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Microfoundations for social cohesion in Behavioral Economics: good bye alexithymic homo economicus welcome back social homo sapiens Ivan Hernandeza Economics School, Evolutionary and Institutional Economics Group, Universidad Nacional de Colombia (National University of Colombia) Tel/fax: (571) 3165361,
[email protected]
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Conference paper presented to the 15th International Joseph Allois Schumpeter Society Conference Jena, Germany July 27 -30 of 2014 Word count: 8.104
Abstract word count: 550
Key words: individualism, empathy, mirror neurons, emotions, rationality, alexithymia Abstract This article is not intended as a literature review, but develops a theoretical framework for researchers interested in the microfoundations, based on behavioral economics, for social cohesion. After nearly a century apart, in the last two or three decade, economic thought has been drawing on insights from psychology. However, there are few attempts to provide a useful conceptual framework, especially to support research in behavioral decisions for social change. Although economists recognize that many decisions are made without due deliberation, economic models are written to represent a deliberative balance. That is, agents are in a state in which any decision will not affect or make them change their minds. The prisoner's dilemma is an example, among many, to find deliberative equilibria. The assumption of incommunication between suspects implicitly rules out mind or feeling reading so that a dominant strategy is ensured, obeying socalled rationality principle. The problem is not the equilibra per se, but the assumption of rationality behind the rule of decision as part of the study of economics. Homo economicus rationality involves blind spots in analytical and theoretical dimensions regarding the role of feelings and empathy in decision-making (Damasio 2008). It is has ruled out the feelings dimension and with this the empathy skills to read and share the feelings and others (Singer and Ernst 2005). Classics like John Stuart Mill (cited in Persky 1995, Berezin 2010) and Adam Smith (2010 [1759]) explicitly did not rule out the emotional dimension. Later versions did, under perhaps the influence of the Enlightenment tradition which posited the rule of reason over emotion and feelings (Persky 1995). Homo economicus got confining and even counterproductive instead of wise and with balanced judgment results from integrating the critical and empathetic, the arts and the science (Yo-yo Ma 2014). Without some adequate microfoundations for
!2 analysis, in the best case, economists will continue to provide very limited analysis and scope. But in the worst case scenarios, they will disorient society in crucial decisions and will most likely be excluded from interdisciplinary efforts. The proposed framework is based on Camerer, Loewenstein and Prelec (2005) in order to include not only controlled processes of visceral and emotional states, well described by economic calculation as "interrupt"or "override", but also critical emotional decisions. Based on somatic indicators, we propose to measure levels of individual alexitymia that will yield high, medium and low social cohesion. The first type will be called the empathic society, which is divided in sympathetic-cooperative and antipathetic-competitive states. Such society has highly correlated collective visions and representations. Expected behavior from others will depend on the roles and institutions that favour positively and/or negatively correlated collective visions and representations. The second type, medium social cohesion or apathetic society, does not share correlated collective visions and representations so roles and institutions ensue behavioral indifference from from others. Low cohesion manifests itself as roles and institutions that mould dispathetic behaviour in the way of inequality, obstacles to access to opportunities, discrimination, violence, intolerance and social and political polarization. It would be better to make amends and part ways with the alexithymia i.e. from the Greek term "not connected or articulated to own feelings" like Echo in the Greek mithology (Goleman and Sutherland 1996). Good bye alexithymic Homo Economicus and welcome back, empathic Homo Sapiens (Kaletsky 2009, Thaler 2000).
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Introduction: is the Homo Economicus in process of extinction?
This is not the first nor will be the last paper betting on the end of the Homo Economicus (Persky 1995, Kaletsky 2009)1. This paper aims to make evident how capitalism cannot be sustained over any inequitable foundations. Homo Economicus will become extinct because it impinges on evolutionary and behavioral nature of humans and that is the reason why the inequitable type of capitalism is shattered with internal inconsistencies. How did an inequitable type of capitalism turned itself into a global benchmark? What type of micro-analysis is needed so as to face its present crises? Why is the homo economicus at the brink of extinction? What or who will replace it? These are the type of questions I will address, and its purpose is to help research and teaching in the area of behavioral economics or economic psychology.
The Great Transformation: extending Karl Polanyi´s analysis into the behavioural realm.
