The Mind of the Market How Biology and Psychology Shape Our Economic Lives

Michael Shermer

Holt Paperbacks

0805089160

9780805089165

Trade Paperback

336 Pages

$15.00

CAD17.00

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In this exploration, author and psychologist Michael Shermer uncovers the evolutionary roots of our economic behavior.  How did we make the leap from ancient hunter-gatherers to modern consumers and traders? Why do people get so emotional and irrational about bottom-line financial and business decisions? Is the capitalist marketplace a sort of Darwinian organism, evolved through natural selection as the fittest way to satisfy our needs? Drawing on the new field of neuroeconomics, Shermer investigates what brain scans reveal about bargaining, snap purchases, and establishing trust in business. He scrutinizes experiments in behavioral economics to understand why people hang on to losing stocks, why negotiations disintegrate into tit-for-tat disputes, and why money does not make us happy. He brings together astonishing findings from psychology, biology, and other sciences to describe how our tribal ancestry makes us suckers for brands, why researchers believe cooperation unleashes biochemicals similar to those released during sex, why free trade promises to build alliances between nations, and how even capuchin monkeys get indignant if they don’t get a fair reward for their work.

REVIEWS

Praise for The Mind of the Market

"[A] captivating raconteur of all the greatest hits of behavioral, evolutionary and neuropsychology, [and] provider of wonderful cocktail party material . . . Fascinating."—Los Angeles Times Book Review

"The book has no end of conversation starters, from capitalism as modern Darwinism to neuroeconomics that show that—biochemically, at least—a human brain is shockingly similar during smooth business deals and sex."—Boston Globe

"Have you ever wondered how people develop trust and live together peacefully? Michael Shermer’s new book uses psychology and evolution to examine the root of these human achievements . . . [He] has earned the right to our attention."—Washington Post

“The theme of Michael Shermer’s new book is a graceful paradox. Decades of study of behavioral psychology, neuroscience and genetics, layered over more than a century of evolutionary studies, proves that we’re not completely rational in making economic choices. But an understanding of our fascinating limitations, which Shermer provides, makes us freer than we were before we knew of them . . . The author, an adjunct economics professor at Claremont Graduate University, compares the argument for top-down, centrally planned economics to the argument for intelligent design. Devotees of the latter often argue that ‘evolution’ could not have designed something so complicated as the human eye, just as proponents of top-down economics argue, that, say, New York City needs the government to create jobs for the poor by doing things like build sports stadiums because the market won’t do it on its own. Shermer easily demolishes another myth about both evolution and economics that both depend exclusively on cutthroat, bloody-handed ‘survival of the fittest’ competition to weed out the weakest creatures and companies . . . The most compelling chapters of Shermer’s book take us on an intimate tour of the best of the last half-century’s work in behavioral economics and neuroscience . . . Shermer notes that we must consciously choose freedom—all more important since the temptation, in light of the weird decisions we sometimes make in the marketplace, is to surrender to someone who must know better.”—Nicole Gelinas, The New York Post

"The Mind of the Market: How Biology and Psychology Shape Our Economic Lives is a really fun book! Interestingly . . . It is no surprise that Shermer is a popular author; his style is engaging, and he brings up fascinating topics and different ways of looking at phenomena. Shermer is able to take nearly any topic and turn it on its head, making the reader look at anything from a new perspective—and this book is no exception. The Mind of the Market is an entertaining, thought-provoking, well-written book similar to the popular Freakonomics. This is a great read for anyone interested in science, psychology, economics, history, anthropology, and the integrated crossovers among any of these topics."—Sacramento Book Review

"The nexus between economies and psychology has occupied scholars in the last several years. Field and laboratory experiments have tried to tease out and test the economist's assumptions of rationality, utility (or profit) maximization, and financial decision-making rules, and to formulate perhaps improved public policies in light of these research findings in what is known as 'behavioral economies.' Some attention has now turned to the intersections of economies and the neurosciences, with the use of brain scans to reveal underlying tendencies and patterns in human nature. Into the middle of these theoretical and empirical frays jumps Shermer (Scientific American columnist; adjunct economics professor, Claremont Graduate Univ.) delivering a well-written, highly entertaining summary of the issues and applications in the evolution of what makes people tick and markets function. Intelligent lay readers will be led from apes to pandas to primitive tribes and modern states, from Charles Darwin and Adam Smith to free will and free markets. Replete with thought-provoking examples and solid references, the book will start as many debates as it will end, but that is a reasonable goal and accomplishments of a journalist and self-proclaimed skeptic. Summing up: Recommended. General readers; all levels of undergraduate and graduate students; faculty and professionals."—A. R. Sanderson, University of Chicago, Choice 

"The Mind of the Market is a consistently stimulating inquiry into the (formerly) dismal science."—Ted Mumford, The Globe and Mail

"I'm about to review a book on economics for you . . . no, no, stop, don't turn the page! It's a readable, entertaining book—about lots of things you don't associate with 'economics.' Like Freakonomics, you'll find no graphs or calculus here, just a wee bit of jargon, and you'll get to read about sex and chimps, the brain wave for shopping, why biology makes us kind and dozens of other unusual topics you never studied in Econ 101."—Richard Parker, The Globe Mail (Toronto)

