“The Case for Mindless Economics,” Gul and Pesendorfer, 2008

Neuroeconomics techniques make broad claims for revolutionizing economic work. Gul and Pesendorfer note that economic theory deals with the analysis and prediction of economic data, and that economic data is strictly limited to the choice data. Economic theory has nothing to say about whether a choice makes someone happy, or whether people maximize a “long-term self” or an “experienced utility” or anything of the sort. Welfare analysis among economists attempts to show whether or not individuals would choose one world over another, nothing more. Standard economics can also easily handle mistakes (through limited information) and reversals of preferences (more complicated). Since economics makes no predictions about the brain, and no statements about what makes someone say, neuroeconomics can neither confirm nor deny economic theory, though certainly it can say something about psychology or neurobiology. (The obvious counters here is that economists regularly advocate policy as if we are speaking of happiness, not just choice, that economics should care why people make decisions, and that neuroecon evidence provides a useful set of new questions for which economics should address.)

http://www.princeton.edu/~fgul/mindless.pdf

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