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  #1  
Unread September 13th, 2006, 10:51 AM
ToddStark ToddStark is offline
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Post New Yorker: Neuroeconomics (Mind Games)

The New Yorker published a pretty good introductory article on Neuroeconomics, a budding field studying how economic behavior works in terms of the brain.

MIND GAMES, "What neuroeconomics tells us about money and the brain,"
by JOHN CASSIDY


Some representative snippets:

Quote:
“We were reading the neuroscience, and it just seemed obvious that there were applications to economics, both in terms of ideas and methods,” said George Loewenstein, an economist and psychologist at Carnegie Mellon who read Damasio’s and LeDoux’s books. “The idea that you can look inside the brain and see what is happening is just so intensely exciting.”
Quote:
Economics has always been concerned with social policy. Adam Smith published “The Wealth of Nations,” in 1776, to counter what he viewed as the dangerous spread of mercantilism; John Maynard Keynes wrote “The General Theory of Employment, Interest, and Money” (1936) in part to provide intellectual support for increased government spending during recessions; Milton Friedman’s “Capitalism and Freedom,” which appeared in 1962, was a free-market manifesto. Today, most economists agree that, left alone, people will act in their own best interest, and that the market will coördinate their actions to produce outcomes beneficial to all.

Neuroeconomics potentially challenges both parts of this argument. If emotional responses often trump reason, there can be no presumption that people act in their own best interest. And if markets reflect the decisions that people make when their limbic structures are particularly active, there is little reason to suppose that market outcomes can’t be improved upon.
Quote:
In the past few years, dozens of papers on neuroeconomics have been published, and the field has attracted some of the most talented young economists, including David Laibson, a forty-year-old Harvard professor who is an expert in consumer behavior. “Natural science has moved ahead by studying progressively smaller units,” Laibson told me. “Physicists started out studying the stars, then they looked at objects, molecules, atoms, subatomic particles, and so on. My sense is that economics is going to follow the same path. Forty years ago, it was mainly about large-scale phenomena, like inflation and unemployment. More recently, there has been a lot of focus on individual decision-making. I think the time has now come to go beyond the individual and look at the inputs to individual decision-making. That is what we do in neuroeconomics.”
kind regards,

Todd
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  #2  
Unread September 13th, 2006, 11:34 AM
Margaret McGhee Margaret McGhee is offline
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Default Re: New Yorker: Neuroeconomics (Mind Games)

Todd, very cool stuff. I have a study in front of me right now:

"Frames, Biases. and Rational Decision-Making in the Human Brain" - Benedetto de Martino, et al. University College, London.

I hate to run over here and say "I told you so" every time a study comes out that seems to support my hypothesis so well - but here is one that's right on topic as well.

Quote:
Intro: Human choices are remarkably susceptible to the manner in which options are presented. This so-called "framing effect" represents a striking violation of standard economic accounts of human rationality, although its underlying neurobiology is not understood. We found that the framing effect was specifically associated with amygdala activity, suggesting a key role for an emotional system in mediating decision biases. Moreover, across individuals, orbital and medial prefrontal cortex activity predicted a reduced susceptibility to the framing effect. This finding highlights the importance of incorporating emotional processes within models of human choice and suggests how the brain may modulate the effect of these biasing influences to approximate rationality.
I think they are showing how a mind, sufficiently motivated (emotionally), can (subconsciously) modulate (weight) the emotions coming from various sources in the brain so as to discount sources that can be expected (through experience) to apply specific irrational biases.

Regards, Margaret

Last edited by Margaret McGhee; September 13th, 2006 at 01:51 PM.
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Unread September 14th, 2006, 09:57 AM
ToddStark ToddStark is offline
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Post Re: New Yorker: Neuroeconomics (Mind Games)

Hi Margaret,

You might also enjoy Marc Hauser's recent book, "Moral Minds."
Amazon listing for Hauser, Moral Minds

Hauser starts with the Humean notion that our moral judgments are driven by our passions rather than calculated through reason, but then expands on it to try to explain how and why we distinguish social conventions from moral decisions. Hauser concludes that we possess an unconscious grammar of action underlying morality, similar to the one that underlies our acquisition of language. It does a good job summarizing both the philosophical issues and relevant scientific data from various fields but is not technical. He points out that while our actions are frequently catalyzed by emotion, the emotion itself must first by triggered by underlying unconscious judgments, and then proceeds to look for the biological roots of those judgments and hypothesizes a universal human moral faculty along the same lines as Chomsky's universal grammar.

