In search of the money gene
What makes someone want to start a business? That was what the young economist Philipp Koellinger was trying to figure out in 2008. His survey data showed that entrepreneurs thought differently from other people—that they believed in themselves more, feared failure less, and tended to see opportunities where others saw threats. Koellinger wanted to know why. “We were left with ‘explanations’ that begged further explanations,” he said in an e-mail. “What was at the bottom of this rabbit hole, we wondered?”
Around the same time, a graduate student at MIT named David Cesarini was publishing the results of an intriguing study showing that identical twins more closely resembled each other in terms of confidence and attitudes towards risk than fraternal ones. In other words, these traits—closely tied to entrepreneurship—were partly heritable. When Koellinger read Cesarini’s work, he realized that it could be the answer he had been looking for. Somewhere down that rabbit hole, people’s financial behavior could be traced to their DNA.
It was a powerful notion, that our financial futures might be coded in our chromosomes. But it lay far outside the realm of what economists normally think about—such as how people respond to incentives and how they make decisions. Knowing about a person’s genes seemed like something else entirely.
Koellinger didn’t see it that way. Four year later, he is part of a group of young economists saying it’s time for their field to jump into the gene pool with both feet. In a series of papers, including one forthcoming in the Annual Review of Economics and another in the Proceedings of the National Academy of Sciences, Koellinger, along with a team headed by Cornell economist Daniel Benjamin, David Laibson and Edward Glaeser from Harvard, Union College psychologist Christopher Chabris, Cesarini, and others, is heralding the arrival of a new discipline—“genoeconomics.” They say economists are missing something important by ignoring the genetics underlying things like risk-taking, patience, and generosity. If we could grasp how our genes influenced such economic traits, they argue, the knowledge could be transformative.
It’s not every day that a band of young thinkers tries to launch a new field—especially one concerning secrets about human behavior that nearly everyone would love to understand. But Koellinger, Benjamin, and the rest of the genoeconomists are also curiously hesitant about their ambitions: In their papers and in conversation, they take great pains to talk about how far off and uncertain any potential applications are, and how difficult the technical hurdles will be to clear. Asked over lunch recently how genoeconomics stands to change the way all of us think about our spending habits, our savings accounts, and our investment portfolios, Benjamin fell silent for more than 30 seconds.
“I’m struggling a lot with that question,” he said finally. “Because this is an area where I think if you say...‘genes are related to economic behavior,’ it sounds revolutionary, it sounds like it’s going to change the way we think about things....But I want to think about this work as mostly workaday science that’s going to lead to the slow accumulation of knowledge.”
As Benjamin notes, the very notion of linking specific behavioral traits with individual markers in the human genome has so far turned out to be largely a pipe dream—one that propelled a decade’s worth of popular fear and magical thinking about things like the “violence gene.” That legacy looms large for genoeconomics. It underscores the difficulty of the task ahead, and also serves as a reminder that success will mean grappling with the unsettling notion that some people might be born to prosper, and others are born to fail. It’s a field with a nightmare scenario already built into it—that banks might demand saliva tests before granting loans, or custody battles might be decided based on which parent has better genes, or insurance companies could raise premiums for customers genetically predisposed to take risks.
Benjamin, Laibson, and their collaborators recoil at the thought of such consequences. And so they work toward their distant goal with the knowledge that they are holding a very hot potato, of a kind unfamiliar to most of their colleagues in economics. Consequently, they find themselves in a peculiar situation: unveiling a bold new idea they hope will change the world, but not too much.
Though the name wasn’t coined until 2007, genoeconomics flickered briefly into existence once before. In 1976, the late University of Pennsylvania economist Paul Taubman published the results of a study in which he followed the financial lives of identical twins, and found there were curious similarities in how much money they made as adults. Taubman concluded that between 18 percent and 41 percent of variation in income across individuals was heritable.
It was a startling conclusion, and one that Taubman’s fellow economists didn’t quite know what to do with. One joked that Taubman’s findings meant the government might as well shut down welfare, since clearly some people would remain poor no matter what. The point was that economists were interested in policy and remedies, not what went on at the molecular level inside people’s bodies. “In some sense, the standard economic approach to preferences is creationist,” said Arthur Robson, an economist at Simon Fraser University who has been studying the biological and evolutionary origins of economic behavior for more than 20 years, and who held a conference on the topic earlier this month at the University of Chicago. “We simply say, ‘Let’s assume people have some set of preferences, and let’s take it from there.’ And we won’t talk about where these preferences came from.”
