Behavioral Bounds, Society, and the Economy

I’m currently reading The Great Upheaval, a history of the last decade of the 19th century in America, France, and Russia. The author, Jay Winik, has a writing style that does a really good job of conveying the the way events at the time must have felt to the participants. I’m generally skeptical of histories that focus too much on individuals at the expense of the wider social and economic context in explaining historical events, but I think there is real value in getting an emotional understanding of the past as long as it’s tempered with that big picture understanding.

[For example, the history of American conservatism series written by Rick Perlstein does a similarly excellent job of taking us inside the minds of of historical actors like Barry Goldwater and Richard Nixon, making the history more intelligible, but also risks leaving the reader with the impression that history is primarily driven by the psychology of individuals rather than broader forces.]

Now, one thing you notice when you read these personality based histories is that there are a lot of important people that we today would consider mentally ill in some way.

Take Grigory Potemkin, consort of Catherine the Great:

He cared little for social decorum: Famed throughout Europe for his palaces, his jewels, his parties, and his women, he wandered around the empress’s apartments naked under an open bareskin dressing gown, baring his hairy chest and munching on apples and raw vegetables, usually turnips or radishes, or obsessively chewing his nails…More often than not, he might look as though he had just woken up, or had been sleeping off a hangover, only suddenly then to burst into fits of manic activity…

From the moment he awoke, his every day was unpredictable. While still in bed, he received visitors in his dressing gown, then roused himself for a cool bath and a short morning prayer. But after that, his moods swung from unrestrained highs…to crippling lows… When he was depressed, he retreated into a near paralytic silence. He refused to sign papers, machinations of the state would grind to a halt, and a significant part of the Russian government would simply stop. Sometimes he sat along, like a catatonic Gulliver, soothing himself with music and pouring emeralds and rubies from hand to hand.

Such behavior would seem to be today called bipolar, yet Potemkin was one of the most powerful people in Russia at the time. Could we imagine such an individual in the same position today? I think not; if nothing else, the continuous scrutiny public figures face these days means he wouldn’t last long (although Donald Trump may be a strong counter example).

The particular example here isn’t so important though; what I want to explore is the proposition that the increased formalization of the economy leaves behind many people who are wired a little bit differently.

To sketch a simple model: Imagine we can reduce human behavior (including cognitive ability) to a single dimension, with some random distribution throughout the population. Assume for simplicity that behavior is immutable; you are endowed with your position in behavior space at birth and it remains unchanging throughout your life.

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Now let’s imagine in any particular society, for an individual to succeed, they have to function within certain bounds of that behavior distribution. If we think of our everyday experience, the vast majority of people we encounter behave in a manner we find mutually acceptable; they operate within the bounds. But we all know people who do not operate within those bounds; we tend to consider these people mentally ill in some way. For example, sociopaths are unable to feel empathy for other people; they would be towards one of the ends of behavior space, as empathy is generally quite important in human interactions. Then there are some people who operate near the bounds; they are able to function productively in society, but many might find them ‘odd’ in some way; we might think of those on the autism spectrum.

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Economic activity is ultimately a set of behaviors, and the nature of economic activity has changed over time. For most of human history, foraging or subsistence agriculture were the only forms of economic activity. We might imagine then that in these societies the bounds on behavior were quite wide; your economic output was pretty much dependent only on your physical ability to plant and harvest crops and some very basic ability to plan ahead.

As we moved into an industrial assembly line economy, the boundaries of successful behavior shifted. You needed to be able to show up on time regularly, obey superiors, and focus for several hours at a time on routine tasks to take part in the new factory economy.

Now we’re in the midst of a transformation into a post-industrial economy, where the highest value activities involve the manipulation of information. Success in this field seems to me to require a very particular set of behaviors: ability to work in teams, laser focus on abstract concepts, etc. In this simple model, the behavioral bounds of highly productive activity might be very narrow.

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If we consider an individual’s position in behavior space as unchanging, then those who are born into that narrow sliver have extremely good luck, whereas the rest of the populace is shut out.

Now of course, this is a highly simplified model. It probably doesn’t make sense to reduce behavior down to one dimension (though those who argue for the primacy of g, i.e. generalized intelligence, in behavior would probably disagree). Also, behaviors are not immutable; culture and institutions serve to shape our biological impulses, and people can change themselves (though not as much as we might like to think).

The model could be easily extended to accommodate these facts; behavior can be modeled in n-dimensions, and with effort individuals could move some distance in behavior space from their initial position. My goal here is primarily to conceptualize the existence of these behavioral boundaries that social and economic activity take place within.

Problems arise when the boundaries set by society are different from those necessary for economic growth. It’s not hard to find examples of this. Social norms against the charging of interest in money lending, as forbidden by Christianity and Islam for hundreds of years, stymied the development of finance. This is not the say the two set of boundaries should always coincide; that’s certainly a debate that can be had. What’s good for society and good for the economy are not always the same thing. (There is some tantalizing new research on the rise of economically valuable personality traits that’s fuel for that discussion.)

In the developed world, our societies have become increasingly formal along certain dimensions. Even the most basic of jobs, like cashier at a large retail chain, requires an an hour long online application complete with personality quiz. This certainly shuts out certain kinds of people and either shunts them into the informal economy or out of the labor force altogether. There really are some people who are just unemployable in the modern world. They aren’t necessarily bad people, or stupid, but they just are unable to abide by some kinds of norms. Now, it could be there are broader benefits to having such formalization, but we shouldn’t delude ourselves that it is costless.

I’ll close with two examples. One comes from a recent story about life in South Korea. Recall that in the space of just a few generations, Korea was able to completely transform itself from a poor country to one of the most modern. Part of the story of that transformation was an intense national work ethic, like that of Japan, where the development of the country was seen as the moral equivalent of war. These patterns of behavior built a modern economy.

But now the younger and more educated generation is chafing at the expectations before them. An intense work ethic that worked in the process of industrialization is still expected in white collar professions (despite little increase in marginal product), leading many to nickname the country “Hell Joseon”.  Patterns of behavior that worked in the past are still expected in the present, leading many to leave for greener pastures.

Contrast this with life in Silicon Valley. Life on the Google campus may seem ridiculous at times; engineers have access to nap pods, games, massages, and a renowned cafeteria, all in the name of increased productivity. What many technology firms have discovered is that the old behaviors of working 9-5 at a desk don’t work well for the information economy. The requirements for innovation are different than they were in the past, and so the behavioral boundaries of employment at such firms have shifted.

Programmers or writers will tell you there is a ‘zone’ they get into when doing their best work. For some people, there are very specific conditions needed to get into that zone. One friend of mine is at his best at night; it’s not hard to imagine that not so long ago, he’d have been shut out of the industry altogether because you were expected to do your work at a certain place and time.

The story of Silicon Valley and other tech companies changing expectations to go with the economy suggests that we in the US have the capacity to be flexible when needed, but I still worry that large parts of the rest of the economy have far too narrow acceptable patterns of behavior.

 

 

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