Evolutionary psychology

Darwin goes to Wall Street

Since the financial crash of 2008 the field of economics has been in a state crisis, where a paradox lies at the heart of the issue.

On the one hand markets are remarkably rational and efficient, displaying allocation and foresight that prediction scientists are only beginning to fully grasp. Efficient markets are powerful, practical tools for aggregating information, and they do it more quickly and cheaply than any known alternative.

However markets also prone to wild swings of irrationality, and can fail spectacularly. Indeed, soul searching in the wake of the financial crisis has led to calls for the field of economics to be revolutionised. Behavioural economics has since risen in prominence, challenging the orthodoxy of neoclassical economic theory by outlining how predictably irrational people can be.

What can we make of this apparent contradiction?

In Adaptive Markets, MIT finance professor Andrew Lo ambitiously calls for a paradigm shift in financial economics, and urges us to reconsider financial markets from an evolutionary perspective. Lo argues by understanding the evolutionary forces that have shaped human behaviour and spurred financial innovation we can reconcile these paradoxical findings, and successfully address the problems facing the financial world.

It Takes a Theory to Beat a Theory

One passage from the book that stuck with me is where Andrew tells the story of taking his son to the National Zoo in Washington DC, who was then a toddler. “As expected, my son was delighted with the Great Ape House, but for me, this visit was nothing less than transformational.”

Lo describes his family standing in front of a group of orangutans, where the alpha male of the group came surprisingly close to the iron-bar fencing separating the great apes from the visitors. In response, Andrew pulled his son away from the fence to keep him out of danger. This startled the alpha male’s companion, who instantly moved in front of the younger orangutan to repel Andrew’s advance- in essence mirroring each other’s behaviour.

The human brain works in mysterious ways. At that precise moment, I saw clearly how the Efficient Markets Hypothesis and its behavioural critique could be reconciled. In fact I understood two things that should have been obvious to me all along, but which I had never thought about until then.

The first insight Andrew had was just how instinctive our primate behaviour is and the the legacy of our shared ancestry, where 97% of our DNA is identical to that of chimpanzees. However Andrew notes the large gulf between our species, where one of these primates carried on their life as usual held in captivity, where the other would go on to write a book detailing the experience and resolving a longstanding academic controversy. Lo argues it is this 3% of the human genome that separates us from other primates, which enables cultural innovation and human ingenuity, and permits advanced economic activity and efficient trading.

The core argument presented in Adaptive Markets is that financial markets do not follow the laws of economic theory. Rather, financial markets are the product of human evolution, and follow the laws of biology instead.

Undoubtedly, behavioural economists have helped improve our understanding of economic decision-making. However, what behavioural economists neglected to answer is the ultimate question: why do people possess these psychological dispositions? Answering ultimate questions leads one to evolution, as the human brain has been honed by the forces of natural selection.

As stated by Lo:

Economic behavior is one aspect of human behavior, and human behavior is the product of biological evolution across eons of different environments. Competition, mutation, innovation, and especially natural selection are the building blocks of evolution. All individuals are vying for survival- even if the laws of the jungle are less vicious on the African Savannah than on Wall Street. It’s no surprise, then, that economic behavior is often best viewed through the lens of biology.

A key concept Lo uses to explain economic behaviour is an evolutionary mismatch:  traits selected for in our ancestral past which were once advantageous, which become maladaptive when the environment changes. For example, Lo argues evolution can help explain loss aversion and people’s inclination to ‘probability match’ in financial settings, which can result in sub-optimal investing.

Financial behavior that may seem irrational now is really behavior that hasn’t had sufficient time to adapt to modern contexts. An obvious example from nature is the great white shark, a near- perfect predator that moves through the water with fearsome grace and efficiency, thanks to 400 million years of adaptation. But take that shark out of the water and drop it onto a sandy beach, and its flailing undulations will look silly and irrational. It’s perfectly adapted to the depths of the ocean, not to dry land.

For the past 50 years, academic finance has been dominated by highly mathematical models and methods that derived from physics. These sophisticated quantitative techniques spawned a wave of financial innovation, and triggered an evolutionary change within the world of finance. However, Lo argues that despite the advantages these advanced quantitative techniques provided, this mass ‘mathematization’ of finance has significant flaws.

Finance isn’t physics, despite the similarities between the physics of heat conduction and the mathematics of derivative securities, for example. The difference is human behavior and the role of evolution in its development… The financial crisis showed us that investors, portfolio managers, and regulators do have feelings, even if those feelings were mostly disappointment and regret during the last few years. Financial economics is much harder than physics.

The Financial Crisis

Much of Adaptive Markets is dedicated to the 2008 financial crisis. Although there are numerous causes of the crisis, Lo argues that at the most fundamental level the primary cause of the crash was greed overpowering fear.

The Adaptive Markets Hypothesis tells us that, at the most basic level of the financial crisis, greed overwhelmed fear. Ignoring the changing environment, people at all levels of the system created a narrative that greed was good. The pushback against the warnings about the oncoming crisis was stronger than the warnings themselves- until it was too late. 

