The Situational Character Goes to the Mall

In last week’s New York Times, John Tierney has a humorous article, “The Voices in My Head Say ‘Buy It!’ Why Argue?,” in which he summarizes some of the fascinating work being done by economic behavioralists and neuroeconomists, including Brian Knutson, Elliott Wimmer, Drazen Prelec, Cynthia Cryder, and George Loewenstein. The research is devoted to understanding why we buy some things and pass up others and on why spendthrifts are prone to the former, while tightwads do more of the latter.

With the aid of a functional M.R.I. machine, economic behavioralists were able to witness the neurological circuitry behind the “i gotta have it” and the “no way!” reactions. If looking into the black box is at all revealing, it seems many shopping choices are not exactly motivated by the utility-maximization calculations that neo-classical economists long imagined. Instead, something much simpler, though not exactly rational, is happening.

People buy those things that activate neurons in the pleasure center of their brains (the nucleus accumbens) and eschew products that activate the pain centers (the insula). No doubt, avoiding pain and seeking pleasure seems pretty rational, but the point is that the positive and negative arousal that lead us to anticipate rewards and pain are often manipulable and inaccurate. They lead to regret — or at least would, were we not such expert ex post rationalizers of bad outcomes. It appears that shoppers are not choosing based on anticipated long term pain and pleasure or, put differently, on stable preferences. No, it’s the on-the-spot affective responses that seem to determine our “choices.”

(That wide gap between who we imagine ourselves to be – preference-driven, thinking, willing choosers – and who science reveals us to be – situational characters – is at the heart of the situationist approach to law and policy.)

Tierney’s article is worth the read — it will stimulate your nucleus accumbens, without creating reader’s remorse. (Those who crave more detailed accounts of the research can access it here and here.)

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