Saturday, September 30, 2006

Reading Will Wilkinson's response to John Cassidy's article on neuroeconomics, I was most intrigued by the following description of research into how, at the neurological level, it could be rational to be irrational.
Cassidy's article flirts with an empirically credible notion of rationality when he discusses the work of neuroscientist Paul Glimcher, who writes, with his co-authors Michael C. Dorris and Hannah M. Bayer, "There is, for example, no evidence that there is an emotional system, per se, and a rational system, per se, for decision making at the neurobiological level." And that's right. Glimcher's pioneering approach assumes that computational resources are scarce, and that the brain must allocate them according to the expected payoff to the organism. In some contexts of choice, the expensive computational processes of the deliberative pre-frontal cortex come online. In others, the brain defaults to more frugal processes involving quick "gut" judgment.

Glimcher's approach doesn't attempt to integrate economics and neuroscience by simply comparing (and judging) actual human behavior against the rarefied standards of economic theory, tempting the conclusion that individual behavior and market outcomes can be "improved upon." Instead, it applies economic theory to the way the brain itself allocates its scarce resources, which helps explains why real behavior -- and embodied, ecologically embedded rationality -- cannot correspond to a (therefore inapplicable) standard of rationality that assumes an unbounded budget of cognitive resources.

Unfortunately, Cassidy brings up Glimcher's work only to allow the economist George Loewenstein to airily dismiss it. Cassidy incorrectly writes that Glimcher's work "might undermine a lot of neuroeconomics," when in fact Glimcher's work integrates economic theory and neuroscience at the most promising level. It is neuroeconomics. (Glimcher's groundbreaking book Decisions, Uncertainty, and the Brain is subtitled The Science of Neuroeconomics.) The point is not to understand how real behavior is anomalous relative to economic theory, but to use economic theory to help us understand real behavior by illuminating the economizing functions of the brain. But missing this point allows Cassidy to preserve his story's strained "reason-versus-passion" narrative frame, and all the tantalizing policy implications that fall out of it.

Someday I must learn more about this.

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