Rather soberingly, Lo details how economists such and Robert Shiller and Raghuram Rajan raised the alarm of the American housing market showing signs of a bubble, which could potentially lead to a catastrophic meltdown of the financial system. However, these concerns were largely ignored by the wider financial community. With the benefit of hindsight, such warnings were remarkably prescient.

Lo’s own research on the hedge fund industry also showed early warning signs of the financial crisis. Back in 2005, journalist Mark Gimein published an overview of Lo’s research in the New York Times. The last paragraph reads; “The nightmare script for Mr. Lo wold be a series of collapses of highly leveraged hedge funds that bring down major banks or brokerage firms that lend to them”.

Apparently Lo’s warning seemed ridiculous at the time, yet in hindsight various hedge funds collapsed at the start of the crisis “and the fact that Bear Stearns and Lehman Brothers both experienced their first wave of losses through their hedge funds, it wasn’t too far off the mark.”

Hedge funds are described by Lo as the ‘Galapagos Islands of finance’, being a novel species of finance that exploit market anomolies which are highly vulnerable to changing environments. According to Lo, increased complexity combined with tighter coupling and a new spawn of financial gigantism increased the odds of a catastrophic meltdown.

Lo also takes the opportunity to challenge the narratives we share to explain the financial crisis. For example, one common theme is that the financial crisis was the result of the unscrupulous practices of financial elites. Although there is much truth to this story, Lo argues many determinants of the crisis were systemic and were not caused by ethical lapses. However, this claim is contested by leaders in the field.

Finance Behaving Badly

Not only does Adaptive Markets cover the basics of evolutionary psychology, it also makes reference to the cultural evolution. Lo makes clear that culture, a domain which is frequently deemed beyond the realm of biology, is itself the product of evolution. That is, subject to the processes of variation, selection and replication. A core argument in Adaptive Markets is that an evolutionary perspective of culture can help us identity and prevent financial scandals.

Long before the days Gordon Gekko became a cultural icon, social psychologists have studied what leads ordinary people to behave like monsters. The infamous Milgram and Zimbardo Stanford prison experiments were conducted during the 1960s and 1970s respectively, and demonstrated in shocking and graphic detail how blind obedience to authority can lead ordinary people to commit atrocities.

Lo notes how little people were paid to participate in these experiments, and yet still were complicit in such unthinkable acts. Milgram paid his participants roughly today’s equivalent of $36, where Zimbardo paid his subjects roughly $90 in today’s money.

Imagine a situation in which you were instructed to engage in questionable financial practices- actions that aren’t nearly as gut-wrenching as delivering electrical shocks- by a managing director or vice president in a suit and tie, and you’re given tremendous financial incentives, like a multi-million dollar year-end bonus, to do so. In light of the Lucifer Effect, it’s not hard to understand how context and culture can lead to even caring and ethical individuals to do reprehensible things to unsuspecting clients. This is the Gekko Effect. 

One possible critique of Adaptive Markets is that it emphases the importance of the environment, yet it does not adequately address the environmental forces shaping financial institutions. However, Lo’s reflections on regulation and corporate fraud is a clear exception.

Although the data is confined to the United States and the time series is rather small (especially when considering evolutionary time-scales), Lo provides evidence that financial scandals and scams are cyclical. That is, historically financial scandals have increased as stock markets rose, and declined once market conditions deteriorated.

 

Lo Dyck, Morse and Zingale's (2013, figure 1) estimates of the percentage of large corporations starting and engaging in fraud

Estimates of the percentage of large corporations starting or engaging in fraud, from 1996-2004 (Dyck, Mores & Zingales, 2013)

Deason et al (2015) Frequency of SEC- prosecuted Ponzi schemes by calendar quarter from 1988 to 2012

Frequency of SEC prosecuted Ponzi schemes by calendar quarter from 1988 to 2012 (Deason, Rajgopal & Waymire, 2015)

These findings may seem counter-intuitive. However, the researchers investigating ponzi schemes make it clear that such large-scale fraud is harder to sustain during deteriorating market conditions, as was the case with Madoff. Lo also notes that regulatory budgets increase after financial bubbles burst.

Lo states the unravelling of Madoff also revealed the biases and blind spots of financial regulators. Although social scientists have much to learn about the behaviour of auditors and financial regulators in the lead up to such scandals, Lo argues loss aversion may help explain why regulators don’t react quicker to signs of disturbance. That is, being more concerned about being wrong and causing a public scandal than investigating cases of potential large-scale fraud.

Fixing Finance 

Lo argues that if we wish to change financial culture and tackle corporate malfeasance, we first have to understand the broader contextual and environmental forces that have shaped such cultures over time and across circumstances.

As a professional working in the field, I’ve observed increasing activity to monitor aspects of organisational culture within the banking industry. However, I believe we’re only beginning to grapple with this challenge, and that various issues need to be addressed. To elaborate, what do we mean exactly when we refer to ‘culture’, how do we measure it, and which aspects of culture can actually be changed and should be prioritised?

Lo provides some excellent advise here, and demonstrates the importance of framing.

The first step requires a subtle but important shift in our language. Instead of seeking to “change culture”, which seems naive and hopelessly ambitious, suppose our objective is to engage in “behavioural risk management” instead… Despite the fact we’re referring to essentially the same goal, the latter phrase is more concrete, feasible, and- this is important- unassailable from a corporate board’s perspective.

To conclude, a core theme of Adaptive Markets is that the financial system is more similar to an ecosystem of living organisms than a machine, and that we must manage the system accordingly. This is a very different perspective compared to traditional approaches of financial regulation, however Lo notes the list of prominent economists who have reached similar conclusions.

Despite certain reviews of the book arguing that the Adaptive Markets Hypothesis offers little practical value, this theoretical insight arguably has many practical implications.

For one, it shows investors how markets are not wholly efficient and can be beaten, and makes clear that specific investment strategies can either succeed or fail depending on the broader financial environment.

Lo shares some big ideas on how large-scale investment funds can be designed to address pressing social problems, such as the high cost of developing new cancer drugs.

For regulators, the adaptive toolkit provides ways of addressing the cultural roots of corporate maleficence, which could help prevent the next Bernie Madoff from succeeding.


Written by Max Beilby for Darwinian Business

Click here to buy a copy of Adaptive Markets

The Appeal of the Primal Leader: Human Evolution and Donald J. Trump

Almost 63 million Americans voted for Donald Trump in the 2016 U.S. presidential election. Trump’s victory defied experts’ predictions, and shocked the world.

How could a man widely dismissed as a joke, a conspiracy theorist and an impulsive narcissist with no political experience whatsoever, capture the world’s most powerful political position?

Not only did Trump perform dismally in the presidential debates and routinely spread blatant falsehoods throughout his campaign. He also branded Mexican immigrants as rapists, where footage of him boasting about sexually assaulting women subsequently emerged. Trump mocked war heroes and the disabled, dismissed climate change as a hoax created by the Chinese, and launched personal attacks on members of his own political party.

Many explanations have been presented since the election of President Trump. For example, many point out that Hilary Clinton in fact won the popular vote, and that procedural issues were a contributing factor. The FBI investigation into Clinton’s email usage is also listed as one of the main reasons. Others either highlight the inadequacies of Hilary Clinton’s campaign, or emphasise the sexism Clinton faced as a presidential candidate.

There is some validity to all these points, and they were likely contributing factors. However, these are proximate explanations for why Donald Trump won the election, rather than the ultimate explanation. After all, these factors can’t explain why Trump received the Republican nomination, and managed to secure millions of votes.

A new paper written by psychologist Dan P. McAdams sheds light on the matter.

Inside the Mind of Trump

Dan P. McAdams is a world leading figure on personality, who has helped reconcile various different strands of personality psychology. His three layered model of personality featured prominently in Jonathan Haidt’s book The Happiness Hypothesis

Prior to the 2016 U.S. Election, McAdams wrote an in-depth article for the Atlantic Magazine titled The Mind of Donald Trump. In this piece, McAdams produced an impartial investigation of Donald Trump’s extraordinary personality, and outlined how his personality may shape his possible presidency. (I recall sharing this article on Facebook when it was still deemed unthinkable for Donald Trump to win the election).

McAdams is back, with a publication in the new journal Evolutionary Studies in Imaginative Culture.

Primal Dominance

As opposed to investigating Donald Trump’s personality, McAdams’ new essay provides an overview of leadership and followship psychology through the lens of evolution. Essentially, McAdams argues that Trump’s appeal to millions of voters was his uncanny ability to channel what is termed ‘primal dominance’. “Like the alpha male of a chimpanzee colony, Trump leads (and inspires) through intimidation, bluster, and threat, and through the establishment of short-term, opportunistic relationships with other high-status agents.”

In this light, Trump’s aggressive leadership style is nothing new. Rather, Trump channels the psychology of dominance that traces back millions of years in human evolution, to our primate heritage. The human and chimpanzee lineages split off from their common ancestor approximately 5 to 7 million years ago. According to McAdams, both primate species took with them a proclivity for social hierarchy, and the corresponding psychology of dominance.

To highlight the similarities between the species, McAdams cites the work of primatologist Frans de Waal, who illustrated the aggressive strategies chimpanzees use to secure leadership positions. As stated by McAdams; “The top chimp achieves his standing through aggression, intimidation, and threat. Prerequisites for the top post often include being large and being strong, though smaller dominant chimps can compensate through powerful vocal displays and other intimidating tactics.”

Frans de Waal wrote a book called Chimpanzee Politics back in 1982, which offered the first overview of the lives and social strategies of primates, and provided a mirror reflection of human nature. Apparently politicians such as Newt Gringrich flocked to the book upon its release. However, in many ways Chimpanzee Politics appears more relevant today. As stated by McAdams:

When the first edition of Chimpanzee Politics appeared in 1982, readers were struck by how much chimps turn out to be like humans. But the case of Donald Trump shows how much humans turn out to be like chimps.

However, the story of leadership strategies is a bit more complicated when it comes to us homo-sapiens. We humans are a cultural species, and rely heavily on cultural know-how for our survival and reproduction. We humans have crossed what has been called the ‘Rubicon of cumulative cultural evolution’ by evolutionary biologist Joe Henrich—kicking off an evolutionary process of innovation and knowledge transfer which has shaped our biology, and is now the driving force of human evolution itself.

The Psychology of Prestige

With the emergence of cultural evolution, a new way of attaining status emerged—a form of leadership referred to as prestige. This form of leadership does not rely on brute force and intimidation, but rather on the socially valued skills and expertise. As a cultural species, we grant high status to those who advance cultural learning within our communities—covering domains such a hunting, healthcare, cooking, caregiving, and the arts of defence.

At first glance, one could consider Trump as a prestigious leader. Not only is Trump a prominent businessman, Trump was originally considered a thought leader in business. McAdams highlights that Trump was made famous for his 1987 book The Art of the Deal, which burst in onto the world stage as an expert. If one new nothing else about the Donald, they may assume that Trump used the psychology of prestige to attain his position. However, McAdams states that a casual reading of The Art of the Deal reveals why this is evidently not the case.

But, of course, nothing could be further from the truth, as even Trump’s most ardent admirers would acknowledge. Even a casual reading of The Art of the Deal reveals that the cultural knowledge Donald Trump aims to transmit is not so much a specialized portfolio formulated to address a specific problem in culture but rather a more general set of strategies aimed at achieving social dominance—dominance in virtually any context in which “deals” are to be made, from real estate to politics to interpersonal relationships.

Which brings us to one of the main arguments presented by McAdams. Prestige psychology is a junior rival to primal dominance, and does not necessarily hold an advantage as a leadership strategy. Rather, dominance is in many ways a more successful  leadership strategy than prestige, but comes at great cost to the collective. What is novel is the remarkable extent to which Trump has used dominance as a leadership strategy to secure the presidency. As stated by McAdams:

If President Obama tried to steer the ship of state slightly toward prestige psychology, Donald Trump has swerved violently in the opposite direction, creating a political and psychological whiplash. No U.S. president in recent memory, and perhaps none ever, has tapped so effectively into the primal psychology of dominance.

What is largely omitted from McAdams’ essay is the environmental factors which may have facilitated the rise of Trump. For example, recent research from London Business School suggests a preference for dominant leaders increases during times of uncertainty (primarily economic insecurity, and threats of terrorism and war).

In this respect, one can speculate that the uncertainty caused by a chaotic presidency may actually increase desire for an authoritarian leader, rather than attenuate it. Perhaps this would be another type of ‘political and psychological whiplash’.


Written by Max Beilby for Darwinian Business

To download the full paper, click here.

References

McAdams, D.P (2017) The Appeal of the Primal Leader: Human Evolution and Donald J. Trump, Evolutionary Studies in Imaginative Culture, 1(2). Available here.

Henrich, J. (2016) The Secret of Our Success: How culture is driving human evolution, domesticating our species, and making us smarter. Princeton University Press

Kakkar, H., & Sivanathan, N. (2017). When the appeal of a dominant leader is greater than a prestige leader. Proceedings of the National Academy of Sciences, 201617711.

Tracy, J. (2016) Take Pride: Why the deadliest of sins holds the secret to successHoughton Mifflin Harcourt

Image credit: DonkeyHotey

A Virtuous Sin: An Overview of ‘Take Pride’ by Jessica Tracy

Dean Karnazes started his professional running career relatively late in life.

As a teenager, Dean had been a top runner at his school’s cross-country team. However, the joys and demands of modern life later took hold. Karnazes went to university, got married, and pursued a business career—quickly rising ranks in his sales job.

But something happened when Dean turned 30 years old.

On the morning Karnazes turned 30, he woke up in a state of shock. In his memoir Ultramarathon Man, Karnazes wrote; “I realized that my life is being wasted.” He later told his wife; “My fear is that I’ll wake up thirty years from now and be in the same place, only wrinkled and bald… and really fat. And bitter.”

That night, Karnazes went drinking in San Francisco, and found himself within inches of cheating on his wife. Reflecting on what nearly happened, Karnazes had an epiphany. He realised that the proudest moments in his life were when he’d independently endured something physically demanding.

Dean escaped from the bar he was drinking at, and started running… All night. He ran from his home in San Francisco, to Half Moon Bay—thirty miles down the California coast.

Karnazes hadn’t ran in 15 years, and suffered for days afterwards. But Karnazes described feeling a profound sense of purpose, and decided he wasn’t going to let it go.

Since that eventful day, Karnazes has become the world’s most famous ultra-marathon runner.

Pride: A fundamental aspect of human nature

Why did Karnazes abandon a successful business career, to become an endurance athlete?

Evidently Karnazes was driven by emotion– and one emotion in particular. Like every other person who dedicates their time and effort to achieve something, Karnazes was driven by pride: the desire to feel proud of one’s self.

In Take Pride: Why the deadliest since holds the secret to human success, psychology professor Jessica Tracy argues that pride is a fundamental aspect of human nature, and an emotion which has been long neglected by social scientists.

Grounded in evolutionary science, Tracy argues that the ultimate function of pride is to increase one’s social status, and that this motivational emotion is the driving force of our species’ success. “One conclusion I’ve reached is that the desire to feel pride is of the most important motivational forces propelling human achievement… Yes, pride is at least partially responsible for many of our species’ greatest successes, including artistic masterpieces, groundbreaking scientific discoveries, and world-changing technological inventions.”

