a1 University of Southern California
Neuroscience can contribute to economics by inspiring new models, helping to distinguish models that have similar implications for readily available data, and guiding interpretations of decision-making processes by policy-makers. However, there is an additional less straightforward role for it to play: augmenting, along with survey data and other non-revealed-preference sources, assessments of well-being. The need for such augmentation lies in the slightly bizarre stance taken by modern economic theory, namely that economics is concerned only with choices and not with welfare per se. It is shown that this is neither historical nor at all necessary, even within the standard paradigm. Although neuroscience is by no means a panacea for determining true utility, which ultimately remains a subjective concept, it provides a uniquely useful complementary dataset.
* I would like to thank many people for conversations and comments on these ideas over the last few years, including (but not limited to) Colin Camerer, Leemore Dafny, Jodi Halpern, Glenn Harrison, Johannes Hörner, George Loewenstein, George Mailath, Tymofiy Mylovanov, Tanya Rosenblat, Tymon Tatur, Jon Wegener and David Wolpert. However, not only are they not responsible for anything I say here, some of them disagree with various of my conclusions.