Money, Mind, and Brain

Economists model what people want by introducing these things into the utility function. As a rule, goods and services belong in utility, but not money. This is because money buys goods and services, but is not itself consumed (except by currency collectors.) This has led to models where people indirectly value money and a recognition that money only works when people are willing to accept it as payment. Recently neuroscientists interested in studying people had to come up with ways of rewarding them when they were in the scanner. Their answer, also the answer in experimental economics, is to pay them for their decisions. So what happens in the brain when people get paid? Brian Knutson and colleagues pay subjects based on their success in responding quickly to a visual target. In their paper "Anticipation of monetary reward selectively recruits nucleus accumbens," they varied the size of the reward and found that dopamine rich areas (such as the nucleus accumbens) showed bold responses proportional to the magnitude of the monetary reward anticipated by the subject. The nucleus accumbens also responds to more basic rewards. But this may mean that the brain learns to put things, like money, in the utility function and that economists’ theory of preferences should take into account how utility is learned.

Comments

[Arnold Kling]

Maybe I'm missing something, but I don't see how this experiment justifies putting money in the utility function. Economists assume that people want money for what it can buy. How does this experiment invalidate that?

[Jan Benjamin Engelmann]

Money is the most powerful secondary reinforcer to humans living in modern societies. One can purchase any primary reinforcer with money, be it food, drink, sex or drugs. The human brain has learned to form these associations from its first visit to a supermarket when she saw mommy buy her a chocolate bar using ... money. Various recent neuroimaging studies have demonstrated that neurons in brain reward systems respond to money (one of them mentioned above). Surely, it is only a secondary reinforcer by virtue of its association with primary reinforcers, but these associations are very strong due to the omnipresence of money in our society. Furthermore, money has the same relative value for all humans, regardless of their preferences.

[Miky Luke]

great joy being here..good place.