Summary: Many common economic misconceptions stem from evolved psychological instincts shaped in small, zero-sum tribal environments rather than modern market systems. These “folk-economic beliefs” lead people to misinterpret trade, immigration, profit, and regulation in ways that conflict with core economic principles, often resulting in support for counterproductive policies. Because these intuitions are predictable products of human evolution, they help explain why flawed policy ideas persist. Recognizing their origins can help counteract misleading instincts while reinforcing those that support cooperation, openness, and exchange.

Economic models, rooted in assumptions of rational agents maximizing utility under constraints, have long provided elegant frameworks for understanding human behavior in markets and societies. Yet, a persistent friction exists between these idealized portrayals of human beings and the ways humans actually navigate economic choices. People frequently champion policies that contravene basic economic principles, including minimum wages presumed to boost income without increasing unemployment, rent controls expected to enhance housing affordability without reducing supply, or tariffs that run counter to comparative advantage and affordability. 

People also often harbor counterproductive intuitions, including a belief that markets erode social bonds, despite evidence that markets foster cooperation and thus generate wealth. Those tendencies stem not primarily from information deficits or irrationality, but from our evolutionary psychology. Our economic intuitions were shaped over thousands of years in a world of tight-knit coalitions and zero-sum intergroup rivalry, rendering modern market dynamics counterintuitive. As such, markets are often rejected even when they are beneficial.

Perhaps the most parsimonious theory explaining why people often behave in economically harmful ways is the evolutionary cognitive model of folk-economic beliefs, proposed by anthropologist Pascal Boyer and political scientist Michael Bang Petersen. Folk-economic beliefs are those convictions about economics held by laypeople untrained in the discipline, which frequently diverge from fundamental economic tenets. These encompass mental representations of varied topics, from prices, taxes, and tariffs to welfare and immigration policies. 

Economists have traditionally critiqued those as irrational beliefs or mere byproducts of ignorance, but an evolutionary lens reveals them as predictable outcomes. Ensuring fairness in trade, sustaining social ties, forming stable coalitions, and resolving ownership disputes are all responses to ancestral challenges.

If this theory is right, both actual economic behavior and theories generated to explain one’s own economic behavior are predictable outputs shaped by evolution. When folk-economic beliefs are wrong, they are wrong in predictable ways. We talk about impersonal markets as if they were tribal conflicts. We treat economies built on innovation and surplus as if they were competitions over a fixed pile of resources.

Consider the intuition that international trade is harmful because another country’s gain must come at our expense. From the perspective of standard economics, this belief contradicts the well-established principle of comparative advantage. People benefit from specializing in what they produce most efficiently relative to other goods, even if a trading partner could produce everything more cheaply in absolute terms. For example, a surgeon who happens to type faster than his or her secretary still benefits from hiring the secretary and devoting more time to the operating room. Likewise, America could manufacture its own consumer electronics, but every dollar and worker devoted to assembling phones is one not devoted to designing the software, chips, and financial services where American companies dominate globally. The result is more total output and mutual gain. 

But our evolutionary psychology wasn’t built for comparative advantage, especially not across nations or tribes. Human groups historically competed for territory, food, and status in genuinely zero-sum ways. If a rival coalition grew stronger, it often meant danger for one’s own group. When modern individuals read that another nation is exporting more goods to us or running a trade surplus, our tribal instincts activate automatically. Nations are cognitively represented as tribes, and the success of one tribe is interpreted as a threat to another. The idea that both sides could benefit simultaneously—one of the central insights of the founder of economics, Adam Smith—runs against these deeply ingrained intuitions.

The same coalitional logic helps explain folk intuitions about immigration. People opposed to immigration often claim that immigrants steal jobs from native workers while also claiming that immigrants siphon welfare benefits without working. At the level of policy argument, these beliefs are apparently contradictory. But at the level of psychology, it is an expression of a single concern: Outsiders are draining scarce resources, whether the resource is employment or benefits. Humans evolved in groups where membership conferred access to shared resources—food, protection, or status—and where vigilance against free riders was essential to sustaining cooperation. Newcomers were therefore automatically treated with suspicion until they proved themselves contributors rather than exploiters. 

When this ancestral heuristic is applied to modern societies, it produces the intuition that outsiders must be consuming resources that properly belong to the in-group. Whether the imagined resource is employment or welfare benefits—or even whether the resources are truly being drained at all—matters less than the perceived threat that group boundaries are being crossed without reciprocal contribution.

