Neuroeconomic imperialism?Posted: November 20, 2012 Filed under: behavioral economics, books, cognition, economics, psychology Leave a comment
I just saw a recent article in the Chronicle of Higher Education on the emerging field of neuroeconomics. Unlike behavioral economics, where ideas from psychology have been ported over to economics to explain various individual “anomalies” in choice behavior, in neuroeconomics much of the intellectual traffic has gone in the other direction–economic modeling tools are helpful in understanding psychological processes (including where those processes deviate from classic economic theory). The axiomatic approach to choice makes it a lot easier to parse out how the brain’s actual mechanisms do or don’t obey these axioms.
An important guy to watch in this area is Paul Glimcher, who mostly stays out of the popular press but is a hardcore pioneer in trying to create a unified (or “consilient”) science encompassing neuroscience, psychology, and economics. I’ve learned a lot from reading his Foundations of Neuroeonomics (2010) and Decisions, Uncertainty, and the Brain (2004): why reference points (as in prospect theory) are physiologically required; how evolutionary theory makes a functionalist and optimizing account of brain behavior more plausible than a purely mechanical, piecemeal, reflex-type theory; why complementarity of consumption goods presents a difficult puzzle for neuroscience; and much more.
Decisions, Uncertainty, and the Brain was mostly aimed at neuroscientists and psychologists, using economic models (including game theory) to transcend Cartesian dualism (and to explain experiments where reward contexts affect the perceptual and motor functioning of primates). Foundations, on the other hand, is a manifesto speaking to all three communities, emphatically including economists. It directly confronts economists’ skeptical critiques of behavioral theory, including Gul and Pesendorfer’s widely cited “The Case for Mindless Economics.”
The book contains a strong methodological argument that multilevel explanations (brain physiology, psychological mechanisms, and economic theory) can better explicate choice phenomena than any one level could on its own. As in the Chronicle article linked above, one theme that will surprise some is that “unrealistic,” “abstract” economic theory does a better job of mapping choice phenomena than do purely psychological theories. At the same time, Glimcher disabuses economists of the idea (perhaps gathered from sketchy popular accounts of fMRI studies) that neuroscientists are just guessing about brain mechanisms relevant to choice behavior. In fact, something like “expected utility”can be found in specific neuronal firing patterns of subjects making choices.
This “reifying” of utility, moving away from economists’ more modest and skeptical notions of ordinal utility and revealed preference, gives economic theory more urgent relevance–math written down to satisfy certain consistency axioms appears to have (imperfect) correlates in the brain. On the other hand, this expected utility cannot be based on absolute wealth, because we have direct observation of what appear to be correlates to reference points as in prospect theory. Glimcher also describes direct neurological mechanisms that match the “trembling hand” and “random utility” constructions of game theory and marketing.
One area where there is much work to be done is the analysis of choices over abstract, language-mediated options. Most of the experiments are tied pretty closely to directly perceived rewards, such as food for animal subjects or concrete objects for humans. The relation between perceptual mechanisms and the valuation processes they feed into is a lot clearer for these direct rewards.
I should point out that none of this is easy reading for the non-neurologist who has trouble keeping track of the various anatomical areas and their putative functions. But the payoff is pretty high on the substance of the research while you also get a very satisfying model of truly interdisciplinary research. It’s a lot like free trade–each field benefits overall but some specific sectors get damaged by foreign competition