If I asked you to think of a social network, Facebook or Twitter would come to mind. Behavioral economists however are looking to expand this definition past the high-tech, globalized world by citing these new findings (source: latimes.com):
“A team of researchers has mapped out the relationships among a remote group of 205 hunter-gatherers in Tanzania who live as humans did about 10,000 years ago and found that their social networks are very much like ours, even in the absence of the complicating factors of megacities, cellphones and the Internet.”
Judging by these findings, our ancestors 10,000 years ago also preferred people who liked the same things. Cooperators, (think of your pious nun), like cooperators and dislike free-riders (think Bernie Madoff). Yes, this seems like a no brainer, but it’s actually monumental for behavioral economics. Behavioral economics is the study of economics through the lens of psychology and social behavior. Where classical economics employes methodological individualism and believes that humans are consistently rational, behavioral economics diverges claiming that humans are often selfless and highly influenced by others.
In research, behavioral economists have been confined to using undergrads in social experiments. If these findings are correct that humans naturally align themselves in similar social network patterns, then behavioral economists can use networks to model and predict macro-economic behavior. The macroeconomy has displayed frequent fragility to human irrational behavior, such as the creation of bubbles in the stock market, or consumer preferences that are manipulated by advertisements. If networks can shed some light onto this activity, it can drastically change the way we perceive economics and human behavior.