The psychology of free-rider detection also helps explain the peculiar ambivalence that many people feel toward welfare programs. While people readily endorse the idea that society should help those who fall on hard times through no fault of their own, they also often worry that welfare encourages laziness or dependency. These views appear inconsistent only if one assumes that the public is applying a unified economic theory. In reality, they reflect two separate intuitions inherited from ancestral exchange systems. 

Communal sharing evolved as a form of insurance against bad luck—injury, illness, or an unsuccessful hunt—where helping unlucky group members benefited everyone in the long run. But the same systems also evolved to punish individuals who accepted benefits without contributing. Modern welfare debates, therefore, activate both intuitions simultaneously: compassion toward the unlucky and hostility toward perceived free riders.

Another common folk-economic belief concerns the relationship between labor and value. Many people feel instinctively that hard work should determine how much something is worth. In the hunter-gatherer economy that prevailed throughout most of human history, where the value of goods was closely tied to the labor required to obtain them, strenuous physical effort was intrinsically linked to value production itself. Hunting, gathering, building shelter, or crafting tools all involved visible effort, and individuals who contributed more effort typically produced more resources. When applied to modern economies, however, the same intuition can generate confusion. A programmer writing code, an entrepreneur coordinating supply chains, or an investor allocating capital may create enormous value without performing visible physical labor. Yet because our ownership psychology is sensitive to effort and physical transformation, profits earned through organization or innovation are often framed as morally suspect, particularly in socialist ideology, as if they are thought to represent extraction rather than creation.

Some common opposition to the profit motive itself is explained by evolutionary psychology. In face-to-face exchange within small groups, unusually large gains might indeed signal exploitation or hoarding of limited resources, especially since producing anything of value typically required communal effort. Someone who consistently benefited more than others from trades might be suspected of manipulating information or violating norms of fairness. Modern markets, however, often reward individuals precisely when they discover new ways to produce value—whether by inventing technologies, improving logistics, or coordinating complex networks of production. Because these gains arise in impersonal systems where the beneficiaries are distant strangers rather than known partners, the profits they generate can appear less like the rewards of innovation and more like evidence of exploitation. Our evolved moral intuitions struggle to track value creation in dispersed and opaque market economies. 

Likewise, many popular beliefs about regulation reflect ancestral intuitions that authorities can directly control outcomes. If the chieftain declared that food should be shared in a particular way, the order could be enforced through social pressure or direct monitoring. Everyone knew everyone else, contributions were visible, and deviations from the rule could be punished immediately. This experience makes it intuitively plausible that governments—which our minds intuitively represent as tribal coalitions—can simply command economic results. If rents are too high, they can seemingly be capped. If wages are too low, they can seemingly be raised. In naive folk economic theories, prices behave like promises: If the authority decrees a new price, the outcome should follow.

Take rent control. The intuition behind it is straightforward and morally compelling. If landlords raise rents beyond what tenants can afford, people may feel exploited: The owner of a scarce resource is extracting more money without providing more housing. A government rule limiting rents, therefore, appears to be a simple act of fairness. Ostensibly, the authority steps in, declares that rents may not exceed a certain level, and housing becomes affordable again. But in a large market economy, rent is not just a moral claim between two parties; it is also a signal that coordinates investment and construction of new housing. When rents are capped below market levels, the signal changes. Developers build fewer apartments, landlords convert rental units into other uses, and maintenance becomes less attractive when returns are limited. Over time, the supply of housing shrinks, and the shortage intensifies the very scarcity that drove up rents in the first place. The policy fails because the mechanism through which housing supply adjusts is invisible to the mental model that produced the intuition.

The same dynamic appears in debates over minimum wages. If workers are paid very little for difficult or unpleasant jobs, the situation feels unfair. But in a modern labor market, wages also function as signals that coordinate hiring decisions across the entire economy. When the legal wage floor rises above the productivity level of some jobs, employers do not simply pay the higher wage and continue as before. They reduce hiring, substitute machines for labor, or restructure tasks so fewer workers are needed. When the price signal changes, behavior adjusts in ways that the regulation does not anticipate. That often results in the direct opposite of the desired effect.