I'll also mention another work in the same spirit, Ray Jackendoff's "Patterns of the Mind." It is a clearly articulated argument but the book is less effective because it tries to accomplish so much more in less space and seemingly for an even more novice audience than Hauser assumes. Jackendoff has a very clear explanation of grammars, the kinds of empirical evidence we use to infer them, and their application to various human abilities. I mention this because one of the things that made Hauser's argument appeal to me is that I was swayed first a few years ago by many of Jackendoff's points, and they came back to me when reading Hauser.

I know you struggle here sometimes clarifying your emotion-based theory, but from my perspective the only criticism I have of it is that I take much of it for granted and am particularly interested in the next step, as Hauser emphasizes, seeking out the biology underlying the emotions rather than stopping with their existence and role in thinking.

kind regards,

Todd
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  #4  
Unread September 14th, 2006, 10:17 AM
Fred H. Fred H. is offline
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Default Re: New Yorker: Neuroeconomics (Mind Games)

Quote:
MM: I hate to run over here and say "I told you so" every time a study comes out that seems to support my hypothesis....
I guess MM is referring to her so-called “emotion theory of behavior choice,” her so-called “axiom”—that declares that “people believe [only] what feels good to them - and use their brains to justify it”—with her (rather presumptuous/laughable) "I told you so" comment.

Trouble is this “framing effect”—that how a question is posed can skew decision-making—is old news. It’s been known for some time that many folk are indeed less objective than others, that some (e.g. MM) allow irrational emotion/feeling to influence their “reasoning” far more than those of us (e.g. Fred H.) that tend to be more objective and are more inclined to use the orbital and medial prefrontal cortex that God/evolution gave us

While the study confirms what is already well known, that “emotion” obviously plays a big role in human decision making/ reasoning, it in no way confirms MM’s circular notion that all humans believe only whatever feels good to them and “use their brains to justify it” (although for MM herself that seems to be the case).

Nevertheless, the De Martino brain-imaging study does provide some cool pics of neural activity.
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  #5  
Unread September 15th, 2006, 10:14 AM
Margaret McGhee Margaret McGhee is offline
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Default Re: New Yorker: Neuroeconomics (Mind Games)

Thanks much for the book suggestions. I'm afraid I've been falling behind my usual consumption. Right now I'm reading "The Executive Brain" by Elkhonon Goldberg and I've also dropped back to pick up one of LeDoux's earlier books that I'm reading at the same time, "The Emotional Brain". But it's been a busy summer. It takes me quite a while to get through them as I tend to go back and re-read one or more chapters as soon as I sense that I'm not getting the full monte - and that happens frequently. I'm sure I could get through them faster if I actually had a background in the bio sciences and psychology. But then, I'd probably miss some connections that I catch now - perhaps even ones that few psychologists see, perhaps even the author.

Quote:
Todd: I know you struggle here sometimes clarifying your emotion-based theory, but from my perspective the only criticism I have of it is that I take much of it for granted and am particularly interested in the next step, as Hauser emphasizes, seeking out the biology underlying the emotions rather than stopping with their existence and role in thinking.
Hmmm. That's interesting that you would be drawn in that direction. For me, it is the implications that this has for learning and education, understanding creativity, politics and human systems of government, crime and rehabilitation, cultural change, identity psychology, conflict resolution and violence, etc. I assure you "stopping" never occurred to me.

I don't really know what you do but from a couple of things mentioned by TomJ (I think) you are into some kind of robotics or machine intelligence. I worked in that area at one time too and I have often wondered about endowing a machine with a type of emotion-like decision-making heuristic - where its "logical mind" is a service provided to that function rather than the driving algorithm - which would better model the solution to complex machine control that nature has provided through evolution. Sort of a Captain Kirk model instead of the current Mr. Spock version of machine intelligence.

In any case, thinking about all these applications of my "emotion-based theory" keeps my head spinning quite enough - and I never think much about the underlying biology - except that it may further illuminate just what's going on in there.

Added on edit: Two paragraphs removed because I think sometimes I analyze this stuff too much. Thanks for your comments.

Best regards, Margaret

Last edited by Margaret McGhee; September 15th, 2006 at 03:47 PM.
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