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Towards an Externalist Neuroeconomics: Dual Selves, Signs, and Choice

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Towards an Externalist Neuroeconomics: Dual Selves, Signs, and Choice Journal of Neuroscience, Psychology, and Economics © 2012 American Psychological Association 2012, Vol. 5, No. 1, 38–61 1937-321X/12/$12.00 DOI: 10.1037/a0026882 Towards an Externalist Neuroeconomics: Dual Selves, Signs, and Choice Carsten Herrmann-Pillath Frankfurt School of Finance and Management Recently, reductionist models of choice have been proposed which directly reduce a modified version of economic utility theory to neuroscience. I propose an alternative conceptual framework that adopts the position of externalism, which I further narrow down to a distributed cognition framework, and eventually to a biosemiotic model of human choice. I relate this to existing modular theories on the brain, which I generalize into a dual selves model. In this model, the internal information asymmetries and deficiencies of the brain/body system drive the reliance of choices on external cognitive mechanisms as manifested in sign systems. I analyze this interaction and apply the combined biosemiotics/dual selves model to an important set of falsifiers of an integrated reductionist model of neuroeconomics, that is, addiction and other consump- tion disorders. Keywords: foundations of neuroeconomics, semiotics, dual selves, distributed cognition, con- sumption disorders I. Externalism Versus Internalism in conscious and automatic processes, and Neuroeconomics would thus result in models which differ from the standard economic model (Camerer, 2007; One of the fundamental issues in current Camerer, Loewenstein, & Prelec, 2005). The neuroeconomic research is the question of drawback of these views is that they still lack whether the analysis of the brain should fol- a coherent and consistent theoretical frame- low the standard economic model or whether work comparable to the standard economic the introduction of an alternative framework approach in terms of its simplicity, consis- is needed. Following the standard economic tency and empirical tractability. This defi- model means referring to the utility function ciency also affects the applied fields of neu- framework and identifying neural correlates. roeconomics (as recognized by Hubert, 2010; This paradigm has been established canoni- Hubert & Kenning, 2008). On the other hand, cally by Glimcher (2009, 2011). Alternative however, a paradox lurks behind the reduc- approaches would take certain insights from tionist program. Ultimately, applied (neuro)- psychology and the brain sciences as a start- economics would no longer need to refer to ing point, such as the distinction between neuroscience at all, because on the level of observable behavior the (possibly modified) standard economic tools would suffice. It is I received important advice from the JNPE referees, precisely if the reduction program can suc- which helped to improve the paper substantially. Parts of ceed that neuroeconomics will become irrel- earlier versions were presented to workshops at Durham University, Jena University and the annual Neuropsy- evant for economics because all the essential choeconomics conference 2011 and the EAEPE 2011 an- insights of neuroeconomics would be repro- nual conference at Vienna. I am indebted to Don Ross for ducible within economics without any refer- his detailed comments. The usual disclaimer applies. Fi- ence to neuronal facts. This would be the case nally, special thanks to Judith Mader who polished my English language. as long as the phenomena to be explained Correspondence concerning this article should be ad- remain on the ontological level of the units of dressed to Carsten Herrmann-Pillath, Academic Director, choice, that is, the individuals (for related East-West Centre for Business Studies and Cultural Sci- criticisms of neuroeconomics, see Bernheim, ence, Frankfurt School of Finance and Management, Son- nemannstraße 9-11, 60314 Frankfurt am Main, Germany. 2009; Gul & Pesendorfer, 2008; Harrison, E-mail: [email protected] 2008). Therefore, Glimcher’s (2011) method- 38 TOWARDS AN EXTERNALIST NEUROECONOMICS 39 ological claims deserve close attention, and reductionism and to search for an alternative are certainly a crucible for testing the relation that needs to be externalist if it aims at an between neuroscience and economics. integration between neuroscience and econom- ics. Therefore, my article aims to offer a con- The Pivot: Externalism in the ceptual framework for externalist neuroeco- Philosophy of Mind nomics (a research program inaugurated by Ross, 2005). In this article my central concern is how to design a conceptual framework for neuroco- Rendering Externalism Empirically nomics which offers an alternative to the re- Tractable: Biosemiotics ductionist approach, and