the Mind of Market

Bestselling author Michael Shermer explains how evolution shaped the modern economy—and why people are so irrational about money How did we make the leap from ancient hunter-gatherers to modern consumers and traders? Why do people get so emotional and irrational about bottom-line financial and business decisions? Is the capitalist marketplace a sort of Darwinian organism, evolved through natural selection as the fittest way to satisfy our needs? In this eye-opening exploration, author and psychologist Michael Shermer uncovers the evolutionary roots of our economic behavior. Drawing on the new field of neuroeconomics, Shermer investigates what brain scans reveal about bargaining, snap purchases, and establishing trust in business. He scrutinizes experiments in behavioral economics to understand why people hang on to losing stocks, why negotiations disintegrate into tit-for-tat disputes, and why money does not make us happy. He brings together astonishing findings from psychology, biology, and other sciences to describe how our tribal ancestry makes us suckers for brands, why researchers believe cooperation unleashes biochemicals similar to those released during sex, why free trade promises to build alliances between nations, and how even capuchin monkeys get indignant if they don"t get a fair reward for their work. Michael Shermer is the author of nine previous books, including the bestselling Why People Believe Weird Things. He is a columnist for Scientific American, the publisher of Skeptic magazine, and the founder and director of the international Skeptics Society. He lives in Southern California. In this exploration, author and psychologist Michael Shermer uncovers the evolutionary roots of our economic behavior. How did we make the leap from ancient hunter-gatherers to modern consumers and traders? Why do people get so emotional and irrational about bottom-line financial and business decisions? Is the capitalist marketplace a sort of Darwinian organism, evolved through natural selection as the fittest way to satisfy our needs? Drawing on the new field of neuroeconomics, Shermer investigates what brain scans reveal about bargaining, snap purchases, and establishing trust in business. He scrutinizes experiments in behavioral economics to understand why people hang on to losing stocks, why negotiations disintegrate into tit-for-tat disputes, and why money does not make us happy. He brings together astonishing findings from psychology, biology, and other sciences to describe how our tribal ancestry makes us suckers for brands, why researchers believe cooperation unleashes biochemicals similar to those released during sex, why free trade promises to build alliances between nations, and how even capuchin monkeys get indignant if they don"t get a fair reward for their work. "The theme of Michael Shermer"s new book is a graceful paradox. Decades of study of behavioral psychology, neuroscience and genetics, layered over more than a century of evolutionary studies, proves that we"re not completely rational in making economic choices. But an understanding of our fascinating limitations, which Shermer provides, makes us freer than were before we know of them . . . The author, an adjunct economics professor at Claremont Graduate University, compares the argument for top-down, centrally planned economics to the argument for intelligent design. Devotees of the latter often argue that "evolution" could not have designed something so complicated as the human eye, just as proponents of top-down economics argue, that, say, New York City needs the government to create jobs for the poor by doing things like build sports stadiums because the market won"t do it on its own. Shermer easily demolishes another myth about both evolution and economics that both depend exclusively on cutthroat, bloody-handed "survival of the fittest" competition to weed out the weakest creatures and companies . . . The most compelling chapters of Shermer"s book take us on an intimate tour of the best of the last half-century"s work in behavioral economics and neuroscience . . . Shermer notes that we must consciously choose freedom—all more important since the temptation, in light of the weird decisions we sometimes make in the marketplace, is to surrender to someone who must know better."—Nicole Gelinas, The New York Post"The nexus between economies and psychology has occupied scholars in the last several years. Field and laboratory experiments have tried to tease out and test the economist's assumptions of rationality, utility (or profit) maximization, and financial decision-making rules, and to formulate perhaps improved public policies in light of these research findings in what is known as 'behavioral economies.' Some attention has now turned to the intersections of economies and the neurosciences, with the use of brain scans to reveal underlying tendencies and patterns in human nature. Into the middle of these theoretical and empirical frays jumps Shermer (Scientific American columnist; adjunct economics professor, Claremont Graduate Univ.) delivering a well-written, highly entertaining summary of the issues and applications in the evolution of what makes people tick and markets function. Intelligent lay readers will be led from apes to pandas to primitive tribes and modern states, from Charles Darwin and Adam Smith to free will and free markets. Replete with thought-provoking examples and solid references, the book will start as many debates as it will end, but that is a reasonable goal and accomplishments of a journalist and self-proclaimed skeptic. Summing up: Recommended. General readers; all levels of undergraduate and graduate students; faculty and professionals."—A. R. Sanderson, University of Chicago, Choice "The Mind of the Market is a consistently stimulating inquiry into the (formerly) dismal science."—Ted Mumford, The Globe and Mail "I'm about to review a book on economics for you . . . no, no, stop, don't turn the page! It's a readable, entertaining book—about lots of things you don't associate with 'economics.' Like Freakonomics, you'll find no graphs or calculus here, just a wee bit of jargon, and you'll get to read about sex and chimps, the brain wave for shopping, why biology makes us kind and dozens of other unusual topics you never studied in Econ 101."—Richard Parker, The Globe Mail (Toronto)"Charles Darwin and Adam Smith may seem like strange bedfellows, but bestselling author Michael Shermer finds the fathers of evolutionary theory and capitalism to be a perfect match . . . Drawing from research, and injecting his own wit, Shermer explains why people make bad decisions about money, why wealth can't buy you happiness, and why we love cooperating."—Meredith Knight, Psychology Today"Written with his customary verve and flair, The Mind of the Market is Michael Shermer at his best. Roving over the entire sweep of history, and drawing on the best of modern science, Shermer attempts a grand synthesis of research from psychology and the neurosciences to demonstrate that markets are moral and that free trade meshes well with human nature. Shermer entertains as well as informs, and in the process he deepens the argument for economic, political and social freedom."—Dinesh D"Souza, author of What"s So Great About America"Economists who u