Why was the Economic Man institutionalized? There is no simple explanation because of a long history and multiplicity of cultural factors regarding Renaissance, Illustration, Humanistic Rationalism, Scientific Revolution, etc.. Karl Polanyi is known as the first to warn about the risky path a society runs into, when it transforms itself from just having a market economy to becoming a market society (Polanyi 1944, Sandel 2000). Polanyi emphasizes that the attempt to disembed a society from its social relationships is futile. Moreover, the society that tries to embark itself towards commodifying valuable convictions and moral values, is heading towards its own destruction. Polanyi pinpoints the influential utopia behind: the rise in individual social status generated through the economic freedom to seek individual gain without interference (exceptions apply), leads to positive effects on society. That is, there is no need for a lineage, or to be altruistic, or philanthropist, as necessary condition to positively impact society. Under this utopia it is okay, ethically and socially speaking, to be selfish (i.e. nonregarding others), and lust for money or possesions are no longer denounced as a principal sin of fallen men (Weber 1930, Hirschman 1977). Regardless of whether the individual seeks or not the general welfare, probably he or she will impact other´s wellbeing anyway, if he or she is seeking individual gain. For example, when new people are employed, their wages enlarge family income even though the new employer may have not been aiming to that goal. Although apparently one endevaour seems independent from the other, under the operation of the so-called "invisible hand", economic interests, in a unintended fashion, tend to positively impact the social sphere (main argument of the Scottish Enlightment movement of the eighteenth century, epitomized in Smith (1759, 1776)).
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Peter Drucker in 1939 had already recognized the fading out of this theoretical category.
!4 Nowadays, this portrait of the Homo Economicus is under scrutiny in particular regarding inequality issues (Piketty 2014, Piketty and Saez 2001, Cadwalladr 2013, Linden 2013, Grosfeld and Senik 2010). The most sceptic view understands it as a set of institutions related to exclusion and increased inequality at the global level, chronic at some regional levels (eg. Latin America). The intolerance to inequality (Hirschman and Rothschild 1973) is by now far a current, real concern. What happened? Why is the business institution, the private gain seekers, now treated with suspicion as coldhearted, Machiavellian and utterly destructive? Is it not the rationale of the homo economicus entrenched and implicitly associated with social impact? The behavioural realm will probably shed some light in this point2.
Behavioral Economics
After nearly a century apart, in the last two decades the economy has been drawing on insights from psychology, especially regarding research in behavioral decision making. Although economists recognize that many decisions are preceded by a process of deliberation, economic models are written to represent a deliberative balance. That is, agents are in a state in which any further decision will not affect or change their minds.
The non-iterated Prisoner's Dilemma game (see table 1) illustrates this kind of deliberative equilibra. The layout in this game is the following: there is strong evidence that two suspects robbed a car but no evidence they robbed a bank. The suspects are detained but remain incommunicado. A confession is required in order to associate them to the second crime. How to make both confess without coercion and, in this way, not ensue impunity? Under the appropriate configuration of prison convictions (table 1), without coercion, suspects confess. If both aim to minimize prison terms, the decisions of the other agent will not affect or change their minds: both choose to confess (i.e. dominant strategy or Nash deliberative equilibrium). Under this layout, individual rational choices will benefit the general interest (i.e. no impunity). Table 1 - Prisoner´s Dilemma Prisoner B stays does not confess Prisoner A does not confess Prisoner A confesses (betrays)
Prisoner B confesses (betrays)
Each serves 1 year
Prisoner A: 10 years
Prisoner B: goes free
Prisoner A: goes free
Prisoner B: 10 years
Each serves 5 years
The question that seems to unveil is: under what circumstances, in non-iterated Prisoner's Dilemma games, both suspects choose not to confess? The ultimatum game (see its extended form in Figure 1) will be used to try to unveil these circumstances. In advance, I may say that these circumstances relate to assumptions that lift the The following section appeals to game theory as illustration of human behavior, but it should not be taken as a critic to such theory. 2
!5 incommunicado assumption so that mind and feelings reading between agents are no longer ruled out (Singer and Fehr 2005). Figure 1
! The ultimatum game (and social experiments based on it) analyses how two players interact face to face (variations apply) when they have to decide how to divide a sum of money given to them. The first player proposes how to divide the sum between the two players, and the second player can either accept or reject this proposal. If the second player rejects the offer, both players go empty handed. If the second player accepts, the money is split according to the proposal. Experimental results, over and over, show that individuals frequently and significantly reject a positive offer if they consider it unfair (Güth and Kocher 2013, Camerer and Thaler 1995). According to self-regarding assumptions, it is anomalous to choose to get nothing rather than something, even it is an unfair proposal. However, when experiments generate the circumstances by which agents have the opportunity to empathize (anticipate the reaction of the respondent to an unfair proposal), selfregarding interest, while important, does not necessarily dominate. Hence, when “faceto-face” encounters are permitted, there is no longer a dominating deliberation. The versions of the ultimatum game that produce unfairer distribution outcomes are the Dictator and Computers-as-proponents versions, in which proponents and respondents are free from communication and avoid face-to-face encounters (Sanfey et. al. 2003, Kahneman, Knetsch and Thaler 1986). In this way, in this game, the capability to simulate how others could feel or think, for example, of a betrayal (i.e. one suspect confesses but the other doesn´t or an unfair proposal) seems to depend on the proximity assumption. However, physical or spacial proximity alone is not the key3. There are evolving and emerging institutions that have to be taken into account in the current argumentation.
