Gintis on the Evolution of Private Property By Bryan Caplan

Herb Gintis’ “The Evolution of Private Property” (Journal of Economic Behavior and Organization, 2007) is one of the most fascinating articles I’ve read in years. (ungated draft) I’m slightly jealous because I’ve planned to write a similar piece for a decade, but Gintis did a much better job than I would have done.

Key ideas:

First, the endowment effect – our tendency to value our stuff extra just because it’s ours – is widespread throughout the animal kingdom. Even butterflies have it!

Among the many animal behaviorists who put this theory to the test, perhaps none is more elegant and unambiguous than Davies, who studied the speckled wood (Pararge aegeria), a butterfly found in the Wytham Woods, near Oxford, England. Territories for this butterfly are shafts of sunlight breaking through the tree canopy. Males occupying these spots enjoyed heightened mating success, and on average only 60% of males occupied the sunlit spots at any one time. A vacant spot was generally occupied within seconds, but an intruder on an already occupied spot was invariably driven away, even if the incumbent had occupied the spot only for a few seconds. When Davies “tricked” two butterflies into thinking each had occupied the sunny patch first, the contest between the two lasted, on average, ten times as long as the brief flurry that occurs when an incumbent chases off an intruder.

And non-human primates, of course:

In general, the taking of an object held by another individual is a rare event in primate societies (Torii, 1974). A reasonable test of the respect for property in primates with a strong dominance hierarchy is the likelihood of a dominant individual refraining from taking an attractive object from a lower-ranking individual. In a study of hamadryas baboons (Papio hamadryas), for instance, Sigg and Falett (1985) hand a food-can to a subordinate who was allowed to manipulate and eat from it for 5 min before a dominant individual who had been watching from an adjacent cage was allowed to enter the subordinate’s cage. A “takeover” was defined as the rival taking possession of the can before 30 min had elapsed. They found that (a) males never took the food-can from other males; (b) dominant males took the can from subordinate females 2/3 of the time; (c) dominant females took the can from subordinate females 1/2 of the time. With females, closer inspection showed that when the difference in rank was one or two, females showed respect for the property of other females, but when the rank difference was three or greater, takeovers tended to occur.

Second, this ubiquitous self-enforcing territory/property cannot arise without an endowment effect:

Consider, for instance, the sparrows that built a nest in a vine in my garden. The location is choice, and the couple spent days preparing the structure. The nest is quite as valuable to another sparrow couple. Why does another couple not try to evict the first? If they are equally strong, and both value the territory equally, each has a 50% chance of winning the territorial battle.Why bother investing if one can simply steal (Hirshleifer, 1988)? Of course, if stealing were profitable, then there would be no nest building, and hence no sparrows, but that heightens rather than resolves the puzzle.

Third, given various technical conditions, evolution affirmatively selects for an endowment effect. Read the paper for details.

My favorite part is Gintis’ discussion of (harmless) psychological experiments on human toddlers and preschoolers:

Long before they become acquainted with money, markets, bargaining and trade, children exhibit possessive behavior and recognize the property rights of others on the basis of incumbency. In one study (Bakeman and Brownlee, 1982), participant observers studied a group of 11 toddlers (12-24 months old) and a group of 13 preschoolers (40-48 months old) at a day care center. The observers found that each group was organized into a fairly consistent linear dominance hierarchy. They then cataloged possession episodes, defined as a situation in which a holder touched or held an object and a taker touched the object and attempted to remove it from the holder’s possession. Possession episodes averaged 11.7/h in the toddler group, and 5.4/h in the preschool group. For each possession episode, the observers noted (a) whether the taker had been playing with the object within the previous 60 s (prior possession), (b) whether the holder resisted the take attempt (resistance), and (c) whether the take was successful (success). They found that success was strongly and about equally associated with both dominance and prior possession. They also found that resistance was associated mainly with dominance in the toddlers, and with prior possession in the preschoolers. They suggest that toddlers recognize possession as a basis for asserting control rights, but do not respect the same rights in others. The preschoolers, more than twice the age of the toddlers, use physical proximity both to justify their own claims and to respect the claims of others.

Fortunately for me, Gintis doesn’t discuss the application that most interests me: black markets. On a typical Hobbesian view, exemplified by Holmes and Sunstein’s The Cost of Rights, markets where government not only refuses to enforce property rights but actively forbids property rights should not exist. Plainly they do. How are black markets possible? Because of the endowment effect – the very psychological trait that explains almost all the property and territory that’s ever existed.

HT: GMU Ph.D. student Eric Hammer, who’s co-authoring the black market piece with me.