Newswise — Greg DeAngelo knows that the more styles of jeans we have to choose from, the less we like our jeans. He knows that people are often willing to drive 10 miles to save $10 on a new pair of jeans, but will not drive this distance to save $10 on a new car. In short, DeAngelo knows that our choices often appear inconsistent and irrational.
DeAngelo, recently appointed as an assistant professor of economics at Rensselaer Polytechnic Institute, is one of a new breed of economists who want to apply advances in neuroscience, cognitive science and psychology to the time-honored models of the discipline, which largely work on an assumption of man as a rational decision maker.
“Neuroscience has enabled us to understand what part of the brain is firing at what time. And technology is at a point where I, as an economist, have access to EEG and FMRI machines,” DeAngelo said. “Now we’re in a place where we can disentangle how you make your decision – is it with the reasoning prefrontal cortex, or the reactionary part of the brain?”
DeAngelo joined the faculty at Rensselaer in the fall of 2010, after a year as a visiting professor at the University of Colorado-Denver. He completed his Ph.D. in Economics from University of California-Santa Barbara in 2009.
Much of DeAngelo’s research has leveraged rich statistical information available from law enforcement agencies to answer intriguing questions. DeAngelo has looked at the role that experience plays in the enforcement of laws, the effectiveness of different law enforcement strategies on public safety, and the interplay between law enforcement, gangs, and immigration. His work has demonstrated a positive link between traffic police and road safety, searched for – but failed to find – evidence that police racially profile when giving citations, and he is in the midst of searching for a link between body mass index --a proxy for attractiveness -- and driving citations.
But at its heart, DeAngelo’s interest is less about the particulars of law enforcement and more about the neurological origins of choice behavior.
DeAngelo cites studies by 2002 Nobel Prize-winning economist and psychologist Daniel Kahnmen – in particular, his theoretical contributions (Prospect Theory) to the profession that describe individuals as not only self-interested, but concerned with how well off others are relative to one’s own self,a sort of “keeping up with the Jones’” theory. “In the Heat of the Moment” author and economist George Loewenstein, “Predictably Irrational” author and economist Dan Ariely, and “Paradox of Choice” author and psychologist Barry Schwartz are among DeAngelo’s influences.
“What I think is going on – and this is what I think behavioral economists are starting to get at – is that people face uncertain conditions every day as they make decisions. And they often make decisions that are based more on feeling, or being averse to that uncertainty, than they are on deliberation or by reason,” DeAngelo said. “I’m interested in when and how that happens.”
Such work questions the roots of dominant economic models built on rational choice theory – in which individuals make choices based on a cost-benefit analysis of what will best serve their interests.
“Those of us that are economists approaching the problem feel that these assumptions and models are well developed. But what happens if we just relax one at a time?” DeAngelo said. “Let’s follow the scientific method, let’s relax one assumption and see what outliers we get. And then we’ll put it back and relax two at a time. And see how far off our predictive models are.”
In that vein, DeAngelo is buildings studies that examine the brain activity of subjects as they make choices, such as the Allais Paradox – in which subjects have been shown to demonstrate inconsistency when choosing between lotteries of various probabilities and success rates. Or a study, he said, that examines whether subjects are consistent enough in their choosing of an object – say a pen – to choose that object again when offered additional options.
“It’s in the folds between economics and psychology,” DeAngelo said. “What we’re trying to do is dig a little deeper into the neuroscience behind things like options, money, and decision-making. Hopefully we’ll get people to think differently about this stuff.”
DeAngelo has been actively presenting his work since arriving at Rensselaer. He presented “Recidivism under Uncertainty – New York State Economics Association” at Cornell University’s Judgment by Numbers on October 4 and at the University of Colorado Youth Crime Working Group Oct. 14-16, and he presented a proposal on “Consistency in Decision Making” to the Russell Sage Small Grants in Behavioral Economics Group on Sept. 25.
For more information on Greg DeAngelo visit his website at http://www.gregorydeangelo.com/.