Friedman's Legacy: the institutional roles and rules of Homo Economicus Friedman's 1970 essay constitutes a legacy that advocates no moral obligation and social responsibility for businessmen towards outsiders of the organization (Mulligan 1986). Even though business is one of the largest areas of human interaction in our society, Friedman's concluding statement contains a moral exhortation to business people: they should engage in open and free competition without deception or fraud. Shaw's (1988) The obligation to respond or regard others' needs is a product of the agent's ability, the severity of degree of need, and awareness of that need. 3
!6 interpretation on the point of "deception and fraud" is that "corporate programs that lose touch with their economic mission while seeking to accomplish social objectives, are likely to be counter-productive" (p. 541). Friedman was a man intimately linked to his historical moment. He benefited from the Cold War in which the US promoted an idealized belief in free markets in order to counter to the geo-political challenge posed by the Soviet Union and also from the US corporate counter-attack against the politics and economics of New Deal Keynesianism (Palley 2015). Pioneering game theory, including Prisoner's Dilemma, was designed specially during the WWII and Cold war period (Mirowski 1991). It was developed under a framework of Cold War, specially analysing how cooperation could spring under polarized, distrustful sides. "Face to face", regarding-others' encounters were not a priority in economic theory when the two players in mind are militar enemies or geopolitical adversaries. Given the historical context, theoretical advances and American neoliberalism generated evolved rules of behavior in capitalism. Not only there is no need to regard others in order to have a positive social impact (such as in the invisible-hand view discussed above), but such regard could even jeopardize the true purpose of business. In fact, business gurus such as Peter Drucker and others (Bacan 2005), pose that executives who choose social and environmental goals over profits are immoral. Polanyi identified the birth of such institutional standpoint back in history. "Nineteenth century thinkers assumed, for instance, that to behave like a trader in the market was 'natural' and any other mode of behavior being artificial economic behavior—the result of interference with human instincts; that markets would spontaneously arise, if only men were let alone" (Polanyi, 1944, p. 269, cursives added). So, the American neoliberalism, rooted in the nineteenth century thinkers and in the historical context of a Cold War, institutionalized rules and roles of Homo Economicus of disregarding others, in order to concentrate in private gain, as legitimate and connatural from a business standpoint. This would lead obviously to societal and cultural implications. I will try to extend Polanyi's argument, in behavioral issues like the compassion deficit, alexitimia and dispathy in the context of inequitable capitalism.
