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Archive for May, 2009

Sin suits me - Roy Booth, 1935

Sin suits me - Roy Booth, 1935

Writing the title of this post, I feel like I indulge in a delicious sin. Indeed, if there is one taboo in today’s respectable history of science, it is certainly the search for precursors, originators, “first scientist to come up with a theory”, etc. That might sound strange to you, but there are good reasons for that taboo. One of them is that the search for precursors tends to reify ideas, a bit as if ideas were objects that were invented and patented once and for all (whereas one realizes soon that they keep changing in meaning, hence there is no historical origin to a “single idea”). Another reason is that by playing the game of “who got this idea first” seriously, you would almost invariably end up with Aristotle or Adam Smith if you are an economist, and that is boring.

Anyway, I find it fun to transgress those very serious codes, and ask: who got first the idea for neuroeconomics?

Passions with Reason (Frank, 1988)

Passions with Reason (Frank, 1988)

I just finished reading Robert Frank’s Passions within Reason, a book he published in 1988. This book could be said to be the first in neuroeconomics (Roman trumpet victory sounds in the background). Robert Frank is an economist who, as far as I can tell, is now also writing a lot in the press (NYT column, etc.), and has become an intellectual figure, like a minor Paul Krugman maybe.

So, why is Passions within Reason our winner? This book makes a perfect transition between two periods of the relationship between economics and biology. The period when Darwinian evolution was the hot topic (up to the eighties), and the period we live in now where the brain is the explanation for everything biological in economics. Yes, the two topics are clearly distinct. Before the nineties, you hardly find a discussion in economics about the neurocognitive dimension of economic behavior. Conversely, in today’s neuroeconomics the discussion of the evolutionary dimension of economic behavior is tucked away in a few pages of books in neuroeconomics (just check Gazzaniga’s textbook on Cognitive Neuroscience, or the textbook in neuroeconomics by Glimcher and al., both from 2008).

And between those two periods, you have Frank’s book, which meshes the two: evolutionary explanations à la Jack Hirshleifer / Robert Trivers / Edward Wilson, and a speculative discussion of the decision-making system where “pure rationality” and “emotions” are both inputs in the brain systems which ultimately account for the behavior of the individual.

Robert H. Frank

Robert H. Frank

A real precursor then, “prescient” that the brain was the next big thing, and “unjustly ignored” until now, as it befits to a genuine pioneer. Frank just lacked an essential piece of technology to become the Adam Smith of neuroeconomics: the fMRI brain scans (note: precursors always lack something, if they had everything they would be “new Adam Smithes”). The fMRI  began to be used in social science precisely in the late 80s, and neuroeconomics as we know it today appeared with it.

Soon, I will examine another candidate for the title of best precursor to neuroeconomics: George Ainslie and his picoeconomics.

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Paul Farrell, a long time ago

Paul Farrell, a long time ago

Reading a column by someone called Paul B. Farrell on Market Watch, a website related to the Wall Street Journal news group, I realized that what neuroeconomics is to me did not correspond to Farrell’s neuroeconomics. At all.

Farrell is mad at neuroeconomists who “promise that if investors, taxpayers and voters simply follow the advice of neuroeconomists, they’ll get rich”. Uh? Later in his column, Farrell gets frantic:

And they [neuroeconomists] are always one step ahead of you and whatever you think you get from their neuroeconomics books. They really are working for Wall Street insiders. What they’re doing is similar to DNA mapping, except the neuroeconomists use MRIs to map your irrational behavioral patterns, then, like a CIA intelligence team secretly monitoring the enemy, their quants develop algorithms that help Wall Street target the little guy with new “financial weapons of mass destruction” that manipulate financial markets.

I don’t know for you, but I don’t follow that too well. As an observer of neuroeconomics, what am I supposed to do with this kind of strange material? I think it educates me on two scores.

First, I have to get used to the rhetoric of online journalism, much more than I am now. Because it really seems that the hysterical tone of this column participates to its dissemination (the blog post I am currently writing is an evidence of it). Hence,  the column by Farrell is not a minor piece of primary material on neuroeconomics. The mere fact that his opinion is shouted is bound to give it some weight. Sad maybe, but the cold and impartial historian of neuroeconomics shall not be moved by that!  😉

Second, this column is a plea for including “pop neuroeconomics” in the scope of the study of the field. The frontiers are just too blurred, and the exchanges between “academic neuroeconomics” (practised in universities) and pop neuroeconomics (practised in consulting firms and published in self help books) are too significant to ignore. How significant exactly? This column gives a clue of it, but I should be much more precise when I will have read extensively in this literature in “neuroeconomics for brainy traders” and “neurofinance: get rich in three days”. Wish me luck.

The Millionaire Code

The Millionaire Code

Coda: a search on internet turns out this book cover. The vociferations of Farrell against the false promises that neuroeconomics would make to small traders appear in a much better perspective, now!

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