"[The Mind of the Market] provides a thorough account of what’s going on in a branch of psychology dedicated to understanding the natural origins of economic decisions."—Science News

"Pure entertainment . . . Some of the most interesting economic research being undertaken these days draws on the disciplines of cognitive science and psychology, and [The Mind of the Market is a] highly readable contribution."—The Business Economist

"Eye-opening . . . [The Mind of the Market] recounts truly fascinating experiments and discoveries regarding physiological components of our market decisions . . . Filled with fun analogies and a smattering of funny lines."Humanist

"Thoughtful and complete . . . You’re certain to learn something new when you read it."—WestWord

"Charles Darwin and Adam Smith may seem like strange bedfellows, but bestselling author Michael Shermer finds the fathers of evolutionary theory and capitalism to be a perfect match . . . Drawing from research, and injecting his own wit, Shermer explains why people make bad decisions about money, why wealth can't buy you happiness, and why we love cooperating."—Meredith Knight, Psychology Today

"Extremely interesting… Shermer is a fantastic presenter."—Steven D. Levitt, The New York Times Freakonomics Blog

“Written with his customary verve and flair, The Mind of the Market is Michael Shermer at his best. Roving over the entire sweep of history, and drawing on the best of modern science, Shermer attempts a grand synthesis of research from psychology and the neurosciences to demonstrate that markets are moral and that free trade meshes well with human nature. Shermer entertains as well as informs, and in the process he deepens the argument for economic, political and social freedom.”—Dinesh D’Souza, author of What’s So Great About America

“Economists who understand Charles Darwin are almost as rare as biologists who understand Adam Smith. Yet the two were essentially saying the same thing—that order emerges unordained from competition and innovation. Michael Shermer brilliantly brings the two insights together to explain how the human mind creates the human market.”—Matt Ridley, author of The Origins of Virtue

“Economics is not just about money. It is also about human nature, justice, trust, and happiness. Michael Shermer brilliantly shows that the real experts of Homo economicus are often found in psychology, biology, even primatology.”—Frans de Waal, author of Our Inner Ape

"Shermer applies his knowledge of evolutionary science to the volatile topic of modern economics. The founder and editor of Skeptic magazine does a bang-up job knitting together the complexities of science and the frail psychology of human beings to explain the unpredictable postmodern world of trade and finance. Pledging that economics is for everyone, the author offers a forbidding, textbook definition of evolutionary economics, then adds, 'this is a swanky way of saying that the economy is a very complex system that changed and adapted to circumstances as it evolved out of a much simpler system.' Exploring the transition from a hunter-gatherer economy to one based on consumer trade, Shermer argues that the world economy not only has a mind of its own but is also constantly shifting due to the influence of the consumers, traders and organizations that participate in it. Far from being needlessly complicated, the book tackles a host of psychological, scientific and ethical quandaries with clear-eyed panache, making its case with evidence not just from usual suspects like Adam Smith and Ayn Rand but also from the evolutionary science of Steven Jay Gould and the Western films of John Ford. Like any good teacher, Shermer grounds his lessons in real-world examples, some drawn from his personal experience as a marathon bicycle racer, some from the global marketplace and others lifted from scientific studies far outside the public domain . . . Shermer's argument that 'we must study the laws of human behavior in economics as the physicist, chemist, or biologist studies the laws of nature' is persuasive. An informative, inventive, broad-spectrum analysis of what makes modern man tick, starting with his wallet."—Kirkus Reviews

"The 'Ripley’s Believe It or Not' of behavioral economics, or why people act the way they do in a capitalistic marketplace . . . Shermer applies his wide-ranging knowledge of science and its rigorous investigatory discipline to uncover the answers and make connections between trade and emotion—in essence, popularizing neuron-economics."—Booklist

"Shermer, columnist for Scientific American and publisher of Skeptic magazine, provides an in-depth examination of evolutionary economics. Using fascinating examples—from monkeys that balk at unfair distribution of rewards after completing a task to humans who feel cheated when offered $10 of free money if a partner is given $90—Shermer explores the evolutionary roots of our sense of fairness and justice, and shows how this rationale extends to the market. Drawing upon his expertise as a scientist and the works of noted economists, Shermer argues convincingly that human beings are not exclusively self-centered, the market itself is moral, and modern economies are founded on our virtuous nature. He explores how we mind our money, the value of virtue, why money can't buy happiness and whether we are really free to make choices . . . This book offers much insight into human behavior and rationales regarding money and fairness and will be of interest to serious readers of science or business."—Publishers Weekly

Reviews from Goodreads

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BOOK EXCERPTS

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Michael Shermer is the author of The Believing Brain, Why People Believe Weird Things, The Science of Good and Evil, The Mind Of The Market, Why Darwin Matters, Science Friction, How We Believe and other books on the evolution of human beliefs and behavior. He is the founding publisher of Skeptic magazine, the editor of Skeptic.com, a monthly columnist for Scientific American, and an adjunct professor at Claremont Graduate University. He lives in Southern California.

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ABOUT THE AUTHOR

  • Michael Shermer

  • Michael Shermer is the author of nine previous books, including the bestselling Why People Believe Weird Things. He is a columnist for Scientific American, the publisher of Skeptic magazine, and the founder and director of the international Skeptics Society. He lives in Southern California.
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    Michael Shermer

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