NeuroeconomicsGiven my interest in all things relating to neuroimaging, and the positive reception I got from What's the deal with Neuromarketing? I thought I'd bring up a related field of study: Neuroeconomics.
A recent article in Technology Review entitled The Economics of Brains underscores the implications of fMRI research as it relates to economic theory. The hope is that by understanding how the brain works in things like decision making and reward processing, economists will be able to better modify their theories to account for "irrational" behavior. Of course, the question is, considering the level of neuroeconomic research occurring today, should economists really care?
Perhaps understanding how the brain works is more trouble than it’s worth. After all, some recent findings are not at first glance very economically enlightening. Anyone who has regretted an impulse purchase, for instance, would be unsurprised to learn that evaluations of immediate and delayed rewards use different parts of the brain. For now, neuroeconomics is subject to the criticisms that plague psychology: that its experiments show what is already intuitively obvious, and its models are descriptive, not quantitative. But Stanford psychologist Brian Knutson and psychiatrist Richard Peterson are trying to answer that criticism. Their paper in a forthcoming issue of Games and Economic Behavior reports that subjects seem to use different parts of their brains when they consider financial gains and when they consider financial losses; more recently, they have found that subjects use different parts again to evaluate the magnitude and probability of those gains and losses. Knutson and Peterson’s work is part of an increasing effort to figure out how economic utility may be coded quantitatively in various regions of the brain. If economists could track the different components of utility in a statistical way, they could understand why some people take risks and some don’t—and possibly predict their future behavior.
Obviously, like most neuroimaging research, the subfield of neuroeconomics is still quite young, and only time will tell how effective this type of research will be in shaping economic theory. One interesting aspect of this field is that by putting the results in an economic framework (as opposed to a marketing framework), researchers have been able to isolate themselves from criticisms such as those directed at neuromarketing researchers (see What's the deal with Neuromarketing?). On the surface, both fields study very similar concepts, but neuroeconomic research seems to encompass a wider variety of issues.
For those of you more interested in the topic, I refer you to the following sites:
What is Neuroeconomics? and What is Behavioral Economics? from Decision Science News
Kevin McCabe, 2003, "Neuroeconomics," Encyclopedia of Cognitive Science, Lynn Nadel (ed-in chief), Nature Publishing Group, Macmillan Publishing, New York, pp. 294-298
And, a Neuroeconomics blog which has made its way to my blogroll.