Does economics need brain science? This is the aim of a recent article in the Economist. Throughout the history of economics, major advances have sometimes come from areas outside of the core discipline. Just as similar developments in other scientific disciplines. This includes the influence from psychology, which has demonstrated that decisions are not made through the rational, overt weighing of alternatives before consciously choosing the right option. Rather, choices are influenced by context, internal states, unconscious processes, emotions, and a whole host of less (or different form of) rational processes.
Today, few seriously think that homo economicus, or the rational man view, is the best model of human decision making. Nevertheless, such assumptions haunt several economic models, most often in implicit ways. One may, of course, say that the unconscious and emotional processes that influence preferences and decisions are built on some kind of rationality. Indeed, they are the remains of adaptive strategies throughout human and mammalian phylogeny.
But this begs the question of the rational man idea. Human preferences and decisions are the result of both overt and covert processes in the mind and brain. What drives our decisions and indeed our behaviours in general are the result of a convergence of several parallel processes of perceptual, emotional, cognitive and social processes. Conscious as well as unconscious kinds. Models of decision making are currently lacking the full implementation of such multidimensional factors, and in particular the temporal aspect of this.
Cognitive neuroscience has thus been suggested as a means to improve this, by applying both the insights from its own research, as well as in direct testing of ideas from economics. This branch, often referred to as neuroeconomics, but also decision neuroscience, has received a lion’s share of attention both within academia and in the media. And, not surprisingly, many economists are sceptic.
And they should be! In present-day pop-science culture, showing a brain image — or better, a brain activation image — is an exceptional way of getting attention, and give the impression of scientific rigour. But going beyond the brain blobs, it becomes harder to know exactly how much news there is in the image. So let’s say that you find that regions x, y and z show increased activation when performing behaviour B. Interesting, right? This is what makes many people fascinated (simplified). “Yeah, they found that this region called orbitofrontal cortex was activated when people expected a reward”. But if you ask yourself or that person: “so what?” what is your answer? What is really the most valuable information in this?
Looking at blobs are, of course not sufficient. But it may be one of the underlying causes of the scepticism and criticism that neuroeconomics has received. There are too many just so stories (or so what stories). Blobs don’t tell stories or hint at causal relations, not even why the brain is important. This is covered briefly in The Economist article:
The fiercest attack on neuroeconomics, and indeed behavioural economics, has come from two economists at Princeton University, Faruk Gul and Wolfgang Pesendorfer. In an article in 2005, “The Case for Mindless Economics” (PDF), they argued that neuroscience could not transform economics because what goes on inside the brain is irrelevant to the discipline. What matters are the decisions people take—in the jargon, their “revealed preferences”—not the process by which they reach them. For the purposes of understanding how society copes with the consequences of those decisions, the assumption of rational utility-maximisation works just fine.
It’s funny to note that this article by Gul and Pesendorfer was published online long before it seems to have hit the presses. And what a smear! Don’t we always want the best possible model with the most available details? But the main claim — that what goes on in the brain is irrelevant to economics — is actually a widespread idea. And to some extent, rightfully so!
Neuroimaging results are not self-evident. It needs to be explained. And it needs to be related to existing knowledge about the brain. Consequently, we need to move beyond the blobology fascination and look into causal relationships, and ultimately how this affects behaviour. Neuroscience has the tools to provide this. For example, if we look at the brain during a decision making task, we learn that one may be able to define specific sub-processes that occur before and during the decision behaviour. According to the oft-cited 2007 Neuron study by Knutson et al. (PDF) we may distinguish between preference formation, valuation, and decision making. Already during the viewing of a product, activation in the nucleus accumbens was positively related to purchase behaviour (occuring several seconds later). Product price that exceeded that of an expected price lead to increased activation in the insula, and was negatively related to purchase behaviour. Among many other factors in this study, it neatly illustrates that decision making (the end product) can be disentangled into relevant sub-processes. And this information is unavailable unless you use neuroimaging.
Furthermore, knowing brain substrates and time-frames allows us to alter behaviour. If an identified region — say the amygdala — is implemented in pathological gambling, we may assume that altering the function of this region may also influence the (undesired) behaviour. Since the amygdala is largely serotonergic, applying medication that increase or decrease the levels of serotonin may affect gambling behaviour. And indeed, this is what research indicates.
This, neuroeconomics should be expected to allow us to probe into the detailed processes that lead to decision behaviour. Knowing the where and when (and why) of the brain during decision making is also going to allow us to affect the causal mechanisms. In effect, neuroeconomics is already today proving its’ effect. And researchers such as Gul and Pesendorfer should pay heed to the discipline. But we — and they — need to go way beyond the blobology so often offered in this arena. Cognitive neuroscience has the tremendous power to influence a whole range of theories of the mind — from psychology and paedagogics to economics and politology. But in order for it to succeed, the science needs to be closely accompanied by valid explanations and less sensationalism.