Unwinding inequality: kicking away the ladder and the compassion deficit
The current widespread complaint about inequality seems to have reached a bottom line: “it is one thing for some people to escape deprivation and leave others behind. It is quite another when the escapees use their new found freedom to block the paths of those trying to find their own way out” (Deaton 2013). Precisely, the main argument of Chang (2002, 2007) in the past decade or so is about how rich countries have created obstacles and established a credo along free markets, so that emerging countries cannot climb up the same ladder the rich countries climbed their way up to development. The common complaint is hence how wealthy sectors of societies abuse their power by conveniently changing the social, legal, market rules, once those rules served them well through their social and economic ascent (Kraus, Piff and Keltner 2011). Under this view, it is naive to expect wealthy sectors giving back to society (Piff et. al. 2010). This is the
!7 common denominator and has been associated with a wealthy's compassion deficit, which constitutes a widespread critique on inequality. Another well founded complaint is that the corporate law (for example in US) does not compel executives or corporate officers to take into account the unintended collateral effects or externalities (Bacan 2005). Only profit-seeking behavior is legitimate under this paradigm, and externalities will not have legal consequences. In this way, external costs are not a business problem, it will be others' problems. This has given ground to many critics (Picketty 2014) to advocate for hardening taxes to the richest and for stopping the corporate money from engulfing democracy through lobbyist and political corruption (Reich 2008). This kind of proposals have been undermined, quite successfully if I may add, by detractors with the recurrent ideological argument that it is a tax to the real job creators in economy. Moreover, it has already triggered a communist witch hunt in the past, evoking the classic McCarthyan right-left, capitalist-socialist ideological accusations. Other critics have opted for a milder view by resorting to the argument that capitalism does not have to be a zero sum game (Porter and Kramer 2006, 2002, 1999). That is, all sectors, including the wealthy, flourish relatively more with a smaller gap between rich and poor or, in other words with a stronger middle class (Wilkinson and Pickett 2010). The middle class would act under this perspective as the centre piece of the virtuous circle that activates the economy. If agents in capitalism were less polarized, less apart from each, they could bump into each other easier, be less focused on themselves and their own personal gain, and could really notice others (e.g. not only through to democratic processes but also in daily activities). In spite of those hard and mild criticisms, the American neoberalism has succeeded in institutionalizing the premise of disregarding-others in order to favor individualism. But the role of individualism that is free from communication and is socially disembedded, is not true to the facts of human evolution (Gintis 2007), and this of course has serious implications for society, as Polanyi duly noted (1944).
Mirror neurons
Social neuroscience has found that our biological wiring confers humans (as well as other mammals) with a propensity for empathy (e.g. global solidarity after a tsunami in Japan, earthquakes in Haiti and with mine workers trapped in Chile). Research in the neural mechanism provides insights that underly our natural capacity to represent others' intentions, beliefs, and desires, referred to as "theory of mind" or "mentalizing" and the capacity to share the feelings of others, referred to as "empathy”. How did this anti-neoliberal ideology emerge? How did this communist complot got organized? According to neuroscientist Rodolfo Llinás, through evolution! In effect, cells learned to associate, communicate, and multicellular beings emerged. It was a successful experiment of nature, that later on transformed into another successful evolutionary experiment: the emotional systems. "The emotional systems are essential to decide what to do"-says Llinás. "A hungry tiger is dangerous because it has to look for food. These emotional states are central to the nervous system activation". But yet
!8 another successful experiment happened in evolution. The nervous system in some organisms, including us, acquired an almost magical property: feel the pain of others. "We have the ability to understand our pain and the pain of others. Something very important because it is the basis of society. We want something or not depending on imagining the pain and pleasure of others. The "culture" as noted by Ramachandran, "consists of huge collections of complex knowledge and skills that are passed from person to person through two main means: language and imitation." The ability to learn and to imitate happens first at an an individual level and then it scales at a collective level. Neuroscientists have named these neurons, mirror neurons. This ability to empathize is the basis of politics, economy, and social structure. These neurons can reproduce the behavior of the others, as if the observer was acting. My argument is that economic theory and American neoliberalism have have diverted our attention on individual gain in order to institutionalize the Economic Man. Economic thinking should now wake up and refocus on the evolutionary capability to mentalize and empathize of Homo Sapiens. If the evolutionary propensity is to empathize, how were the institutional roles and rules of disregarding others legitimized, theoretically speaking?
THEORETICAL FRAMEWORK
Camerer, Loewenstein and Prelec (2005) present a theoretical scheme useful for finding out how institutional roles and rules of disregarding others work, specially associated with the traditional views of the Homo Economicus' rationality. They point out two dimensions to explain behavioral functioning: first, the cognition/affect dimension and, second, the controlled/automatic processes dimension (described in Table 2). Regarding the former dimesion, affect for some researchers is associated with feelings states but Camerer et al clarify that: For most ... researchers, the central feature of affect is not the feeling states associated with it, but its role in human motivation. All affects have "valence" -they are either positive or negative (though some complex emotions, such as "bittersweet", can combine more basic emotions that have opposing valences). Many also carry "action tendencies" ... e.g., anger motivates us to aggress, pain to take steps to ease the pain, and fear to escape or in some cases to freeze -as well as diverse other effects on sensory perception, memory, preferences,and so on ... Affective processes, ... are those that address "go/nogo" questions -that motivate approach or avoidance behavior (p. 18).
The cognition/affect dimension is defined by Camerer et al as: Cognitive processes are those that answer true/false questions. Though it is not essential to our overall argument, our view is that cognition by itself cannot produce action; to influence behavior, the cognitive system must operate via the affective system (p. 18).
