Friday, July 18, 2008

Priomdal villain seeking and oil and food prices

I've been reading about evolutionary psychology lately. The premise of evolutionary psychology, which goes hand-in-hand with the current advances in neuro-biology, is that our brain is composed of cognitive organs which evolved just like other parts of our body, and therefore human behaviors can be explained from an evolutionary perspective.

One of the biases we inherited from our caveman ancestors is the tendency to associate "bad" things in the "society" we live with an external agent. We always look for a villain outside.

Another shortcoming of our brains is that we don't come in terms with mathematical phenomena that do not occur in our everyday lives. Everyone knows the story of the king who was fooled by his clever servant who wanted two times the grain of gold on each tile of a chess board. That is because we never come across exponential grow in our lives, and hence did not evolve a sub-organ for it. As a matter of fact there are some tribes who don't have numbers at all!

Combination of these features may be a reason why the current spikes in the food and oil prices are always associated with speculators. As these two articles argue,

http://online.wsj.com/article/SB121486800837317581.html?mod=googlenews_wsj
http://www.nytimes.com/2008/06/13/business/13speculate.html?_r=1&partner=rssnyt&oref=slogin

the basic supply-demand relations may be the only reason. I would be happy to see more arguments from the other side if you have any.

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