The Moral Animal – Why We Are The Way We Are

For those interested in human psychology and how evolutionary forces can influence the way individuals make decisions, The Moral Animal – Why We Are The Way We Are by Robert Wright is a fascinating read. It explores the science of evolutionary psychology, examining the historical context around how the theory of natural selection was conceptualized by Charles Darwin. Wright claims the key goal of evolution is for an individual to pass their genes into the next generation. Throughout this pursuit, human behaviour can sometimes be at odds with an individual’s long-term happiness or what is considered a robust moral compass. Although the terms “social Darwinism” and “determinism” have negative connotations, Wright asserts that despite evolutionary forces prompting humans to act in a certain way, it doesn’t mean that moral sentiment needs to follow the same path. Even though behavioural biases can lead investors into making suboptimal decisions that earn excess risk-adjusted returns, exploiting these behavioural biases is not an easy endeavor. Wright analyzes why financial market history is littered with examples of individuals acting in non-rational ways, stating: “[H]umans aren’t calculating machines; they’re animals, guided somewhat by conscious reason but also by various other forces. And long-term happiness, however appealing they may find it, is not really what they are designed to maximize.” Putting aside the discussion around naturalistic fallacy (drawing values or moral sentiment from evolution), the implication that evolutionary psychology can lead individuals to act in suboptimal ways is important for business and financial markets