Regarding the controlled/automatic processes dimension, others have developed similar two-system models, being type I and type II processes of Nobel Prize laureate, Daniel
!9 Kahneman, a recent and diffused one (Kahneman 2011). Camerer et al define it as follows: Controlled processes are "serial (they use step-by-step logic or computations), tend to be invoked deliberately by the agent when her or she encounters a challenge or surprise ..., and are often associated with a subjective feeling of effort. People can typically provide a good introspective account of controlled processes. Thus, if asked how they solved a math problem or choose a new car, they can often recall the considerations and the steps leading up to the choice. Standard tools of economics, such as decision trees and dynamic programming,can be viewed as stylized representations of controlled processes ... Automatic processes operate opposite to controlled processes: "in parallel, are not accessible to consciousness, and are relatively effortless. Parallelism facilitates rapid response, allows for massive multi-tasking, and gives the brain remarkable power when it comes to certain types oftasks, such as visual identification." (Camerer, Loewenstein and Prelec 2005, p. 15-16)
I will be focusing on the intertwinning of these two dimensions. Traditionally, the control/automatic dimension has been associated to the cognitive/affective dimension as follows: controlled processes occur at special moments when strong visceral, emotional, automatic processes become interrupted. These type of interruption processes have become to be known as an the "Impartial Spectator" we all have operating in our neural functioning (Ashraf, Camerer and Lowenstein 2005). It serves as the source of "self-denial, of self-government, of that command of the passions which subjects all the movements of our nature to what our own dignity and honour, and the propriety of our own conduct, require" (Smith, 1759, I, i, v, 26). Modernity and science, even neuroscience until recently, concentrated on the cognitive aspect of the behavior, disregarding emotions, feelings and biological regulation as integral part of human reason (Damasio 2008). Under the traditional perspective, reason can operate "properly" if emotions are controlled, interrupted, or, say, disconnected. That is, rational individuals must not let the default emotional, passional state hold control in order to optimally achieve a goal or to solve a problem (Frank 1988, Hirschman 1977). Economic calculation epitomizes controlled, commanding processes over emotions. "One could say that economics is about [this] "interrupt" or "override"." (Camerer, Loewenstein and Prelec 2005, p. 18). In this way, traditional rational behavior in Economics has been limited to cuadrant I (see Table 2) as to overide or interrupt the emotional impulses in cuadrant IV. The Economic Man or Homo Economicus is the goal of human crossroads, if passions are succesfully overriden. Under this paradigm, Cuadrants II and III are out of the picture, and constitute blind spots, in particular, as we shall see, regarding alexythimia and dispathy. The Economic Man's institutionalization was developed with the advancement of Modern thinking and European Illustration: Descartes, Montesquieu, Steuart, among many others, promote the disconnection between reason and emotions, that is, the separation of mind and body (Nussbaum 2003). In spite of this important influence, classical economy did not intend to create a distinction between sentiment and reason, or between emotion and rationality (Persky 1995). This divide was ultimately false. John
!10 Stuart Mill's end point was that the truly rational life combined emotion and reason (Berezin 2010). However, the blind spots of the Homo Economicus´ rationality were the role of feelings and empathy in decision-making, for example, "gut feelings" in investment (Elster 1996, 1998).
TABLE 2 - DIMENSIONS OF NEURAL FUNCTIONING Cognitive Controlled Processes - serial - effortful - evoked deliberately - good introspective access Automatic Processes - parallel - effortless - reflexive - no introspective access
I
III
Affective
II
IV
Source: Camerer, Loewenstein and Prelec (2005) - Table 1 The functioning of cuadrant II is compromised. The gut feelings or so called intuitions tend to be confused culturally with emotional, automatic or impulsive feelings. As a consequence, the cuadrant III, automatic-cognitive functions, such as institutionalized rules and roles, get hold of behavior. These rules and roles could be explained and articulated but with no introspective access or reflexivity by emotional indicators. Those rules and roles are not questioned, not discerned. So, if somebody is hired by a big corporation that produces goods or services that pollute, affect negatively social communities, operate under Ponzi schemes, or generate any sort of negative externalities, the gut might be telling her it is unethical and even make her quit the job. But if the Cuadrant II function is not developed, is not paying attention to these somatic indicators, the institutional roles and rules induce her to go astray. The agents then become automata reacting only to their social programming, namely, institutional roles and rules. And this is just as bad as when passions hold total control of behavior without the cognitive regulation (traditionally associated with rationality). Damasio (2008) proposes to extend the narrow concept of rationality, traditionally only associated to cognitive control, as to include the emotional control. The proposal in Damasio´s order of ideas is to develop emotional control through somatic alerts, so institutional roles and rules do not hold total power of behaviour. For this we have to let go of Homo Economicus in its pure form and embrace the Homo Sapiens which includes all cuadrants, I to IV. In this way, both cognition and emotional control define a broader concept of rationality, given that it will lead us to stay in touch with our own emotions and regard others´emotions as well, as we shall see in the next section. Moreover, by embracing our emotional control, the institutional roles and rules that induce us to
!11 disregard others in an inequitable capitalism, will not be rational any longer. In this way, it will also be irrational not to follow the instincts, that is, our somatic indicators. The American neoliberalism that legitimates disregard to others for profit-gain, will no longer be admitted as rational. It will be called alexithymic, as we shall see in the following section.
