What can "neuroeconomics" teach us about how we think about money?

The economic mysteries of daily life.
Nov. 1 2008 7:55 AM

Money on the Brain

What can "neuroeconomics" teach us about how we shop?

This morning, I had a remarkable experience: I strolled into a delicatessen and bought some delicious Stilton. What made the shopping trip unusual was that I was wearing a brain scanner while I did it. My costume consisted of an electroencephalograph cap, which looks like a polka-dot shower cap with wires plugged into it; a pair of wraparound glasses with a tiny video camera attached; a clothes peg on one finger to measure my heart rate; two other finger monitors that function like a lie detector; a thermometer patch on a fourth finger; and a satchel to hold a computer gathering the data.

Most of these devices, or their equivalent, can be hidden under clothes or baseball caps so that the wearer looks as if they are sporting only shades and an iPod, but in my case the boffins hadn't bothered, and so I entered the deli looking like an extra from a 1970s episode of Doctor Who.

Advertisement

This was all part of my efforts to understand "neuroeconomics," a new, controversial, and eclectic marriage between economics, marketing, and various branches of physiology and brain science. With very different aims, economists and marketers are attempting to tap into the dramatic advances in our understanding of the brain that have taken place over the past 15 years. Their tools encompass mood-altering drugs, tests for hormone levels, animal studies, and fMRI scans (which use immobile scanners to measure blood flows deep inside the brain).

"Neuromarketing" is the simplest application, and the one in which I was participating. David Lewis, a neurophysiologist at the Mind Lab, a spinoff from the University of Sussex, showed me how the physiological readings could be viewed alongside output from my camera to provide a simple but—presumably—useful demonstration of what really grabbed my attention in the deli. Among Lewis' findings are that eating chocolate is more exciting than making out (at least, making out in an electrical shower cap while surrounded by men with clipboards) and that, subconsciously, young men are more interested in sneakers than in the wares on display in an Ann Summers sex shop.

While the possible applications for marketers are obvious enough, such trials are hardly unlocking the deepest secrets of thought. It remains to be seen whether neuroscience has much to contribute to economics itself, a subject that has long focused on the decisions people make, without relying on any particular theory of how they make them. It is also hard to point to anything terribly interesting that the neuroeconomists have discovered, although neuroeconomics may contribute more as time goes by.

Neuroeconomics may provide more shape to the older and more famous field of behavioral economics. A mixture of economics and psychology, behavioral economics has used laboratory experiments to expose a bewildering number of exceptions to the traditional economic theory of rational choice. At present, though, there is little pattern to what the behavioral economists are observing, and it's possible that a greater understanding of how the brain works might help to provide one.

Yet neuroscience might also help reinforce the traditionalists. Wolfram Schultz, a neuroscientist at Cambridge who studies how the brain processes risk and reward, says that just as the brain registers sensations such as sight, he can now see it registering rewards. There was no reason to expect that the mathematically convenient economists' fantasy of "utility" had any real analogue in the brain—but it seems that it might, after all. There's a thought.

TODAY IN SLATE

War Stories

The Right Target

Why Obama’s airstrikes against ISIS may be more effective than people expect.

The NFL Has No Business Punishing Players for Off-Field Conduct. Leave That to the Teams.

Meet the Allies the U.S. Won’t Admit It Needs in Its Fight Against ISIS

I Stand With Emma Watson on Women’s Rights

Even though I know I’m going to get flak for it.

Should You Recline Your Seat? Two Economists Weigh In.

Medical Examiner

How to Stop Ebola

Survivors might be immune. Let’s recruit them to care for the infected.

History

America in Africa

The tragic, misunderstood history of Liberia—and why the United States has a special obligation to help it fight the Ebola epidemic.

New GOP Claim: Hillary Clinton’s Wealth and Celebrity Are Tricks to Disguise Her Socialism

Why the Byzantine Hiring Process at Universities Drives Academics Batty

Moneybox
Sept. 23 2014 3:29 PM The Fascinating Origins of Savannah, Georgia’s Distinctive Typeface
  News & Politics
History
Sept. 23 2014 11:45 PM America in Africa The tragic, misunderstood history of Liberia—and why the United States has a special obligation to help it fight the Ebola epidemic.
  Business
Moneybox
Sept. 23 2014 2:08 PM Home Depot’s Former Lead Security Engineer Had a Legacy of Sabotage
  Life
Education
Sept. 23 2014 11:45 PM Why Your Cousin With a Ph.D. Is a Basket Case  Understanding the Byzantine hiring process that drives academics up the wall.
  Double X
The XX Factor
Sept. 23 2014 2:32 PM Politico Asks: Why Is Gabby Giffords So “Ruthless” on Gun Control?
  Slate Plus
Political Gabfest
Sept. 23 2014 3:04 PM Chicago Gabfest How to get your tickets before anyone else.
  Arts
Brow Beat
Sept. 23 2014 8:38 PM “No One in This World” Is One of Kutiman’s Best, Most Impressive Songs
  Technology
Future Tense
Sept. 23 2014 5:36 PM This Climate Change Poem Moved World Leaders to Tears Today
  Health & Science
Medical Examiner
Sept. 23 2014 11:37 PM How to Stop Ebola Could survivors safely care for the infected?
  Sports
Sports Nut
Sept. 23 2014 7:27 PM You’re Fired, Roger Goodell If the commissioner gets the ax, the NFL would still need a better justice system. What would that look like?