Status

Economists stand pretty much alone in believing that people are indifferent to one another’s situation. Psychologists do not believe it, the man/woman in the street typically would not, your mum does not (mine didn’t anway). I wouldn’t go as far as Oliver Cromwell (I beseech you, in the bowels of Christ, think it possible that you may be mistaken.) But we might want to consider the possibility that we are wrong. The prime facie evidence in favor of a concern with status is strong–going back to Duesenberry’s discussion of the consumption function in 1949 and further of course. Modelling a concern with status is rewarding–for example, such a argument sheds light on attitudes to risk. The case for including status in utility could rest there. However, it also seems highly plausible that such a concern with status is the fruit of evolution.  It is easy to think of evolutionary scenarios that might engender a concern with relative standing. If males compete with one another to obtain resources, it might be that the most successful male in terms of resources, even if only by a smidgin, wins a wildly disproportionate level of attention from the fair sex. But the economists intense predilection for selfish preferences has only been moved to a deeper level. Deriving non-selfish preferences in this fashion is tantamount to embedding aspects of the game or the feasible set into preferences in a way that would win instant opprobrium in a conventional economic setting. Why wouldn’t an intelligent actor maintain purely selfish preferences in the winner-take-all game described, but apply the features of the game appropriately to arrive at the same course of action? In a new setting, the individual with aspects of the old game embedded in preferences is likely to behave inappropriately, but the actor with purely selfish preferences could recompute and find the optimal course.  What is the upshot of all this? Perhaps, non-selfish preferences evolved as a rule of thumb in complex circumstances, a rule of thumb necessitated by complexity and cognitive costs, a rule of thumb whose theoretical treatment is going to be famously awkward.