Alexithymia and dispathy
How to stay in touch with our own emotions and regarding others´as well? According to the greek word pathos, empathy is the quality or capability of human beings, in an actual life experience, to feel what others feel and is what makes us deeply and inevitably social (Keysers 2011). On the contrary, dispathetic humans lose this quality or capability. We have seen that mirror neurons biologically confer us this quality or capability of empathize with others, even to mentalize their thoughts, but we can lose it by either brain lesion, congenital condition or, most importantly for our argument, when we begin to experience difficulty in expressing and describing our own emotional responses. This condition has been named after its greek origin as alexithymia (i.e. a + Greek léxi ( s ) speech + -thymia). Together with Damasio, Gardner and others, Goleman (1995) has been pivot for the diffusion of the importance of emotions in decision-making process. However, this difussion has had a bias towards cognitive control over emotional impulses, and not emotional control or regulation, namely, the "Somatic Marker Hypothesis" or "gut feelings" of Elster. For Goleman, the alexithymic person has problems in the cognitive realm in order to articulate or verbalize the emotional impulses that could let behaviour go astray. Much of the literature in Behavioural Economics, working hard on the topic of irrationality, is based on this tendency (Ariely 2008, Kahneman 2003). This important first thrust of behavioral economics has been influenced by the traditional view of rationality, but has not addressed properly the emotional dimension per se. The alexithymia we are focusing on is within the emotional realm (Damasio 2008 and Elster 1996, 1998) and its implications in dispathetic behavior in the rational decisionmaking process. The true value of the emotion and the somatic indicators related to it, is best understood when it is not there anymore. For example, when the pain of others is not felt, then guilt or shame of causing it are not felt either; when others are objectified, then there is no remorse on treating them as objects; when other´s needs are denied long enough, then this pre-empts any need to care or help them. Somatic indicators such as guilt, shame, remorse, need to help, are key to rational decisionmaking. The lack of paying attention to them caused by alexitymia generates the dispathetic behavior. There are many examples but some financial services are well known to fit the case of dispathetic behaviour. Financial innovations like the diffusion of sub-prime mortagages with no down payment, no proof of income, or other due requirements to lend to responsible borrowers, were increasing risk into the system without really caring about stakeholders. Selling subprime mortgages became as customary as leaving the problem to the next investor (just as in Ponzi schemes). Several documentaries on the financial
!12 crises have shown that there were no signs in any of the high executives in Banks of ex ante or even ex post somatic alerts like shame, remorse, or guilt (Beck and Bolt 2011). These banks and bankers were bailed out. This example seems to pose the Homo Economicus as an instant gratificator, desperately in need for short-term profits to palliate those somatic alerts. But the matter I intend to expose is another. Although private gain palliates somatic alerts, it has the main effect of neutralizing them. In this way, somatic indicators will not be there to alert us ex ante. In more general terms, when negative externalities become a commonplace, there is no reason to prevent them from happening (not the intended externalities, let alone the unintended). The implications of this type of alexithymia compromises, at least, social cohesion. The next section intends to develop the implications of dispathy in social cohesion.