After Taubman, the idea that genes had an important role to play in decision-making was largely abandoned in the world of economics. But with the completion of the Human Genome Project in 2000, the first full sequence of a human being’s genetic code, people started wondering if perhaps it would be possible to push past broad heritability estimates, of the sort that Taubman generated, and figure out what part of a person’s genome influenced what aspect of his behavior.
Late one night in 2001, Laibson, Glaeser, and Benjamin, who was then about to start graduate school at Harvard, were walking back to their hotel after a conference dinner, and discussing the then-novel field of neuroeconomics, the study of how economic decision-making functioned inside a person’s brain. Someone wondered aloud where economics would go next. As Benjamin remembers it now, that was the first time any of them considered the possibility of investigating the genetic basis of the traits they and their fellow economists cared about.
In thinking along these lines, Laibson, Benjamin, and Glaeser were part of a wave in social science that amounted to something like a genomic gold rush. Inspired by the huge advances in genetics—which allowed medical researchers to find new ways to diagnose diseases like Huntingon’s and some forms of cancer—social science researchers who had previously never been concerned with biology became interested in the genetics behind political affiliation, criminal activity, intelligence, and personality. But early findings in the field of behavior genetics—a dancing gene! A novelty-seeking gene!—gave way to disappointment, as psychologists, criminologists, and others realized what medical researchers had begun realizing years earlier: that the workings of the human genome were much more complicated than anyone had initially thought.
Over time, social scientists started coming to terms with the fact that even the most heritable of traits, such as height, were influenced not by one or two powerful genes, but by a combination of hundreds or even thousands—and that environmental factors, like a person’s upbringing, play a complex role in determining how those genes are expressed. “Every single direction has proved to be less promising than people originally expected,” said Laibson.
To talk to the genoeconomists about their vision for the field is to listen to people acutely reluctant to overpromise, or to come off as naive. Much of their forthcoming paper in the Annual Review of Economics, in fact, describes how the vast majority of studies that appeared to link individual genes to specific outcomes—the amount of education people receive, whether or not they are self-employed, how they invest their money—have turned out to be impossible to replicate. Their hope lies in a new approach to data-gathering that is only just getting underway, wherein researchers look for patterns among thousands, and even millions of people—numbers that are only just becoming possible thanks to massive collaborations linking gene studies being conducted all over the world.
“If you expect a peach you’re trying to pick from a tree branch to be 5 feet up, and it turns out to be 10, you don’t give up, you go get a ladder,” said Laibson. “We’re now in the process of getting ladders.”
Neither Laibson nor his colleagues have any illusions about how long those ladders will need to be. But for all their throat-clearing and the cold water they feel compelled to throw on their work as they introduce it to the general public, they are confident that it’ll eventually be possible to match up patterns in a person’s genome with patterns of financial behavior. Perhaps parents could be alerted if their kids have genes that incline them to impulsive spending or wildly risky investments, Benjamin said. Or perhaps policy makers could use genetic information about a particular population—say, cigarette-smokers or alcoholics—in order to craft policy more effective at encouraging some behaviors and discouraging others.
But if the possibilities are endless, they are also a bit scary—even to the genoeconomists themselves. “I’m really worried that if [tracing behaviors to genes] should become possible, it may lead to a lot of things that we don’t want,” said Koellinger. “I very firmly believe that information about your genetic makeup is probably the most private thing you could possibly have, and there should be extremely tight protections to make sure that no one gets their hands on this data unless you as an individual explicitly want this.”
There is already legislation on the books that prohibits employers from considering genetic information when making hiring decisions, and it’s not hard to imagine similar laws being passed in the realm of lending and investment as well. But even if such measures never become necessary—if genoeconomics never finds links clear enough to be of interest to a corporation or the IRS—Benjamin and his colleagues might still be ready to declare their work a success. That’s because, as they see it, genoeconomics is not motivated by a desire to tell people their destinies, but merely to give economists a more complete set of tools.
“My dream scenario is that economists usefully use genetic data for doing what economists do. And I think that [would be] a huge, huge success,” Benjamin said. “There’s a whole kind of data that explains half of people’s behavior that right now is totally absent from economics.”
If that doesn’t sound like the paradigm-shifting scientific revolution that a new word like “genoeconomics” seems to promise, that’s no accident.
“It’s a little bit unclear at this point if practical applications will come out of this,” said Koellinger. “That’s very important to understand. Just like with any other basic research, of course, when you’re writing grant applications or talking to the public it’s important to say why you’re doing this, what could be the potential implications.
“But really the bottom line, the truth,” he said, “is that for us, we’re simply doing this because we’re curious about why people are the way we are.”
Leon Neyfakh is the staff writer for Ideas. E-mail email@example.com.