Neuroeconomics: Merging Psychology and Economic Theory
In an attempt to explain the internal processes governing the occurrences in the economic world, neuroeconomics is an emerging interdisciplinary field attempting to merge psychology and economic theory. Simply put, the biological basis of behavioral economics — how and why people make judgements and decisions with economic consequences in terms of simple cerebral biology. But why should we be interested?
Surely considering the brain in more behaviorist, 20th century “black box” terms is much more simple — input information, output decision. And whilst, arguably, many economic theories do consider human behavior and choice in such a way, psychology would argue otherwise. Neuroeconomics attempts to bridge the gap between input and output, analyzing the chemicals and structures, which provide the biological basis for individuality in processing and decision-making.
Whilst the majority of the cerebral cortex is in fact dedicated to the interpretation of such complex or ‘higher order’ judgment functioning, the study of the biological response is relatively limited. This is surprising, given the untold benefits to corporates and executives whom, in theory, would thrive from findings; sectors in marketing, education, health, managerial and so on, in which research into human heuristics and biases would greatly inform product, workforce, and knowledge development. So why are not all corporations capitalizing on the biological blueprints for consumer, workforce and public decision-making? One word: ethics.
Neuroeconomics assumes that the neurotransmission and chemical balance in cerebral areas responsible for higher order and consciousness (such as the prefrontal cortex) result in the socioemotional basis for most of our decisions. Yes, contrary to economic theory, most human decision is not rational or uniform, but relies on the illogicality of trust, affect and gratification. So how ethical is it for these processes to be manipulated for capital gain? Brain imaging techniques and genetic screening in consumers, the aging population, even Wall street traders has given us greater insight into the likelihood of particular decisions, judgment and risk taking, allowing those utilizing the information to cash in on their carefully biologically tailored advertisements, behavioral change interventions, and so on. Does this mean in years to come scientists will be able to access unconscious desires and preferences for profit? Well, yes and no.
Whilst the ethical implications of feeding the consumer’s biological process for preference in questionable at best, using these reductionist techniques to better inform consumer choice is not necessarily beneficial. Studies have shown that whilst initial choice in blind tasting, for example, is unconscious, contrary decisions are made based upon branding, cultural preference and so on. Given that we do tend to make decisions consciously in terms of consumption, these techniques may be somewhat redundant.
Moreover, to an extent, neuroeconomic study still relies on the same economic principles of assumption – this being that human brains, unfortunately for scientists, do not work in uniformity, and rather, decisions are made irrationally, regardless of the unconscious biology informing us otherwise. Therefore the direction of neuroeconomic study would do well to focus on what creates this irrationality and uniqueness in behavior – are we simply unconventional when we want just for the sake of it? Certainly research must be conducted with temporality in mind – understanding the static structure of choice and judgement with no consideration to situational influence is redundant in itself, let alone in combination with the unpredictability of individual human decision.
More specifically within the field of neuroeconomics, neuromarketing seems to provide the most controversy in terms of its future applications. Currently, the field aims to utilize the findings of neurological study regarding consumer choice, and aims to appeal to certain unconscious mechanisms, which govern decision boosting purchase and profit – in theory. Previous research has already attempted to determine the chemical basis of ‘trust’ (well established as oxytocin) as a powerful component in judgement and decision in terms of brand trust and familiarity. Whilst this may be a well-established marketing technique in the corporate toolbox, the contribution of chemical ‘manipulation’ certainly lends towards the unease fueling ethical qualms in the area. In the same vein, gender differences in cerebral organization is well established to predict judgment and choice behavior, and is well marketed to tailor to the different sexes, however, the thought of a brand ‘controlling’ consumers through biological means raises ethical issues in this case. Although, these techniques are well posited in countless campaigns, thus perhaps the field of neuroeconomics only provides a biological explanation for consumer behavior, which is already time-honored and utilized.
Regardless of the ethical implications of probing into the deepest levels of consciousness for the sake of an ad campaign, the field has many benefits, which should be considered in comparison. It must firstly be addressed, in fact, that neuroeconomics and health psychology are long lost sisters, and whilst we praise the work of psychologically informed public health campaigns, neuroeconomics must also be considered as a valuable informant. In such a way that neuroeconomics may be used as the basis to inform such behavioral psychology, it must also be considered as the biological basis for behavioral economics, providing valuable contribution to wholly effective public change for the better. Similarly, development in managerial sectors, workforce training and motivation has already proven to benefit from neuroeconomical research in terms of ‘reframing’. Neural study has indicated the more efficient work of employees when focusing on creative and emotional thinking, as opposed to logics and numerical training traditionally employed (as demonstrated by our human preference to avoid rationality in decision making). Focusing on the emotional intelligence and providing encouragement and training directed towards a more imaginative decision making process has innumerable benefits in employment satisfaction.
Moreover, applications of neuroeconomics to psychiatry must be considered in weighing up the pros and cons of the field. If it is possible to identify a specific genetic or chemical contribution resulting in a decline in cognitive functioning, thus ultimately leading to psychiatric disorder (with specific symptoms in impaired judgment and decision making symptoms), both fields are mutually informed. More simply, identifying such biological structures and process in neuroeconomic study better informs the neurological basis for psychiatric disorders, aiding medical or therapeutic intervention. In a similar way, the study of psychiatric disorder can be used as ‘case study’ for areas of cerebral dis-regulation and its effects on judgment and decision.
Whilst I do not claim even close to omniscient in the aforementioned fields of neuroscience, economics or behavioral psychology, I would dismiss the claim that neuroeconomics is a redundant area of study, but highlight the issues surrounding the biological basis for ‘controlling’ consumer behavior. Regardless, the need for further research concerning a biological model of decision is clear, with accuracy in the field’s current conclusions questionable at present.
This guest article originally appeared on the award-winning health and science blog and brain-themed community, BrainBlogger: Neuroeconomics – Capitalisation on Consumer Control?
Guest Author, P. (2018). Neuroeconomics: Merging Psychology and Economic Theory. Psych Central. Retrieved on July 11, 2020, from https://psychcentral.com/blog/neuroeconomics-merging-psychology-and-economic-theory/