McCabe on Neuroeconomics in The Economist
Professor of Economics and Law and Director of The Center for the Study of Neuroeconomics at George Mason University Kevin McCabe told The Economist he believes that in only a few years neuroeconomists will have discovered enough about the interactions between the inner workings of people's brains and the world they inhabit to begin to shape public policy. Researchers trained in both economics and neuroscience are entering the new field of neuroeconomics, says McCabe, and bringing with them the ability to look for the answers to sophisticated questions.
Early studies in neuroeconomics utilized primarily active MRI scans, which are limited in their ability to provide information. "Blood flow is an indirect measure of what goes on in the head, a blunt instrument," says McCabe. A more invasive form of brain research in which neuroscientists analyze individual neurons is carried out on rats and monkeys, while use of transcranial magnetic stimulation using a low-level magnetic pulse to disrupt activity in a specific part of the brain is another technique currently utilized in neuroeconomic research.
Do economists need brains? The Economist, July 24, 2008.
"The success of neuroeconomics need not mean that behavioural economics will inevitably triumph over an economics based on rationality. Indeed, many behavioural economists are extremely pessimistic about the chances that brain studies will deliver any useful insights, points out Mr. Camerer with regret.
"However, Daniel Kahneman, a Princeton University psychologist who in 2002 won the Nobel prize in economics for his contribution to behavioural economics, is an enthusiastic supporter of the new field. 'In many areas of economics it will dominate, because it works,' says Mr. Kahneman.
"Even so, 'we are nowhere near the demise of traditional neoclassical economics,' he argues. Instead, insights from brain studies may enable orthodox economists to develop a richer definition of rationality. 'These traditional economists may be more impressed by brain evidence than evidence from psychology,' he says; 'when you talk about biology either in an evolutionary or physical sense, you feel they have greater comfort levels than when you start to talk about psychology.'"