Tracy and her colleagues’ innovative research demonstrates that pride is not just confined to individualistic societies, but is a universal human emotion. For example, hunter-gatherers in Burkina Faso who have received little to no exposure to Western culture recognise pride displays on similar levels to that of other universal human emotions, such as fear. On top of this, Tracy’s research illustrates that congenitally blind Olympic athletes display recognisable pride displays—ruling out the possibility that these behaviours are learned from watching others.

tracy-and-matsumoto-the-spontaneous-expression-of-pride-and-shame

Pride expression in response to victory shown by a sighted (left) and congenitally blind (right) judo athlete (image credit: Bob Willingham)

A virtuous sin

Historically, pride has been described as both a virtue and as a sin. How have scholars and religious leaders come to radically different conclusions on this emotion?

The answer is because of pride’s two-sided nature.

One the one-hand, there’s authentic pride: a type of pride based on a reasonable perception of one’s self-worth, accompanied with a desire to achieve. It is based on one’s actions and their contributions to others. On the other hand, you have hubristic pride. Unlike authenticity, hubristic pride is based on one’s own perception of innate greatest and superiority. In other words, an inflated sense of self-worth and entitlement.

Tracy’s research illustrates that those prone to authentic pride are generally prosocial, outgoing and emotionally stable. In contrast, those prone to hubristic pride are more likely to be narcissistic, low in self-esteem, and vulnerable to bouts of shame.

Essentially, the key determinant of either authentic or hubristic pride is where one attributes their success. As stated by Tracy;

No wonder authentic pride is associated with feelings of achievement and accomplishment while hubristic pride is linked to egotism and arrogance. If you think you succeeded because of your hard work, you should confident, productive and accomplished. And if you believe you succeeded because of who you are, well, then it makes sense that you’d feel pretty great about yourself in a manner that can described as conceited or smug.”

These two variants of pride are also associated with different ways of processing failure. Those who tend toward authentic pride can put their failures into perspective, and treat them as temporary setbacks and extract lessons from these experiences. Conversely, those susceptible to hubristic pride do not respond in kind. They are vulnerable to setting unrealistic goals, which typically fail. When the inevitable happens, they disregard or undermine these failures, as admitting failure would violate their identity.

This distinction is why pride can explain acts of genius, as well as acts of apparent insanity. For example, hubristic pride may best explain why Lance Armstrong not only enhanced his already remarkable cycling performance by doping with EPOs, but why he subsequently manipulated and intimidated his teammates to follow suit– which drastically increased the odds of getting caught. Tracy summarises this point eloquently. “The hubristic form of pride can explain these seemingly inexplicable acts, and it may be the only thing that can. Yes, pride is a source of human greatness, but it’s also a source of the greatest of human downfalls. For this reason, pride- perhaps more than any other emotion – lies at the heart of human nature.”

Two paths to leadership

Tracy argues pride is ‘adaptive’, in the sense that it grants one power and influence, which helps increase one’s social rank. We know that leaders are more likely to survive and reproduce than those at the bottom of the hierarchy.

With that in mind, why are there two very different forms of pride, and how can they both be adaptive? It’s because there are two divergent routes to leadership.

Firstly, there’s dominance– increasing one’s social status through intimidation, manipulation, and coercion. This type of leadership is ancient, and is rooted in primate social dominance. Within the animal kingdom, animals which are the most powerful and the superior fighters are generally granted high status.

However, we homo sapiens  are unique. Unlike other animals, we are a hyper-social cultural species. We rely on cultural knowledge and wisdom like no other animal– we literally depend on socialisation and cultural know-how for our survival. As a result, we seek leaders with the skills and knowledge our group needs to thrive. This path to leadership is called prestige.

Intriguingly, Tracy’s research shows that both paths are equally successful. That is, one can get to the top either through domination, or by developing prestige.

For example, Tracy and her colleagues conducted experimental research, providing groups of university students with problems solving tasks developed by NASA. However Tracy and her colleagues weren’t interested in the groups’ answers. Instead, they measured each participant’s dominance and prestige, along with four measures of social influence (including eye-tracking of reviewers watching the experimental footage, with the time spent focused on each participant as a measure of status).

The experiments demonstrated that both dominance and prestige were equally effective strategies. Despite acknowledging that they didn’t particularly like the dominant group members, participants nonetheless viewed these individuals as influential leaders.

This helps explain why Donald Trump was elected President of the United States. Trump pursued the primate dominance path to success by bullying, manipulating and intimidating his political rivals, and ended up winning arguably the world’s most powerful position. In other words, Trump didn’t win despite of his arrogance and aggression; he won because of it.

Although the US election caught pollsters off guard and subsequently shocked the world, it appears that many evolutionary psychologists were not surprised by the result– including Tracy herself. Take Pride was penned before Trump was elected the Republican nominee. However, Trump’s leadership style is a focal point of the book. “…[A]s this book goes to press, in the spring of 2016, Trump is the leading Republican candidate for U.S. president. Overt or exaggerated displays of hubristic pride are obviously not a deal breaker.”

