The MPS in the Galapagos (12): The Evolutionary Neurobiology of Entrepreneurial Behavior

Later in the morning of June 27th, Peter Whybrow spoke on "The Entrepreneur: Adaptive Response to Evolving Opportunity."  Whybrow is the Director of the Semel Institute for Neuroscience and Human Behavior at UCLA.

Hayek and the Austrian School Economists emphasize the importance of entrepreneurial risk-taking in responding to uncertain and unpredictable opportunities in ways that central planners cannot do.  The entrepreneur manifests the distinctive human personality of those inclined to take risks in exploiting opportunities in their environment. 

Whybrow's lecture was a good contribution to this MPS conference, because he offered a Darwinian theory of the entrepreneurial personality as an evolved propensity of the human brain.  And yet the weakness in Whybrow's presentation was that he did not acknowledge the serious problems with his genetic explanations of entrepreneurial behavior.

Whybrow began by suggesting that if we define the entrepreneur broadly as someone who engages in "creative risk-taking," then Charles Darwin was an entrepreneur in developing his theory of evolution, and Peter and Rosemary Grant were entrepreneurs in developing their research on "Darwin's finches" in the Galapagos to prove Darwin's theory.

In his account of the Grants' research on the finches, Whybrow repeated the popular view--as conveyed in Jonathan Weiner's The Beak of the Finch--that the Grants have actually observed the evolution of new species on Daphne Major.  But as I have indicated in a previous post, this is not true.  As even Weiner admits, while the Grants have shown that natural selection leads to evolutionary change within a species, they have not shown that this evolutionary change leads to new species.

Whybrow's main argument was that the personality of the entrepreneurial risk-taker was an evolutionary adaptation for responding to evolving opportunities, and that this personality had a genetic basis.  The genetic basis for this is that some forms of the dopamine D4 receptor gene is associated with a propensity to risk-taking, and therefore natural selection could have favored this gene in selecting for risk-taking behavior.

In some ways, Whybrow's argument overlapped with Charles Murray's argument about the biology of human diversity.

Whybrow declared: "DRD4 has a role in modulating cognitive and emotional behavior."  "The DR4-7 repeat is associated with risk taking."  "In a study of 94 young men (Harvard) the DRD4-7 allele was highly correlated with financial risk taking, accounting for some 20% of the variance."

We might state his reasoning in a simple way:  Genes have some influence on personality, and personality has some influence on behavior.  It's hard to dispute this.  But, of course, the problem is figuring out what is meant by "some influence."  What exactly is meant by "associated with" or "correlated with"?  In one case, it's "20% of the variance."  So 80% of the variance is not accounted for?

Particular genes influence but do not specify behavior, because genes interact with other genes, with other biological factors (including epigenetic regulation of genes), with the physical and social environments, and with individual judgments.  So identifying particular genes "associated with" some kind of behavior does not take us very far in explaining that behavior.

Whybrow relied on two kinds of studies in behavior genetics--heritability studies and gene association studies.  Heritability studies use adoption studies and twin studies to determine the proportion of phenotypic variance in a given population that can be attributed to genotypic variance.  Gene association studies look for statistically significant associations between particular genes and particular phenotypic traits.  The problem here is that such studies rely on assumptions that are not true.  For example, twin studies assume that 100% of the genes of monozygotic twins are genetically identical, and that 50% of the genes of dizygotic twins are genetically identical.  We know this is not true, because identical twins are not really genetically identical: transposable elements and copy number variations in DNA create variation between individuals.

The recent research in genetics showing the falsity of the assumptions in behavior genetics has been well surveyed by Evan Charney ("Behavior Genetics and Postgenomics," Behavioral and Brain Sciences 35 [2012]: 331-410).  I have commented on some of these issues in a  previous post.

I agree with Whybrow that evolution can shape genes that have some influence on traits of temperament that have some influence on behavior.  But identifying such genes does not allow us to predict human behavior.  We cannot predict complex human phenotypes--such as entrepreneurial risk-taking--from a human genotype.  The ultimate evolutionary reason for this is that human beings have evolved for phenotypic plasticity--the capacity to change one's phenotype in response to a highly complex and variable physical and social environment.  Human genetics constrains but does not determine human cultures and human judgments.

Evolutionary science gives us no escape from the unpredictable contingency and irreducible complexity of human history.  In fact, evolutionary science itself is a historical science that has little predictive power, in contrast to nonhistorical sciences like physics and chemistry.

This theme of the contingency and complexity of human life and of entrepreneurs as people who gamble in their attempts to find opportunities in such a world was taken up by John Kay, who spoke in the afternoon.

Kay is a prominent British economist who studies the relationships between academic economics and business behavior.  He writes a column for the Financial Times. 

Kay spoke about his studies of casino gambling in London, in which he found that many of the gamblers were successful entrepreneurs.  Remarkably, they play games of pure chance (such as roulette and black jack) as if they know they're going to win.  They are people who exaggerate their control over things.  The traits that make them successful entrepreneurs also make them irrational gamblers. 

The great point of interest for Kay is that this contradicts the standard model of economic behavior as taught by economists.  Modern financial economics rests on three broad claims.  First, as a prescriptive premise, we decide what to do based on a calculation of probabilities and expected utilities in managing risk.  Second, as a descriptive premise, rational calculators are more successful, which assumes a casual evolutionary argument in which maximizing our expected utility equals reproductive fitness.  Finally, equilibrium results from this.

Kay explained that this standard model was based on the dominant view of economists (like Frank Ramsay Savage and Milton Friedman) that risk can be weighed for probability in making a rationally calculated decision.  Against the dominant view, Keynes and Frank Knight had argued that uncertainty in economic life provides no scientific basis for a calculation of probability.  Hayek was on Knight's side in arguing that events cannot be calculated by probability because they are open-ended.

Kay argued that we needed to see the truth in the Knight/Hayek insight into uncertainty.  We need entrepreneurs who act in the face of uncertainty with an irrational optimism that they will win.  On the other hand, we also need calculators who do calculate the probabilities of risks where that is possible.  In casinos, the calculators are the casino owners who calculate probabilities in order to make money at the expense of the entrepreneurs.

Presumably, Whybrow would say that what we see here in the calculators and entrepreneurs are two different kinds of personality that might be evolutionary adaptations for responding to different kinds of opportunities.