Empathetic and dispathetic societies
We have seen that the disconnection with somatic indicators happens because of a rationality based purely on institutionalized cognitive rules and roles. I propose to measure social cohesion as a continuum, which depends on the institutional crossroads orienting behavior towards (or away from) empathy (see Figure 2). A higher scale of social cohesion translates into an empathetic society, where agents count with correlated collective visions and social representations. In such scale, society can have not only positively but also negatively correlated collective visions and social representations (Deutsch 1973, Wong and Yu 2005). For example, when the realization of our visions and goals depend on others attaining them as well, cooperation ensues. In this way, when institutional roles and rules in society generate positively correlated collective visions, sympathetic-cooperative reactions are expected (also understood as solidarity, compassion, sympathy). On the other hand, when the realization of our visions and goals depend on others not attaining them, competition ensues. In this way, when institutional roles and rules in society generate negatively correlated collective visions, antipathetic-competitive reactions are expected (also understood as rivalry, antagonism). All the above-mentioned scenarios lead to a high or even medium cohesion in society given that, in all of them, empathy is generated. But the lower scales of social cohesion are generated when institutional roles and rules generate dispathy (or very low levels of empathy). This scenario has been often confused, specially by some critics of social corporate responsability, with apathy and even antipathy. Empathy is a neccesary condition for apathy and antipathy. We cannot react indifferently or as rivals if we do not know what they think or feel. We need to know what are the feelings or thoughts we are reacting to. But what happens when it is not a matter of reaction but a matter of non-empathy or dispathy? It is not about seeing or identifying others as allies, or even as competitors, or simply, indifferent to our goals. It goes beyond that. Low social cohesion is about institutional roles and rules that impede you to feel the other person´s pain and prevents you from understanding what and how they are thinking. In the preceding section we have developed an example of dispathetic behavior based on the subprime mortgages. Now, lets imagine an counter-example
!13 between competitors. In an empathetic society we can perfectly feel and understand what competitors are trying to do. We can even feel their rivalry and antagonism. We need an empathetic society so as to have a healthy competitive system in which agents, and their regulators, reasonably know how to compete in a market or industry. Rival agents such as Apple and Microsoft or Samsung understand and even feel what the counterpart is trying achieve in order to react. They sometimes react sympathetically or cooperatively, and many other times antipathetically or competitively. In that way, their goals are sometimes positively correlated, and other times negatively correlated. Precisely, Axelrod (1982) studied this type of duality and concluded that cooperation among rivals exists when there is no expected loss in competitive advantage (so called "Coo-petion"). To disregard social relations and other institutions, such as reciprocity and redistribution, is not only a futile but also risky attempt. This is the disembeddedness argument of Polanyi (1944), which I intend to reinforce by pointing out the risk of dismissing the emotional dimension. In effect, an utopia purely based on invisible hand arguments and individualistic rationality entails dispathetic behaviour in the way of inequality, obstacles to access to opportunities, discrimination, corruption, segregation, violence, and social and political polarization. Milton Friedman´s thought of business as antipathetic behavior based on competition and rivalry, to be fair, also revealed that business could slide into "deception and fraud". So, unintentedly or not, he shed light on how business could easily derail into the dispathetic realm.
Figure 2 - Institutional crossroads of behavior
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LOOKING AHEAD: EXPERIMENTS FOR EMPATHY Colombia is entering a phase of post-conflict after 50 years of internal conflict. Much of this internal conflict is due to the chronic inequality that characterizes the Latin American region. There is a need to set the conditions that reestablish social cohesion. We have created in the Institute of Human Development of the National University of Colombia a course called "Social Innovation and Empathy" so as to design experiments for empathy in order to generate the conditions for the creative solutions to the social deficit that 50 internal conflict could have generated in this inequitable capitalism. There is a need to increase empathetic efforts in order to override the institutions that have led to dispathetic behaviours in this type of societies. Moreover, there is an evolution of institutions that has generated a locus of attention in the cognitive dimension, deliberately oblivious or disconnected from the emotional dimension. Can empathic capabilities be developed in order to override this cognitive bias and dispathy? "Research findings suggest that empathy is, in part, based on shared representations for firsthand and vicarious experiences of affective states. Empathic responses are not static but can be modulated by person characteristics, such as degree of alexithymia. It has also been shown that contextual appraisal, including perceived fairness or group membership of others, may modulate empathic neuronal activations. Empathy often involves coactivations in further networks associated with social cognition, depending on the specific situation and information available in the environment. Empathy-related insular and cingulate activity may reflect domain-general computations representing and predicting feeling states in self and others, likely guiding adaptive