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The Year in Research
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Mind Your Value Judgements
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S.E.C. Short-Sale Ban: Pretty Much Useless
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Advice from Japan: Don't Forget TARP 1
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Chart of the Day: Money Market Stress Easing
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House Price Bubble Deflated?
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Where Were the Whistleblowers?
Dec 16 200811:03 pm EDT -
It's Just a Recession
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Comparing American and European Unemployment Insurance
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Chart of the Day: Utility and the Brain
Economic theory is built on the idea that people do things to increase their satisfaction or happiness.
Via a new paper which tracked brain activity as people tried different types of wine, here is a look at where we experience utility in the brain.
The area is located in the medial orbitofrontal cortex which is right behind the nose. Interestingly, damage to this area of the brain is associated with impulsive behavior and poor financial decision making.
It's important to note that this region isn't completely correlated with all of the types of utility economists study. For example, in the case that you maximize your utility by deciding to hold off buying a video game until next month because if you buy it now you'll spend too much time playing it and miss an important deadline for work/school, there is no evidence that that type of calculation happens in this part of the brain. The scan above seems to show us where pleasantness is processed.
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