What do you do with a discipline or field of endeavour that’s getting a bit stale and dated? Slapping the prefix neuro- onto it seems to be popular, and here’s the latest example: no one trusts economics any more (well, almost no one), so maybe that trust can be restored by looking at how trust itself – and the neurochemical basis for such – acts as a fundamental human component of the system that old economic models don’t account for [via BigThink]. Confused? Yeah, me too.

Zak and his collaborators at Claremont Graduate University have found that oxytocin, a hormone produced in the brain that promotes human bonding, plays a powerful role in shaping how generous people are. He calls it “the moral molecule.” “It’s a whole different model,” Zak says. “It tells us why global commerce works — because there is a motivation to reciprocate.”

People release oxytocin (pronounced ok-si-toh-sun) in settings that promote feelings of trust and safety, Zak has found, and their behavior becomes more trusting and generous in return. He envisions workplaces structured to reinforce this cycle.


Although Zak preaches the power of markets, he strongly agrees that rational-actor models fall short. “Economists get a bad rap for doing what I call ‘imaginary economics,’” he says. “You sit in your office, imagine some situation and scribble down a model. You get excited about it, ship it to your friends and publish it in a journal. It has nothing to do with any problem in the world.

“What neuroeconomics does is put human beings back in the center of economics. I can go inside the brain and measure what’s happening.”


Vernon Smith showed that people are naturally more generous than decision theory would predict. But what would happen if the players’ moods were enhanced by oxytocin? Zak had some of his game subjects inhale oxytocin before playing the Trust Game. Remarkably, more than twice as many people on oxytocin sent all of their money to a stranger (versus control subjects who were administered a placebo).

This is compelling evidence that oxytocin helps us to decide whom to trust and when to reciprocate, Zak says. “Civilization is dependent on oxytocin,” he says. “You can’t live around people you don’t know intimately unless you have something that says, ‘Him I can trust, and this one I can’t trust.’”

Obviously we can’t just start dosing people up with neurochemicals in an attempt to make the world a better place (or could we?), but the theory is that we can build a social and economic environment where people are more likely to have their oxytocin levels raised, leading to a sort of virtuous reciprocal circle of generosity. But if you’re thinking it sounds like something of a utopian technofix, don’t worry – this Zak character is looking at the bigger picture:

“How can we make the world more trusting, more cooperative, more generous? It’s not all oxytocin. It’s a much bigger brain circuit. It’s the people interacting with you, it’s the environment within which you interact — all those things matter. We have to peel away the layers of the onion to figure out how all those things fit together.”

All well and good… provided the current system doesn’t break irreparably before we’ve peeled our metaphor. Er, onion.

4 thoughts on “Neuroeconomics”

  1. Drugging people isn’t the only way to get some of the advantages of a more trusting society.

    For example, everyone (except cheaters) benefit when weights and measures are honest—I get a huge time savings when I don’t need to check that the fuel pump is giving me every gallon that I’m paying for. But we don’t achieve this by making people more trustworthy; we achieve it by having a government agency with the power to check for honest measures and impose fines large enough to deter cheaters.

  2. The only people who seem to ignore the fact that people make irrational decisions in their lives are right wing, libertarian free-market-absolutists. I doubt if there has ever been the mythical “rational” man.

    Even Alan Greenspan finally admitted that he had misjudged people.

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