Of Mice, Men, And Markets
Economists usually study the behavior of consumers and producers. But at the May 30-June 2 Neurobehavioral Economics Conference in Pittsburgh, they focused on monkeys and rats. Why? Because they figure there may be similarities between how animals respond to stimuli and how humans behave in the market.
Take, for example, the rat who repeatedly pushes a lever to choose electric pleasure over food, until it starves to death. Sound a bit like the guy whose credit-card balances exceed his annual earnings?
But seriously. Neuropsychologists are encouraging economists to consider Economic Man as an animal that has a bit of extra brain cortex. These scientists want economists to take into account not just human reason, but the dark sea of instincts and emotions that can overpower formal intellect. "Economics overemphasizes the areas that distinguish us from animals," says conference organizer George Loewenstein, an economist at Carnegie Mellon University.
IMPULSES. Building on what they have learned in experiments with rats, monkeys, and humans, scientists are testing hypotheses about which centers of the brain figure in economic decision-making. The scientists speculate that the section known as the amygdala--a source of emotional thought--fights for supremacy with the more deliberative prefrontal cortex. So it could be your amygdala talking when you take the kids' college money to the Porsche dealer.
It's precisely this kind of impulsive behavior that keeps economists so busy trying to predict or guide the course of economies. Some economic policy does take into account our propensity to opt for immediate pleasure: Social Security, for instance, is there for those who won't save. But most policy is based on the assumption that we act in our own economic interest. "With people, we can talk about changing goals," says Peter Diamond, an economist at Massachusetts Institute of Technology who attended the conference. "That's hard to do with a rat."
Did the Pittsburgh conference change how economists think about how economic thinking works? The brain, some of them say, should no longer be viewed as a socialistic model of rational planning, but a bustling, free-market economy--a Turkish bazaar alive with music and smells and whispered enticements. Someday, economists may learn enough about the brain to make sound policy seem pleasurable, too.
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