Money Talks: A Brain Image of a Microeconomic Theory

Nikhil Swaminathan
April 4, 2007

Poor people get it faster than wealthier ones to the equivalent of about $60,000 for the most well-off
when there is a small financial reward of the bunch.
By measuring response time, the researchers got a sense
The microeconomic law of of how quickly people learned which one of the abstract
diminishing marginal util- pictures indicated money would be following. They no-
ity states that while accu- ticed an inverse correlation between how much money
mulating a good—pretzels, a person had (assets and income) and the swiftness
pencils, nickels, whatever— with which they were conditioned. The poorer people
each successive unit of that tended to figure out which card signaled money ahead
good will be less satisfying within about 12 trials, says neurobiologist Philippe To-
to acquire than the one be- bler, the study’s lead author, whereas the richer people
fore it. Finding a shiny took about 35 trials.
FINDERS, KEEPERS: In
quarter on the street is a The team next repeated the experiment while the sub-
a demonstration of the law
of diminishing marginal util- real thrill. But, if you ject’s brains were scanned by an fMRI (functional mag-
ity, a new study shows that are carrying around a bag netic resonance imaging) machine. Researchers focused
when a modest, monetary of coins, acquiring another their scans on the midbrain (which contains neurons or
reward is involved, poor peo- one does not seem nearly as nerve cells that produce dopamine, a neurotransmitter
ple learn faster than rich exciting. In fact, would you central to reward-based learning), and the striatum, an-
people. even bother to pick it up? other reward-based center located under the cerebral
That hesitation is what re- cortex. This time, however, the participants did not
searchers at the University of Cambridge in England have to physically respond. “We didn’t want them to
were banking on when they designed a study to see do that because there are neurons in the striatum that
if the haves catch on more slowly than the have-nots are responding to initiate an action of responding to re-
when it comes to reward-based learning. Reporting in ward,” Tobler says. It was this response preparation
the current issue of Neuron, the scientists reveal that that the researchers timed.
when a small sum of money is on the line, poorer people Once again, an inverse association between wealth and
learn quickly how to maximize their profits, leaving their learning appeared, with poor people displaying more in-
wealthier counterparts in the dust. creased activity in the midbrain and striatum when com-
In a Pavlovian paradigm, a number of abstract shapes pared with the more affluent subjects.
flashed in front of 14 participants. After each shape Tobler says the study, which is one of the first to try to
appeared for three seconds, a picture of either a 20-pence
measure marginal utility in a laboratory setting, chal-
coin (roughly 40 cents) or a scrambled image followed. lenges the notion held by many economists that utility
A card of one particular shape was always followed by comparisons cannot be made between people, because
the coin, and subjects were told that they could take they likely value objects differently. He says, however,
a 20-pence piece home if they could accurately predict “It is possible that these kinds of comparisons are more
when the money card was the next one up. easily done with money, because money is on an abso-
The participants had in personal assets an average of lute scale.” A $20 bill is worth the same no matter who
about $1,700 in their bank accounts, which ranged from had it, but one person might value it more.
zero to nearly $6,000. The group’s average income was
just over $20,000, spanning from no income for students 1996–2007
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