Abstract
Digitization is a milestone calling for a link back to the origin of social science in Antique Greece. The link is Neuroeconomics, an interdisciplinary field between neurology, psychology, and economics based on modern high-resolution brain scanners. The humanities expresses the human aspiration for positive relations among humans in contrast to the negative aspect of individual fighting for survival in the Elder Stone Age. The breakthrough of positive human relations is enabled by economic growth that provides the average consumer in the industrialized world with an existential freedom over at least 50% of their income. This happy situation is threatened by both an ecological catastrophe by the green-house effect and alienation of traditional human relations. Neuroeconomics explains how the rise of the creative class can overcome alienation by an inclusive democratic culture with sustainable solutions across the center. An independent production factor in this complex development is economics structured for dissemination of human capital.
TopBackground
This series of Industrial Revolutions have been that successful that it challenges the whole Ecosystem which implies a deep crisis in Economics, too:
- ●
An intra-disciplinary polarization between the Chicago School of Economics aiming to restrict interference in the market forces to monetary policy (Interest rate and amount of money) versus the Austrian School of Economics aiming to strengthen psychological knowledge among economists (Menger, 1971)
- ●
A contemporary representative of the Austrian School is the psychologist Kahneman (2011) who was awarded the Nobel prize of Economics 2002
- ●
An International Student Initiative for Pluralism in Economics is formalized (ISIPE, 2014)
To understand the present crisis of Economics it is necessary to recognize the background in British Empiricism where philosophers as Bacon, Locke and Hume in the 18th Century claimed that the classical philosophy was biased by four types of prejudices:
Human nature resists changes. Many cases show that when persons are offered either a cheaper or better service then are only a third immediately ready to adopt it (Heijden, 2019)
Key Terms in this Chapter
Third Party Effects: Positive or negative effects of economic transactions on persons that are not directly involved. Classical economics considers third-party effects as a political issue. Modern economics outlined in this chapter considers third-party effects as originated by the economic system, wherefore it must be internalized in the discipline of economics.
UBI: Basic non-conditioned subsidy to all adult citizens corresponding to 50% of net median income. It gives social security to low incomes, a net benefit to middle incomes and is mostly paid by high incomes.
Pigou Tax: Tax on negative third-party effects, e.g., pollution, corresponding to the costs of the society.
Neuroeconomics: An interdisciplinary approach to behavioral science between economics, neurology, and psychology.
Market Economy: The interaction of consumers and suppliers on production and distribution of scarce (pecuniary) goods and services. Consumers are expected to maximize utility by comparing choices within their budget limit. Suppliers are expected to maximize their return-of-investment (ROI) supplying the most competitive goods and services to consumers.
Risk-Willingness: Correlates with personality traits as extravert and open-minded.
Entrepreneurial Ingenuity: The special set of qualities of founders of successful firms as specified in the Pilot-in-the-plane model of Saraswathy.
Macroeconomics: The study of key factors in aggregate economy, e.g., multiplicators, to guide politicians.
Stress-Management: User-driven healthcare to improve mental health e.g. physical exercise, diet and deep relaxation (meditation).
Risk-Aversion: Correlates with personality traits as neuroticism, conscientious and agreeable.
Behavioral Economics: The study of the effects of psychological, cognitive, emotional, cultural, and social factors on economic decisions of individuals and institutions and how those decisions vary from those implied by classical theory.
Big 5: Statistical correlation identifies five basic personality traits: extravert, open-minded, agreeable, conscientious, and neurotic.
Economic Psychology: A comprehensive model for prediction of economic behavior.
Risk-Preference: Value function of economic agents formed by reward-seeking, cognitive activity, and fear. Correlation studies with personality traits shows it is parted in negative and positive wings: