Neutral Theory, Stochasticity, and the Efficiency of Social Institutions

Abstract

This paper draws on the concept of neutral theory from molecular biology to describe how rational choice foundations may be given to cultural practices or social institutions in such a way that the specifics of the practice or institution are inherently arbitrary, i.e., stochastic. Neutral theory describes the process by which genes at the molecular level may propagate across a species without conferring any benefit in terms of evolutionary fitness. Likewise, social institutions or cultural practices may propagate across the group without any instrumental use for them. Interpretations of practices and institutions in terms of neutral theory are generally simpler than other economic explanations. On the other hand, definitionally, neutral explanations of cultural practices are less likely because they will not be actively selected for at the group level.

Keywords: Neutral Theory, Rational Choice Theory, Evolutionary Economics, Social Institutions

JEL Classification: D70, B52, P50