homeostatic responses and goal-directed behavior in dynamic social contexts" (Bernhardt and Singer 2012). Although we are wired for empathy, institutional rules and roles could encourage and regulate behavior in such manner that empathy does not occur automatically. "Yet, empathy frequently breaks down when it is difficult or distressing to relate to people in need, suggesting that empathy is often not felt reflexively. Indeed, the United States as a whole is said to be displaying an empathy deficit.When and why does empathy break down, and what predicts whether people will exert effort toexperience empathy in challenging contexts? Across seven studies, we found that people whoheld a malleable mindset about empathy (believing empathy can be developed) expended greaterempathic effort in challenging contexts than did people who held a fixed theory (believingempathy cannot be developed). Specifically, a malleable theory of empathy— whether measuredor experimentally induced—promoted more self-reported effort to feel empathy when it ischallenging (Study 1), more empathically effortful responses to a person with conflicting viewson personally important sociopolitical issues (Studies 2-4),
!15 more time spent listening to theemotional personal story of a racial outgroup member (Study 5), and greater willingness to helpcancer patients in effortful, face-to-face ways (Study 6). Study 7 revealed a possible reason forthis greater empathic effort in challenging contexts: a stronger interest in improving one’s empathy. Together, these data suggest that people’s mindsets powerfully affect whether theyexert effort to empathize when it is needed most, and may represent a point of leverage in increasing empathic behaviors on a broad scale." Schumann, Zaki and Dweck (2014). In our future projects we will design and apply several experiments that address the empathy deficit and the institutional evolution that favours disconnection of reason and emotion at a regional level. Are methodologies like the action-research and participatory action-research aimed to trigger the ventral-based empathy? Can we and should we design experiments to activate ventral-based empathy, not to substitute, but to reinforce the dorsal-based empathy and empathy overall? (Keysers 2011).
Conclusions: good bye alexithymic homo economicus welcome back social homo sapiens
Perhaps we are nowadays experiencing the consequences, in the form of an inequitable capitalism, that Polanyi warned us seventy years ago: “Nothing could seem more inept than the attempt to reduce a civilization, its substance and ethos, to a hard and fast number of institutions; to select one of them as fundamental and proceed to argue the inevitable self-destruction of civilization on account of some technical quality of its economic organization. Civilizations, like life itself, spring from the interaction of a great number of independent factors which are not, as a rule, reducible to circumscribed institutions. To trace the institutional mechanism of the downfall of a civilization may well appear as a hopeless endeavor.” (Polanyi 1944, p. 4) This paper tries to help in this so-called "hopeless endeavor" of Polanyi, by analysing how some institutional roles and rules impinge over behavioral and evolutionary aspects of human nature. My point in this essay is that Homo Economicus is fading away already, not because of social revolt or capitalist crisis, but because of evolutionary arguments: institutional roles and rules that lead behaviour to alexithymic decisions and dispathetic outcomes are not sustainable from both an individual and also a social perspective. Although some institutions have ineptly promoted dispathy, human adaptability and social resilience are alive and active. This paper could help as guidance to such initiatives. There is a need to increase empathetic efforts in order to override those institutions that lead to dispathetic societies. The evolution of institutions that generated a locus of attention solely in the cognitive dimension, deliberately oblivious or disconnected of the emotional dimension, could be addressed by developing empathetic capabilities. These capabilities could override this cognitive bias and dispathy. Human institutions could be rearranged to guide self-interest in directions so as to be empathetical (Persky 1995).
!16 This paper complements the disembeddedness argument of Polanyi: the utopia of "selfregulated market" is not only a futile but also a risky attempt to disregard other type of institutions (such as reciprocity and redistribution). I would add that this utopia also dismisses the emotional regulation dimension, just for the sake of invisible hand arguments or individualistic rationality, specially related to cognitive control of emotional impulses. In other words, the problem is not so much the rationality assumption but also discarding the emotional dimension as part of the study of economics. It is not so much a problem of over-emphasis but of the blind spots it entails (Akerlof and Schiller 2009). The challange lies, as John Maynard Keynes put it, not so much in developing new ideas as in escaping from old ones. Old ideas leave us blind spots, I have tried to expose. In order to unveil them, we need to change the questions that control our locus of attention in private gain. Contrary to the hard-nosed self interest view, in behavioral economics, people are more complex, and regarding others interests. That is, human decision makers are not interested solely in own material success. Decision-makers are based not only traditional rationality and efficiency, but also on emotion, empathy and fairness issues (Guth and Kocher 2013). For the sake of economics science, there is a need of an extinction of Homo Economicus. Perhaps it fulfilled an important role as a result of the Enlightenment era and modern thinking. So, like Neanderthals mixing with Homo Sapiens, Homo Economicus brought good and bad genes. The Homo Sapiens has strengthened with those good genes but now needs to explore other broader and social frontiers.
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