Financial choices influenced by genes
Did your mother scold you for running up that big credit card bill? She might be partly to blame.
New research by a team that includes a Massachusetts Institute of Technology graduate student suggests that our genes may play an important role in influencing our economic behavior.
The study involves a popular personality test called the ultimatum game. It goes roughly like this: Two volunteers are offered a sum of money, say $15, to split between them. One person must make an offer to the other about how to divide the cash. If the offer is accepted, the partners share the money. Otherwise, they each receive nothing.
Psychologists who study the game face an intriguing puzzle: Many people reject offers they perceive as unfair, even though it means losing out on free money. And while some hold out for half the pot, others consider a smaller portion fair enough.
In the experiment, published last week in the Proceedings of the National Academy of Sciences, Björn Wallace of the Stockholm School of Economics and colleagues asked more than 300 pairs of twins to play the game.
Identical twins, who share exactly the same genes, were more likely to show similar beliefs about fairness than fraternal twins, whose genes are different.
"Our results suggest that when you look at how parents pass on traits to their children, their primary influence is through genes, and not the values they teach during childhood," said David Cesarini, a doctoral student in economics at MIT who coauthored the paper.
About 40 percent of the difference in participants' choices could be chalked up to genetics, researchers calculated. The remainder was because of "unique environmental factors" - social influences that affect members of the same family differently, such as having a particular teacher or friend.
The findings may meet with a big yawn from behavioral geneticists, who have long known that genes affect personality. But Wallace said he hoped the study would inspire economists to question the broad assumptions about human behavior that underlie their field.
"A lot of economic models assume that there are no differences in people's preferences or that they are socially transmitted and can be changed," he said. "What if they're not?"
In the ultimatum game, for example, some social scientists hypothesize that players who reject unfair offers are acting out a natural human impulse to punish selfish behavior in order to encourage group cooperation. Others believe they are trying to save face and avoid being cheated in the future.
While either view could be true, Wallace said, explanations that can account for genetic variation are more likely to be correct. And, if his findings are confirmed in larger studies, policy makers should take those variations into account, he said.
Integrating economics with the natural sciences, as this research does, could lead to better economic policy, said Terence Burnham, an economist and Harvard research affiliate who was not involved in the study but has collaborated with some of its authors.
"Economics is great at certain things but it's really crippled by the fact that it has a terrible model of human nature," Burnham said. "Policy makers like the rigor of economics but if that rigor is built on a foundation of sand, it's unhelpful."