Take Pride

What should we take from Tracy’s work?

Tracy’s advice for your own life couldn’t be more clear: cultivate authentic pride.

One of my ultimate aims of this book is to demonstrate that you can choose to control the darker impulses and follow your more authentic prideful voice. I believe understanding the science of pride—both sides of pride—will allow you to fully appreciate and benefit from this natural capacity all members of our species share. It’s an ability not only to feel good about ourselves, but also to use those feelings towards our own ends, to change our lives.

Recruiters and HR professionals should take note. It’s vital that organisations explore the motivations of job candidates and promising leaders, not just their skills and experience. Businesses should seek leaders that display authentic pride, and cite intrinsic motivations for wanting the position.

Yes, dominance is a successful leadership strategy. However it comes with big costs, including lower employee satisfaction, higher staff turnover, and reduced creativity. Essentially domineering leadership causes unnecessary suffering, and is arguably unsustainable. In a world were culture is a key driver of human evolution, we need to select knowledgeable and competent leaders who can improve the human condition.

Written by Max Beilby for Darwinian Business

Click here to buy a copy of Take Pride.

*Post updated 12th December 16

 

References and recommended reading

Boehm, C. (2016) Trump’s primate-like posturing got him to poll position in Iowa, New Scientist. Available here

Cheng, J. T., Tracy, J. L., Foulsham, T., Kingstone, A., & Henrich, J. (2013). Two ways to the top: Evidence that dominance and prestige are distinct yet viable avenues to social rank and influence. Journal of Personality and Social Psychology, 104(1), 103.

Henrich, J. (2015) The Secret of Our Success: How culture is driving human evolution, domesticating our species, and making us smarter. Princeton University Press

Karnazes, D. (2007). Ultramarathon Man. Riva Verlag

Tracy, J.L. (2016) Evolutionary psychology shows that people get ahead in life by using one of these two strategies. Quartz Magazine. Available here

Tracy, J. L., & Matsumoto, D. (2008). The spontaneous expression of pride and shame: Evidence for biologically innate nonverbal displays. Proceedings of the National Academy of Sciences, 105(33), 11655-11660.

Tracy, J. L., & Robins, R. W. (2008). The nonverbal expression of pride: evidence for cross-cultural recognition. Journal of personality and social psychology, 94(3), 516.

Van Vugt, M. (2015) Understanding Primates – and Donald Trump, Psychlogy Today. Available here

Van Vugt, M. & Ahuja, A. (2010) Selected: Why some people lead, why others follow, and why it mattersProfile Books

Von Rueden, C. (2016) The Conversation About Trump Should Consider the Evolution of Men’s Political Psychology, This View of Life. Available here

 

Charismatic Leadership Through the Lens of Evolution

One of the defining features of human psychology is our extraordinary prosociality. How can cooperation and prosocial behaviour be maintained, despite the immediate temptations to free-ride and deflect?

In a paper published in the September edition of the journal Evolution & Human Behavior, organisational psychologists Allen Grabo and Mark van Vugt explore the origins and functions of charismatic leadership.

Charismatic leaders have played a prominent role throughout history, and yet a definition of what charismatic leadership actually is remains elusive.

The authors argue that the ultimate function of charismatic leadership is to effectively promote and sustain prosocial behaviour within groups. Using the terminology of evolutionary psychology, the authors contend charismatic leadership is “[…] a signalling process in which a leader conveys their ability to solve urgent coordination and cooperation challenges in groups”.

They continue:

This process is context-dependent, but fundamentally consists of (1) attracting attention to recruit followers, (2) making use of extraordinary rhetorical abilities and knowledge of cultural symbols and rituals to inspire and offer a vision, (3) minimizing the perceived risks of cooperation, and (4) aligning these followers toward shared goals.

Grabo and van Vugt suggest charismatic leadership helps foster group cohesion, even as populations grow larger and less kin-based than those of our hunter-gather ancestors.

The Charismatic Prosociality Hypothesis

Three studies were conducted to test the ‘charismatic prosociality hypothesis’. The authors recruited participants online, and used charismatic stimuli and experimental economic games to test it.

For the first two studies, the researchers capitalised on the wealth of TED talks available, and identified videos which viewers found similarly interesting but were presented by speakers scoring high or low in charisma. Participants watched either a high or  low charisma scoring TED talk, before participating in experimental economic games: the ‘Dictator‘ and ‘Trust‘ Games.

Participants who had watched the more charismatic TED talk gave more in the Dictator Game than the participants in the non-charismatic condition. For those playing the Trust Game, the Trustees behaved more pro-socially  (returned more of an initial amount sent by the first player) in the charismatic condition, versus the non-charismatic condition.

To test the generalizability of the effects observed in the initial studies, the authors made use of an entirely different ‘charismatic manipulation’. The authors instead primed participants by asking them to imagine a charismatic (or non-charismatic) individual, and to write a short description about this person. Afterwards, the primed respondents participated in the experimental economic games. The authors added ‘The Stag Hunt‘ Game, which measures cooperation in a more abstract way than the strict allocation of money.