Our minds are not utility-maximizing computers that simply deviate from optimal choice due to insufficient information or computing power. They are toolkits. Our brains have evolved specialized cognitive inferences, or intuitions, that solved specific recurrent problems in our ancestral environments: “Who is trustworthy enough for exchange?”; “Who belongs to us, and who is a rival?”; “Who is contributing, and who is free riding?”; “Who owns what, and by what right?” These intuitions can be triggered by modern economic situations that resemble ancestral ones, even when the actual circumstances are entirely new. 

Folk-economic beliefs persist not because people are irrational, but because they are reasoning with tools that evolved for cooperation in small bands rather than coordination among millions of strangers. The challenge for modern societies is therefore not simply to correct mistaken beliefs, but to build policies that work with—rather than against—the grain of human psychology. 

Modern market societies represent one of humanity’s most remarkable cultural achievements. They sprang into existence by harnessing a set of different ancient social instincts—ones that enable cooperation on an unprecedented scale. Systems of property rights, contract enforcement, and voluntary exchange allow millions of strangers to coordinate their efforts in mutually beneficial ways. 

The claim here is not that markets are infallible. It is that our evolved intuitions often misidentify the nature of the problem and thus point us toward remedies that make matters worse. In modern economies, visible losses are concentrated, immediate, and emotionally salient, while gains are diffuse, gradual, and spread across millions of consumers and workers. A serious defense of markets should therefore acknowledge adjustment costs and real harms without conceding the larger error: namely, the belief that mutual gain, price signals, profit, and exchange are themselves forms of exploitation.

Some of our evolved instincts—like valuing reciprocity, rewarding contribution, and building reputations for trustworthiness—remain essential foundations of prosperous societies. Markets themselves depend on these deeply rooted norms of cooperation and exchange. Other intuitions, however—such as zero-sum thinking about trade, suspicion toward profitable innovation, or faith that authorities can simply command prices—reflect cognitive shortcuts suited to environments of scarcity and small-group control rather than decentralized abundance.

Recognizing that distinction should not slide into a blanket dismissal of public concern. Not every market outcome is benign, and not all economic anxieties are mere illusions. Trade, technological change, and broader shifts from manufacturing to services can impose real, concentrated losses on particular workers, firms, and regions, especially on lower-skill laborers whose jobs are exposed to offshoring or displaced by new forms of production. A person who loses a job to foreign competition is not simply trapped by faulty intuition. He is often responding to a real personal setback, even if the economy as a whole still becomes more productive and prosperous. The same is true in recessions or cases of fraud and negative externalities. 

The question, then, is how societies can address those real costs without defaulting to the very intuitions that misdiagnose their causes. 

Human beings are unusual among species in our ability to revise intuitive judgments through abstract reasoning and accumulated knowledge. Economic theory, empirical evidence, and institutional experimentation provide ways of testing whether our intuitions about markets actually match the systems we inhabit. Over time, societies that learn to distinguish between intuitions that promote cooperation and those that misread economic signals tend to design more effective institutions. 

Much of the progress of the last two centuries reflects this process of institutional learning precisely. Expanding trade networks, protecting property rights, encouraging innovation, and allowing prices to coordinate decentralized decisions have produced levels of prosperity that would have been unimaginable in the environments where our economic intuitions evolved. Understanding the evolutionary roots of folk-economic beliefs, therefore, helps explain why certain policy ideas remain politically attractive despite poor outcomes—and why sustained progress often depends on institutions that counteract some of our most natural intuitions while reinforcing others that support cooperation, openness, and exchange.

This article was originally published at The Dispatch on 4/21/2026.

“Drivers struck and killed 3,024 people walking in the United States in first six months of 2025, down 10.9% from the year before – the largest annual decline since GHSA began tracking pedestrain deaths 15 years ago.

While the 10.9% decrease is encouraging, pedestrian deaths remain 2.5% above the 2019 level, the last year before a steep rise in dangerous driving behaviors and traffic deaths caused by the pandemic.”

From Governors Highway Safety Association.

Summary: Many people today feel that life in New York has become uniquely difficult. Some imagine that the city was cleaner, safer, and more livable in the distant past. Historical reality tells a different story: Preindustrial New York was marked by extreme filth, unsafe water, rampant disease, pervasive poverty, and living conditions that made everyday life harsh and dangerous compared to contemporary times.

Discontent fueled the 2025 New York City mayoral election and Zohran Mamdani’s victory. A common theme echoed across the five boroughs: New York is a hard place to live. “We are overwhelmed by housing costs,” said Santiago, a 69-year-old retiree, outside a Mamdani rally. Those opposed to Mamdani had their own complaints. María Moreno, a first-time voter from the Bronx who supported Andrew Cuomo, lamented, “Now everything’s dirty, and our neighborhood does not feel safe.”

Today’s voters have legitimate grievances. The city’s housing costs, quality-of-life issues, and perceptions of disorder weigh heavily on residents’ minds. But it’s important to keep things in perspective. Different voters may romanticize different eras, but many seem to share a sense that if they could travel back far enough in time, they’d find a New York that was once clean, safe, and affordable. When Americans were polled in 2023, almost 20 percent said that it was easier to “have a thriving and fulfilling life” hundreds of years ago. Across the country, as one writer put it, people are engaged in an “endless debate around whether the preindustrial past was clearly better than what we have now.” In fact, Mamdani’s politics are grounded in an ideology that first arose from the frustrations of the early industrial era.

If Americans could go back in time to preindustrial New York City, however, they’d likely be horrified and possibly traumatized. Despite today’s real challenges, most New Yorkers would not trade places with their predecessors.

Long before the rise of factories and industry, New York City was a bustling port, founded by the Dutch as New Amsterdam in order to trade furs in the early seventeenth century. As early as 1650, local authorities enacted an ordinance against animals roaming the streets to protect local infrastructure—but to no avail. Then, in 1657, according to the Dutch scholar Jaap Harskamp:

New Amsterdam’s council attempted to ban the common practice of throwing rubbish, ashes, oyster-shells or dead animals in the street and leave the filth there to be consumed by droves of pigs on the loose. When the English took over the colony from the Dutch, pigs and goats stayed put. . . . Pollution persisted. The streets of Manhattan were a stinking mass. Inhabitants hurled carcasses and the contents of loaded chamber pots into the street and rivers. Runoff from tanneries where skins were turned into leather flowed into the waters that supplied the shallow wells. The (salty) natural springs and ponds in the region became contaminated with animal and human waste. For some considerable time, access to clean water remained an urgent problem for the city. . . . The penetrating smell of decomposing flesh was everywhere.

Into the early twentieth century, urban living in the United States felt surprisingly rural and agrarian, with an omnipresent reek to match. As late as the mid-nineteenth century, pigs roamed freely through New York City streets, acting as scavengers, and nearly every household maintained a vegetable garden, often fertilized with animal manure.

Indoor air quality was no better. A drawing from Mary L. Booth’s History of the City of New York depicts a seventeenth century New Amsterdam home with smoke from the fireplace swirling through the room. Indoor air pollution remains a serious problem today in the poorest parts of the world, as smoke from hearths can cause cancer and acute respiratory infections that often prove deadly in children. One preindustrial writer railed against the “pernicious smoke [from fireplaces] superinducing a sooty Crust or furr upon all that it lights, spoyling the moveables, tarnishing the Plate, Gildings and Furniture, and Corroding the very Iron-bars and hardest stone with those piercing and acrimonious Spirits which accompany its Sulphur.”

That said, before industrialization, though inescapable filth coated the interiors of homes, the average person owned few possessions for the corrosive hearth smoke and soot to ruin. By modern standards, New Yorkers—like most preindustrial people—were impoverished and lacked even the most basic amenities. According to historian Judith Flanders, in the mid-eighteenth century, “fewer than two households in ten in some counties of New York possessed a fork.” Many were desperately poor even by the standards of the day and could not afford housing. One 1788 account lamented how in New York City, “vagrants multiply on our Hands to an amazing Degree.” Charity records suggest that the “outdoor poor” far outnumbered those in almshouses.

Water quality was infamously awful. In seventeenth-century New Amsterdam, as Benjamin Bullivant observed, “[There are] many publique wells enclosed & Covered in ye Streetes . . . [which are] Nasty & unregarded.” A century later, New York’s water remained as foul as Bullivant had described. Visiting in 1748, the Swedish botanist Peter Kalm noted that the city’s well water was so filthy that horses from out of town refused to drink it. In 1798, the Commercial Advertiser condemned Manhattan’s main well as “a shocking hole, where all impure things center together and engender the worst of unwholesome productions; foul with excrement, frogspawn, and reptiles, that delicate pump system is supplied. The water has grown worse manifestly within a few years. It is time to look out [for] some other supply, and discontinue the use of a water growing less and less wholesome every day. . . . It is so bad . . . as to be very sickly and nauseating; and the larger the city grows the worse this evil will be.”

In 1831, a letter in the New York Evening Journal described the state of the water supply:

I have no doubt that one cause of the numerous stomach affections so common in this city is the impure, I may say poisonous nature of the pernicious Manhattan water which thousands of us daily and constantly use. It is true the unpalatableness of this abominable fluid prevents almost every person from using it as a beverage at the table, but you will know that all the cooking of a very large portion of the community is done through the agency of this common nuisance. Our tea and coffee are made of it, our bread is mixed with it, and our meat and vegetables are boiled in it. Our linen happily escapes the contamination of its touch, “for no two things hold more antipathy” than soap and this vile water.

In 1832, New York experienced a devastating outbreak of cholera, a bacterial disease that typically spread through contaminated water and killed with remarkable speed. A person could wake up feeling well and be dead by nightfall, struck down with agonizing cramps, vomiting, and diarrhea. The epidemic killed about 3,500 New Yorkers.

The initial actions taken to protect city water supplies were often private in nature. In fact, throughout the eighteenth and early nineteenth centuries, private businesses generally supplied urban water infrastructure. Despite such efforts, drinking water remained generally unsafe, even after industrialization, until the chlorination of urban water supplies became widespread.

The pervasive grime took a visible toll on New Yorkers. Between drinking tainted water, eating contaminated food, inhaling smoke-filled air, and living with poor hygiene, the average resident sported visibly rotten teeth. One letter from 1781 described an acquaintance: “Her teeth are beginning to decay, which is the case with most New York girls, after eighteen.”

The dental practices of the time were often as horrifying as the effects of neglect. The medieval method of using arsenic to kill gum tissue, providing pain relief by destroying nerve endings, remained common until the introduction of Novocain in the twentieth century. As late as 1879, the New York Times ran a story with the headline “Fatal Poison in a Tooth; What Caused the Horrible Death of Mr. Gardiner. A Man’s Head Nearly Severed from His Body by Decay Caused by Arsenic Which Had Been Placed in One of His Teeth to Deaden an Aching Nerve—an Extraordinary Case.” The story detailed the gruesome demise of a man in Brooklyn, George Arthur Gardiner, who died “in great agony, after two weeks of indescribable suffering.”

Preindustrial New York City wasn’t uniquely miserable for its time. Life was harsh everywhere, and cities around the world contended with the same foul smells, filth, poor sanitation, and grinding poverty. Rural villages were no better. Peasant families often brought their livestock indoors at night and slept huddled together for warmth. In many cases, rural peasants were even poorer than their urban counterparts and owned fewer possessions. Farm laborers frequently suffered injuries and aged prematurely from backbreaking work, while fertilizing cesspits spread disease and filled the air with an inescapable stench.

Though they may have been slightly better off than their rural counterparts, the struggles of early New Yorkers are worth remembering. However daunting the problems of today may seem, a proper historical perspective can remind us of how far we’ve come.

This article was originally published in City Journal on 1/13/2026.

“Amidst growing global challenges, perceptions of human cooperation—a cornerstone of societal progress—appear to be in decline. Despite empirical evidence showing that people in both the USA and China exhibit increased cooperation in experimental games, the public remains convinced that morality and trust—two key ingredients of cooperation—have declined over time. To investigate this paradox, this study examines trends in cooperation that people perceive from the past into the future, along with the reasons they perceive to underlie these trends. We conducted a cross-cultural survey of 628 Americans and 449 Chinese, asking them to estimate the likelihood of others’ cooperative behavior in a prisoner’s dilemma game and to rate four cooperation-related traits—warmth, morality, assertiveness, and competence—at various times between 1960 and 2030. Participants also provided reasons for their beliefs. Our findings revealed a stable belief in declining cooperative behavior in the game, along with all four traits, with a relatively small decline in competence, in both the USA and China. Moreover, over 60% of respondents believed in a more general decline in cooperation. Declining social trust and increasing stress and wealth were the primary perceived reasons for their beliefs in both countries; also, increasing exposure to social media was a stronger perceived reason for U.S. participants, whereas increasing education was stronger for Chinese participants. This study reveals a widespread belief in the declining cooperation in two of the world’s largest nations and highlights the profound influence of sociocultural factors on public beliefs.”

From Nature.