Doughnut Economics - Kate Raworth - Part 4 of 8

2020 Reading Challenge - Day 212

August 1, 2020

Book 58 - Doughnut Economics
Kate Raworth
Chapter 3 - pages 81-110

Reading Time - 60 minutes

This chapter examines how we can Nurture Human Nature and switch from economics being focused on the cartoonish character of the rational economic man to something more inclusive of our human nature.

The rational economic man has its roots in Leonardo daVinci's image and, in current economic theory, is the smallest unit of analysis (kind of like the atom in chemistry). The rational economic man is solitary, calculating, competing and insatiable. But, if we keep that image, at the core of our economics, we are in serious trouble. We need a new portrait of humanity.

This cartoonish image of man is rather arbitrary and comes from John Stuart Mill who wanted something that would work in economic mathematical modeling. In his definition, man wants wealth, dislikes work and loves luxury. The image was exaggerated even more later and the model man was calculating his utility, insatiable in his wants and endowed with perfect knowledge and perfect foresight. Again... all for mathematical modeling. Obviously, this is a ridiculous model and yet... as time went on... it was seen not just as a model but as how the real man (human) should behave. It went from being a model of man to being a model for man. This new man has less empathy and is focused on wealth and status. The shift is also reflected in the shift from people being citizens to people being consumers. Language matters.

Raworth suggests that in WEIRD (Western, Educated, Industrialized, Rich, Democratic) societies, five broad shifts are required.

From Self-Interested to Socially Reciprocating

The rational economic man model has this idea that self-interest is our natural state and optimal strategy... yet that is patently not true. We are the most cooperative species on the planet and there are umpteen examples of people throwing self-interest aside and jumping into rivers to save strangers, or even pets. We trade, we give, we share, we volunteer, we reciprocate. She gave a rather interesting example of the Ultimatum Game to show that reciprocity differs around the world, in different cultures and societies. In the West we tend to have conditional cooperation - you cooperate with me, and I'll cooperate with you. We cooperate as long as others do and punish defectors. In the Ultimatum Game, two days worth of wages are given to the Proposer who has to offer some percentage of that to the Receiver. The Receiver can accept or reject the proposal. If they accept, then they get the money. If the Receiver rejects the proposal, then both walk away with nothing. Not surprisingly, in the West, anything less than a 30% cut for the Receiver is usually rejected. In other cultures however, some Receivers will accept 10% of the cut. In other cultures... some Proposers offer 60% of the cut... Obviously not motivated purely by self-interest

From Fixed Preferences to Fluid Values

Who we are is not fixed... it alters not only over the course of our life, but over the course of a day. We shift as our roles shift from worker, to spouse, to parent, to caregiver, to volunteer, to friend.

From Isolated to Interdependent

We are not isolated but tend to go with the herd. Social networks, who we hang out with, shapes our preferences, purchases and actions. No human is an island and we just have to look at the notion of keeping up with the Joneses to see how we are influenced by others.

From Calculating to Approximating

We have dozens of cognitive biases which hamper our ability to act rationally. But... with nudge policies... we can be directed to make rational choices. We are much more heuristic (mental shortcuts) than rational (evaluate the pros and cons of 50 options). Unfortunately, heuristics is not so good for our current situation in which climate change is largely invisible, delayed, gradual and distant. Something like that does not compute for our heuristic processes...

From Dominant to Dependent

The idea that humans have dominion over nature has caused all manner of problems in the world. And is completely false - we are not at the pinnacle of the pyramid of life but rather woven into nature's web. We need to transform how we see ourselves. Even shifting our language from thinking as nature's bounty as resources to relatives would help... And we are related in the web of Life... so that oak tree outside is not simply a resources, but a relation... would that alter how we interact with the world? We need to rethink how we belong in this world and our role in it.

Raworth also asks the question... how would the Ultimatum Game be played if it was food, water, healthcare or time that was being proportioned out? She also gave a few examples of how monetary incentives (getting monetary rewards to finish school, read books, pick up litter, etc) really doesn't solve anything. It just shifts from intrinsic motivation (I do it because it's the right thing to do or I want to do it) to extrinsic motivation (I'll do it to make money). Once the monetary incentive is gone... what then? For example, in the US, blood donors are paid for their donations. But in the UK (and Canada) blood donors volunteer their time and blood. Which system works better? The volunteer system. Money erodes social norms and values and replaces them with market norms... where everything has a price and everything can then be bought and sold. There are other ways to encourage behavioural change... like Nudges, Networks and Norms. They connect with people's values and identity...

Raworth has asked numerous groups and conferences what a new portrait of humanity would look like and the three same images kept cropping up: community, sowers, acrobats. We are not one thing... so how do we re-draw ourselves?