With increases in natural hormones and human touch, our trust levels go up and down. This New findings in neuroeconomics are beginning to identify why people are cooperative and trusting, while others are considered sociopaths. It’s all in the brain’s chemistry, says Paul Zak. These findings are part of the emerging field of neuroeconomics.
What is Neuroeconomics?
Neuroeconomics combines methods from neuroscience and economics to study how people make decisions involving risk, as well as strategic decisions involving relationships with others.
Paul Zak and his colleagues discovered that doses of the naturally-produced hormone oxytocin made people more trustworthy, and thus more likely to give money to strangers. Additionally, Zak’s research determined that oxytocin levels can be naturally raised by human touch
Oxytocin: The Basis for Moral Behavior
Oxytocin is a hormone which is released during many experiences, including birth in women. In the brain, oxytocin is involved in social recognition and bonding.
Oxytocin appears to be the ‘social glue’ that holds entire families, communities and societies together, without needing the government to monitor transactions. Empathy for others begins with the release of oxytocin, which compels feelings of love.
When we feel trusted, our brains release oxytocin. This, in turn, causes us to recriprocate the ‘trusted’ feeling. With an added dose of oxytocin, subjects’ generosity to strangers increased up to 80%
What does this mean for the economy?
Increases in trust result in an impact on the economy, Zak has shown. He calculates that a 15 percent increase in the proportion of people who think their compatriots are trustworthy raises per capita output growth by 1 percent for every year thereafter.
Cooperation can explain why financial transactions can occur (we trust one another). Internet sites such as eBay rely on trust, and handshakes often open meetings (touch develops trust). Zak’s research reveals that our brains are ‘wired’ to cooperate, which would explain how civilizations have developed.
Economists have uncovered that interpersonal trust is among the most powerful predictors of whether or not a country will be “rich.”
According to Zak, the implications of this research could lead to a greater understanding of criminal behavior, improving negotiations and treating patients with neurologic and psychiatric disorders. While too little work has been done to make any claims on the potential for the research, Zak is at the leading edge of discovering where it could lead one day in the future.
Â
Background on Paul Zak
- He was credited with originally coining the term ‘neuroeconomics.’Conducts more research with oxytocin than any other scientist in the world, and runs one of only 5 neuroeconomics labs on earth.
- Has been published in scientific journals and featured in media interviews all over the world.
Founder of Claremont Graduate University’s Center for Neuroeconomic Studies, and professor of economics at CGU; Professor of Neurology at Loma Linda University Medical Center; Senior Researcher at UCLA; Degree in math and economics (San Diego State), PhD in economics (Penn); Post-doctoral training in neuroimaging (Harvard).Author of the upcoming book, “Moral Markets.”
Quotes:
Wouldn’t you like to look inside Warren Buffet’s head and find out how the oracle of Omaha makes his amazing investment decisions? Using the research, we can help explain why successful investors make the choices they do”.
“Interpersonal trust is the strongest predictor of poverty in the world economists have found. This is big news, but we needed to study how we build trust further.” Paul Zak
Source: Claremont Graduate University
