Today, I continue with my posts on two contributions in the new issue of the Journal of Economic Literature. This is about the contribution by Carlos Alós-Ferrer, who emerged as one of the intellectual leaders in the field of economics, psychology and neuroscience in recent years. He is now professor at one of the central locations where cutting-edge research is done, Zurich.

Instead of summarizing his views, I present several direct quotes. These speak more than I can achieve with my own argument. Since I am currently travelling in China, I will follow up with comments in my next post. Further, I would let the reader reflect upon these quotes without interfering with my thoughts. However, I honestly urge the reader to look at these quotes (and, of course, feel motivated to read the entire paper).

Here they go!

While the dependence of human society on the capabilities and characteristics of the human brain is little more than a tautology, the recent decades have brought the recognition that the relation is bidirectional, that is, the converse link is equally strong, and the human brain’s normal functioning is heavily dependent on the social world, to the extent that disturbances in the latter lead to disturbances in the former.

The two key realizations, already hinted at above, are, first, the bidirectionality between brain and social world, and second, their likely coevolution.

The take-home message is that, as we study higher social cognitive functions, we might discover that there is little to learn from whether specific, localized regions of the brain are active or not. Such brain regions might be more constructively considered nodes in a series of interrelated networks, with the same region possibly playing different roles in different networks.

In summary, there is no specific region for decision making, not even for a well-defined component thereof. At the same time, not all regions identified in all decision-making studies are part of the same network. Rather, there are functionally different but highly interconnected networks fulfilling different functions that contribute to decision making.

On the other hand, neurology has discovered that the brain can significantly change in response to experiences, including those arising from social interaction, providing a feedback link from the social to the biological. Further, neuroimaging studies are making increasingly clear that there is no physical separation of brain regions regulating social and “rational” processing.

Experience-dependent neuroplasticity occurs throughout development, and is particularly important for activities related to reward and learning. Even beyond biological maturation, the brain is far from immutable. Daily activities and the input from our social environment can lead to long-lasting changes in brain structure.

This and many other examples cast doubt on the idea of a “standard” brain, which underlies most brain localization studies, and remind us that the brain is dynamic and it adapts to our environment not only in an evolutionary sense, but also within the scope of every individual life.

At a very general level, “social brain” is just a short expression for the set of brain structures and functions related to the perception and evaluation of the social environment, and how that perception and evaluation affects social decision making.

In evolutionary terms, hence, it could be argued that the “social brain” developed to allow for group formation and reap the benefits of cooperation in a species which had previously gone down the individualistic path. This view, however, is incomplete, for along the way, something amazing happened. The great apes started developing the capacity to mentalize, that is, the capacity to understand other individuals’ minds.

The study of mentalizing, or theory of mind, is one of the great pillars of social neuroscience. The importance of the concept is rather easy to understand for an economist, as it essentially parallels the difference between decision theory and game theory.

Insights from social neuroscience can be invaluable for the next steps as economics advances towards fully descriptive models of human behavior, incorporating bounded rationality, departures from self-interest, and strategic behavior. After all, if economics is a social science, then its object of study is, directly or indirectly, the social brain.