The increased prosocial behaviour observed  in the high charisma condition within the Dictator and Trust games was replicated with the prime. In the Stag Game, participants in the charismatic condition were more likely to cooperate than those in the non-charismatic condition.

Overall, the findings provide initial evidence for the theory of charismatic leadership being an instrument to galvanise cooperation and prosociality among strangers.

A limitation of the research methodology arguably further supports the hypothesis: that the studies were confined to online experiments. One would expect significantly stronger prosocial effects when people are exposed to charismatic leaders in naturalistic settings.

The Dark Side of Charismatic Leadership

Of course, the authors focused on the positive aspects of charismatic leadership. Charisma has a dark side, which Grabo and van Vugt acknowledge.

The present article focuses exclusively on the positive effects of charismatic leadership, but this is by no means the entire story. In fact, there is much more to be said about the “dark side” of charismatic leadership, the dangers which can result when a leader takes advantage of the extreme devotion and commitment of followers for selfish or immoral reasons by signaling dishonestly their intentions to benefit the group. History is full of examples of individuals, such as cult members or suicide bombers, who were unable to abandon their commitment to a charismatic leader even in the face of conflicting information, with disastrous outcomes. One way of understanding such actions is to view them as the results of an evolved “psychological immune system” which functions to defend firmly held convictions against change by novel information. While such a system might have been beneficial for group cohesion in the past – when contact with outgroup members was rare and perhaps more dangerous – it is perhaps best considered an evolutionary mismatch in the modern world.

Click here to read the full paper

Post written  by  Max Beilby for Darwinian Business

You can read Max’s review of Mark van Vugt and Anjana Ahuja’s book  Selected: Why some people lead, why others follow, and why it matters here 

 

Employee Health from an Evolutionary Perspective

An evolutionary perspective provides a powerful way of thinking about employees’ health.

What I’ve outlined below is Zhen Zhang and Michael Zyphur’s chapter on employee health and physiological functioning, in Stephen Colarelli and Richard Arvey’s volume The Biological Foundations of Organizational BehaviorThe chapter provides a wealth of information regarding employee health and physiology, and I’ll focus mainly on the practical applications rather than its theoretical contributions.

Zhang and Zyphur’s thesis is essentially this: modern working environments presents novel stressors and social difficulties for which humans have not yet adapted to. The authors propose that these challenges present an evolutionary mismatch, and suggest ways of aligning modern working conditions with that of our ancestral past.

Of course, the forces of technology have been unleashed and there’s no going back to the stone age, and nor would we want to. However, aspects of our humanity are arguably being ignored in modern organisations, and the authors propose some reasonable actions which can help improve employees’ health and physiological functioning.

Evolutionary Psychology and Employees in Modern Organisations

The authors argue that the majority of human psychological mechanisms are adaptations to Pleistocene environments. A classic example of our ancient psychological quirks outlined is that most people are more fearful of seeing snakes and spiders than having a loaded gun pointed at them, despite the fact that guns kill significantly more humans annually than snakes and spiders combined. This is because snakes and spiders were a constant threat to our ancestors during the Pleistocene, whereas guns are a recent invention and thus a novel threat.

Zhang and Zyphur argue that the mismatch between the environments in which we evolved and those in which we find ourselves in create ‘substantial difficulties’ at work. Specified are many aspects of the modern working environment that were absent in our ancestral past, including: a stricter organisational hierarchy, larger workloads, relative lack of social support, reduced physical activity, lack of sunshine in office and factory settings, sleep deprivation due to shift work, and work-to-family conflicts.

Evolutionary psychological research suggests that we humans evolved in the context of small tightly knit groups, with strong ties and support mechanisms- as do indigenous cultures across the world. The authors note that employees often work in small groups like our ancestors did. However, large modern organisations are populated by people who do not know each other personally, which presents challenges for cooperation and collaboration in light of our evolutionary drives to wrangle over status.

Social Status

Although rising income inequality makes pronounced status differentials appear largely inevitable, one must appreciate that we humans are primarily an egalitarian primate. The authors cite anthropologist Christopher Boehm’s book The Hierarchy in the Forest, which documents hunter-gathers having largely flat structures in their social lives, and that their levels of egalitarianism are far greater than that of modern organisations. I would throw in  here that it is the process of cultural group selection which has enabled greater status differentials within and between groups.

The authors argue that the mismatch between small egalitarian groups and that of large hierarchical organisations creates status hierarchies that are difficult to comprehend, and are a source of chronic stress. Further, Zhang and Zyphur argue that these large differences in status induce desires for success that lead people to “place unreasonable demands on their time and mental energy in order to ‘get ahead’, sacrificing their mental and physiological health in the name of social status and material wealth.” (p. 141).

Surprisingly, the authors did not cite the ‘Whitehall studies’. The Whitehall studies was a series of longitudinal research which commenced in the 1960s, that investigated the health of over 17,530 male UK civil servants. Contrary to the researchers’ expectations, the studies demonstrated that the civil servants with the highest status jobs actually were the least stressed, and subsequently the healthiest employees.

Men in the lowest  grade were 3.6 times more likely to die from heart disease than the highest grade. However, the lower grades were associated with various risk factors, such as obesity, smoking, and decreased leisure time. Statistically holding these risk factors constant, the lowest grade were still twice as likely to die from heart disease than the highest grade.

