and gorillas, have yielded inconsistent results. That some non-human primates exhibit the bias could mean that it was present in the last common ancestor between them and humans, but it could also mean that they learned the behavior by participating in other reward-based studies.
The area of North Tanzania where the Hadza live provided a natural way to further investigate the role of culture in transmitting this bias, as a large lake separates some, but not all, of the camps from a nearby village. People living in the camps on the near side of the lake have much more frequent interactions with tourists and commerce, often buying items from stores in the village, or selling bows and arrows to visitors.
The researchers conducted versions of the endowment effect experiment in several different camps, and compared the results.
In order to avoid bias from items that might be more or less valuable in the environment the Hadza live in, the researchers constructed the experiments so that participants chose between items that had only cosmetic differences. Participants would be given either a package of cookies, with the option to trade it for a different flavor, or given a lighter, with the option to trade it for a different color. They also ensured that the participant knew that the variety he or she received at the start was a random choice, and varied whether the participant got to physically hold the item before given the option to trade it for another variety.
"We wanted to use both food and tools, as experiments with non-human primates show an endowment effect for the former but not the latter," Apicella said. "However, we saw that it didn't make a difference whether a person was choosing between cookies or lighters. The difference-maker was their relative level of isolation from modern life."
"The more isolated Hadza traded about 50 percent of the time — which is what rational people should do," Azevedo said. People near the village traded about 25 percent of the time, which is much closer to the 10 percent we see with Western students."
"To make sure this wasn't a case of the more capitalistic people moving closer to the village, we also asked the people about their social networks," Azevedo said. "The percentage of people who named someone in a distant camp was very small. Quantitatively, it seems impossible that the difference in endowment effect between two camps could be explained by migration."
With that potential caveat accounted for, one explanation for the apparent lack of an endowment effect in the more isolated camps is that the bias is a learned behavior that comes with exposure to capitalistic societies. However, an alternative explanation could be that both groups experience the effect, but it is suppressed in the more communal groups by social pressures.
"We need to study this further to see which explanation holds," Apicella said. "Either way the results suggest that these isolated hunter-gatherers are more rational than the average western consumer when it comes to economic decisions."