because of this will demonstrate the ultimate relevance of neuro- To achieve the aim of establishing the case economics and neuroscience for economics. for externalist neuroeconomics, I rely on other In doing this, I mainly adopt a philosophical approaches to externalism in the cognitive sci- perspective, especially the philosophy of ences which focus on the role of external causal mind, in order to construct a conceptual processes establishing mental phenomena in framework which might help to organize the terms of interactions between neuronal states different theoretical propositions and hypoth- and external facts. These approaches are to be eses that come together at the neuroeconom- found in the growing literature on “distributed ics interface, although originally emerging cognition” or the “extended mind” (e.g., Clark, from different disciplines (compare Foxall, 2011; Hutchins, 1995; Hutchins, 2005; 2008). Sterelny, 2004; Ross, Spurrett, Kincaid, & Ste- One foundational issue in the philosophy of phens, 2007; for a critical view, see, e.g., Spre- mind is the distinction between externalism and vak, 2009). In this literature, the operations of internalism regarding mental phenomena (for the human mind are seen as being fundamen- surveys, see Lau & Deutsch, 2008; Schantz, tally dependent on external facts, referring not 2004; Wilson, 2004). Reductionist neuroeco- only to the obvious role of devices which lever- nomics seems ambivalent with regard to this age cognitive skills, but more fundamentally to distinction and this reveals the need for a con- the externalization of all cognitive processes in ceptual clarification. The reason for this is that the sense that cognitive performance essentially the standard economic model is externalist, involves the external world and includes both whereas its proposed neuroeconomic version is physical entities and social interaction. There- internalist. Externalism in economics is re- fore, a straightforward sketch of an externalist flected in the revealed preference approach to approach that is different from the externalism the utility function: The utility function refers of standard economics is possible. This would exclusively to observable behavior with no ref- offer a fresh view on neuroeconomics (for a erence whatsoever to internal mental states; the related argument, see Wilcox, 2008). In this concept of utility is merely a mathematical de- view, if one continued to use the term “utility” vice to describe observed actions (Ross, 2005). in explaining human choice, “utility” would not In contrast, reductionist interpretations of the correspond exclusively to a neuronal state in a utility concept refer exclusively to internal neu- neuro-reductionist approach, but to a causal ronal states. So the important difference be- conjunction between a neuronal state and an tween economics and reductionist neuroeco- external fact. nomics is that the former is externalist, the latter In order to render the philosophical approach internalist: This means that reductionist claims of externalism applicable in the context of neu- actually result in a metamorphosis of the (im- roeconomics, I propose to introduce the ap- plicit) economic position of externalism into proach of biosemiotics (which is a new way of one of internalism. As a consequence, reduc- making use of semiotics in our context; for tionist neuroeconomics entails a fundamental surveys on other uses in consumer research, see clash between two philosophical positions im- Mick, 1986; Mick, Burroughs, Hetzel, & Bran- plicit in the two disciplinary approaches. I argue nen, 2004). According to this view, all mental that this inconsistency in the philosophical phenomena are seen as interactions between foundations is a sufficient reason to discard neuronal states and signs, with signs being ex- 40 HERRMANN-PILLATH ternal physical facts. These interactions have a nomena to empirically substantiate my argu- function, which basically boils down to biolog- ment here. This also seems methodologically ical categories such as homeostasis or adapta- appropriate as the phenomenon of addiction can tion, which are relative to the environment. This be seen as one of the possible strong falsifiers of reflects the etiological approach to function, standard economic models of consumer choice, which sees functions as the result of past and seminally applied by Becker and Murphy current processes of selection in particular en- (1988) to addiction (see Ross, Sharp, vironments (for an overview of theories of func- Vuchinich, & Spurrett, 2008; West, 2006). tion, see Krohs & Kroes, 2009). Thus, the con- Biosemiotics builds on the philosophy of junction between internal neuronal states and Charles Sanders Peirce (for a selection of im- external facts has a function relative to a con- portant contributions, see Peirce, 1992, 1998, text. and
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