Why Brexit Won
Eric Beinhocker is the author of the excellent book The Origin of Wealth, which greatly influences our thinking here at Civic Ventures. It dismantles our concept of economics and then reassembles it with a better understanding of human behavior. When you abandon the weirdly idealized economic thinking that argues the market is a kind of conscious organism which decides the best outcomes, you start to realize that a lot of our assumptions are completely wrong. Beinhocker basically explodes the idea of trickle-down economics that has dominated thinking in the field for decades. I highly recommend the book; it literally changes the way you think about markets and money and jobs and society.
Basically, all this is a long way of saying that when Beinhocker talks, we listen. So his new essay for the Atlantic, “The Psychology of Voting to Leave the EU,” deserves highest priority in your to-be-read queue. Beinhocker explains, using economics and behavioral research, why British voters went for the Brexit, a decision that flew in the face of their own self-interest.
“Humans are wired for reciprocal cooperation,” Beinhocker writes.
Do unto others as you would have them do unto you, I’ll scratch your back if you scratch mine, etc. Our hunter-gatherer ancestors lived in small groups, for whom cooperation was essential for survival. A key step in human development was when people expanded this circle of cooperation from close kin to strangers through trade, customs, religions, alliances in warfare, and eventually through laws and institutions. Modern society is a vast intricate web of cooperation.
“But cooperation also creates the potential for cheaters,” he continues. “Humans are thus also wired to be altruistic punishers—not altruistic in a nice sense, but altruistic in the sense that they will punish people, even to their own harm, to enforce fairness.”
Beinhocker’s thesis explains why people often say one thing and then vote against their previously stated beliefs, and it also establishes why American voters might possibly vote for Trump. Please go read the whole thing.
