Wednesday, April 8, 2009

Your Mind and Economic Decision-making

One of the newer areas of research in economics is that of behavioral economics. The area involves blends aspects of neurological research and economics to study how we make choices. And it is fascinating.

If you find the idea interesting, there's a good short article in New Scientist, which is a UK publication (HT to Arts & Letters Daily). Of particular interest were the images at the beginning of the article. (Click where indicated below the first image to see the second.) The second image shows how economic decision-making may relate to other choices we make. There are also links to the abstracts of a number of articles in research journals.

About the same time I saw the New Scientist article, I ran across this story in a recent issue of The Economist. It would seem to provide anecdotal support to some of the research on the brain and decision making. To me, The Economist piece connects brain growth and evolution under stress and links it to the ability to make certain kinds of choices. It would make sense that changes in growth would impact the decision to make the types of choices we make when faced with a wide range of situations, not just monetary decisions.

Let me know what you think.

This post relates to the following Keystone Economic Principles:
1. We all make choices.
3. All choices have consequences.
4. Economic systems influence choices.
5. Incentives produce “predictable” responses.
and
7. Economic thinking is marginal thinking.

1 comment:

Mike Fladlien said...

I live in a town where 44% of the students received free and reduced lunches. What makes poverty so bad it that it robs the spirit. Children of poverty don't want to try because they have had experiences where something outside of their control robs their efforts.