Book review: An Economic Theory of Greed, Love, Groups, and Networks

I just finished reading An Economic Theory of Greed, Love, Groups, and Networks by Paul Frijters with Gigi Foster, which has been sitting on my bookshelf for over ten years (and originally published in 2013), and kept being passed over in favour of other, seemingly more exciting, books. The book is clearly a labour of love for Frijters, and aims to add some of what he sees as the key missing parts of economics - not greed, which is inherent in the neoclassical model of individual utility maximisation, but love, groups, and networks. Frijters notes that the aim of the book is to add and integrate these into the mainstream view of economics, and:

What results is an enhanced view of how society works that increases the number of phenomena covered, and deepens the existing story.

In her preface to the book, Foster warns that the book may be an extremely uncomfortable read for those who hold mainstream economic views. She is right in that. I found it uncomfortable, because I was constantly thinking "yes, and...". The book has sections devoted to greed (the mainstream economic view, according to Frijters), love, groups and power, and networks and markets. The most uncomfortable aspect, I found, was that I thought the story they tell would have been much more compelling if told in the reverse order, starting with networks, and ending with greed and love.

There is a lot to like about the book. Frijters writes well, and tells a story that is sufficiently plausible to be persuasive. The problem is that much of the book reads like a collection of just-so stories, plausible enough individually and collectively, but often difficult to distinguish empirically from alternative explanations. I don't often find myself using the word epistemology, but this time I can't really avoid it. I don't buy into Frijters's epistemological stance.

As one example, Frijters conceptualises love in the form of loyalty to others. He dismisses altruism as a more limited concept than love. However, I was surprised by how little attention he pays to the broader literature on social preferences, particularly negative social preferences. People don't just care about others in a positive way. We can be spiteful, or envious. It is therefore rather ironic that later in the book, Frijters critiques the work of Akerlof and Kranton (whose book Identity Economics I reviewed here) as being "rather limited". I would say that a theory that considers positive social preferences, but gives little attention to negative social preferences, is rather limited as well.

Where I found the book was strongest was on the treatment of networks and markets (which is why, I think, it should have come first). I especially liked the way that Frijters leverages networks into explanations of the construction of cliques, groups, and ultimately, nations. The different forms of groups were also interesting, but I found this part of the book less convincing. I expect that there are many other categorisations of groups that could be developed, and I would have liked to see deeper engagement with the extensive literature on collective action, such as the work of Mancur Olson or Nobel Prize winner Elinor Ostrom. In her preface, Foster asks readers to forgive instances where particular authors' contributions are not acknowledged. However, I think the lack of engagement with the collective action literature is a more substantial omission.

The book is mostly heavy going, but there are some lighter parts. I particularly liked this bit:

The type of economist who depicts the rest of the world as being inhabited by agents who are rational and have complete information is, by implication, redundant. Instead of working out how the economic system works, such an economist could simply walk up to the first person on the street and ask him how the economy works...

In that, Frijters is undoubtedly correct. Overall, I think the book presents some interesting points to think about, things that could expand the horizons of economic theory. However, it's unclear to me who the intended audience for this book is (or was). I don't think it will engage the general reader, and a specialist economist may well struggle, as I did, with the epistemological approach. Sadly, it's not a book that I would recommend for any but those who are looking at extended mainstream theoretical economic models, and even then, they would likely be better served by looking at Frijters's more focused academic research.