20 years later, the ‘Whitehall studies II’ corroborated these findings. The researchers concluded the Whitehall Studies II stating; “Healthy behaviours should be encouraged across the whole of society; more attention should be paid to the social environments, job design, and the consequences of income inequality.”

Workload

Another big development is the sheer volume of work that is characteristic of modern working life.

Anthropologists estimate that in earlier periods of human evolution, people most likely worked up to 8 hours per week. However we now work between 40-80 per week, which is an order of magnitude greater. In order to survive in industrial society, we have to work much harder than our great ancestors did.

The authors state that this rapid shift in workload has resulted in our physiological systems failing to adapt to the new environment, resulting in chronic stress, and a deterioration of social relationships (which buffer the adverse impacts of stress). Zhang and Zyphur state that the increased workload can help explain the prevalence of stress-related physiological maladies we are experiencing today, such as high blood pressure and heart disease.

From an evolutionary perspective, the authors suggest that milder forms of physiological responses can be considered as evolved defence mechanisms that alert people and help them cope with threats and adversities. These responses prompt adaptive behaviours when they are within normal ranges. However, sharp changes in the work environment can lead to excessive stress and malfunctioning in employee physiology. Thus, physiological systems which evolved for life in hunter-gather times can be maladaptive in modern contexts.

An Organising Framework

Zhang and Zyphur provide a theoretical framework based on their review of occupational health psychology:

IMG_0544

An organising framework for examining employee functioning at work (p. 144)

Notice how the authors reconcile traditional constructs within the field organisational psychology, such as organisational support and job stress, with that of physiology. Zhang and Zyphur note that traditional organisational behaviour research focuses mainly on cognitive, affective and behavioural approaches to examine employees’ health and the associated organisational outcomes, and that physiological measures  (e.g. elevated blood pressure as an indicator of job strain) have played only a peripheral role.

A key point raised is that measuring physiological functioning is not only important for employees’ well-being, but also for the bottom line. For example, the authors cite a study which found that higher levels of salivary cortisol can explain 25% of the variance in subsequent healthcare costs for organisations. Of course for practising organisational psychologists, one can argue that physiological measures are problematic in regards to cost, time, and data disclosure.

Practical Implications 

Within the chapter, Zhang and Zyphur provide some recommendations for promoting a healthy work environment, including job redesign, increasing fairness, and providing adequate support.

The authors believe that job redesign, which addresses the root cause of job stress, can help alleviate the negative impact of high job demands. To ‘increase justice’, Zhang and Zyphur suggest that interpersonal skills should be incorporated into management training. Also, Zhang and Zyphur argue that organisational support and resources should be readily available for employees, including employee assistance programmes and counselling services in the workplace.

One way to contract the adverse impacts of larger status differentials and the impersonal nature of modern organisations on health is to increase the social support employees receive. For example, a study cited found that employees who recieved high social support from  their coworkers had lower resting heart rates during and after work. The authors argue that these findings confirm that social support can reduce the mismatch between the modern work environment and that of our ancestors.

For stakeholders in a position to evaluate executive remuneration, appreciate the detrimental impact high income inequality can have on employee health and group functioning.

As stated by Zhang and Zyphur; “More practically, by understanding human evolution and the environments for which we have evolved,  it is possible to design interventions to reduce stress by creating a better match between old and modern environments. For example, this could be done at work by creating socially supportive cultures, reducing social and other uncertainties, increasing natural lighting, and minimizing physical space constraints, as well as reducing workloads in employees.” (p. 142).

Written by Max Beilby for Darwinian Business 

Click here to by a copy of The Biological Foundations of Organizational Behavior

References & Recommended Reading

Boehm, C. (1999). Hierarchy in the Forest: The Evolution of Egalitarian Behavior. Harvard University Press.

The Economist (2008) Social Status and Health: Misery Index. Available here

Evans, O., & Steptoe, A. (2001). Social support at work, heart rate, and cortisol: a self-monitoring study. Journal of occupational health psychology,6(4), 361.

Ganster, D. C., Fox, M. L., & Dwyer, D. J. (2001). Explaining employees’ health care costs: a prospective examination of stressful job demands, personal control, and physiological reactivity. Journal of Applied Psychology,86(5), 954.

Marmot, M. G., Stansfeld, S., Patel, C., North, F., Head, J., White, I., … & Smith, G. D. (1991). Health inequalities among British civil servants: the Whitehall II study. The Lancet, 337(8754), 1387-1393.

Marmot, M. G., Rose, G., Shipley, M., & Hamilton, P. J. (1978). Employment grade and coronary heart disease in British civil servants. Journal of epidemiology and community health, 32(4), 244-249.

Pinker, S. (1997). How the Mind Works. NY: Norton.

Suttie, J. (2016) Why Your Office Needs More Nature, The Greater Good Science Center. Available here

Zhang, Z. & Zyphur, M.J. (2015) Physiological Functioning and Employee Health in Organizations; In Colarelli , S. & Arvery, D. (Eds) The Biological Foundations of Organizational Behavior. Chicago University Press.