Neuroeconomics is the use of data on brain processes to suggest new underpinnings for economic theories, which explain how much people save, why there are strikes, why the stock market fluctuates, the nature of consumer confidence and its effect on the economy, and so forth.
Until recently, economists have always been content to treat the human brain as a "black box" and suggest mathematical equations which simplify what the brain is doing. Most empirical studies of economic behavior have therefore relied on measuring inputs, like prices, and predicting outputs, like how much people will buy, from a simplified theory of brain processes. This approach reflects a bias traceable to the 1880’s, when Jevons wrote “I hesitate it is impossible to measure the feelings of the human heart”.
Until recently, economists have always been content to treat the human brain as a "black box" and suggest mathematical equations which simplify what the brain is doing. Most empirical studies of economic behavior have therefore relied on measuring inputs, like prices, and predicting outputs, like how much people will buy, from a simplified theory of brain processes. This approach reflects a bias traceable to the 1880’s, when Jevons wrote “I hesitate it is impossible to measure the feelings of the human heart”.
