In defense of (some) neuroeconomics

Andrew Samwick at Vox Baby reports on the neuroeconomics sessions at the AEAs.  He is justifiably impressed with the work of David Laibson.  Laibson has pioneered the theory and implications of hyperbolic discounting.

But a clever economist can always come up with a rational (time-consistent) model to explain what appears to be irrational hyperbolic discounting.  Laibson, however, uses fMRI scans to show that different parts of the brain are activated when making decisions at different time-scales.  As Andrew notes, the isolation of the different decisions to different parts of the brain gives Laibson’s argument significant credibility against more standard neo-classical explanations for the same phenomena.