The Economy Inside Your Head

Automatic TRANSCRIPT

I looked up indicates or for you on the way here, which is always appreciate it. When our guests come up with an indicator for us that American adults are now spending eleven hours at the consuming media and media is the ultimate embassy real good at something that really, please, please within your hands. You make is triggered by something site, but really all of the benefit that you get all the enjoyment. You get as insights your minds that was a Communist League Caldwell these been working on developing a branch of economics known as cognitive economics, which she defines as the economics of what happens inside your head. So for example, think of all the different stimuli that might be competing for your attention in a given moment. Like, let's say you're at home and the television is on. But also your kid is asking for help doing homework, but also you had a plan to get some work done in your quiet den. Or maybe you're feeling sluggish and you want to exercise while how does your brain end up choosing? Which of these stimuli will. End up getting your attention, your concentration, your mental energy Lee wants to develop models to answer questions like this using research, not just from 'economics, but from psychology, and neuroscience and other disciplines and then to better understand how the decision making process inside our brains has consequences in the real world outside our brains. I'm Dan the indicator from planet money my conversation with Lee Caldwell about cognitive economics. Support for this podcast and the following message come from zoom when you can't be there in person zoom zoom is used by millions to connect face to face one easy platform for all your communication needs. Visit zoom online to set up your free account today. Meet happy with zoom. Support also comes from. Hello monday. A new podcast from Lincoln's aditorial team about the changing nature of work and how to get the most from Monday and your career find Hello Monday on apple podcasts or wherever you listen to podcasts. Trying to sort of connect cognitive economics to more traditional definition of economics. Which is the study of how people make choices in a world. Usually that means the physical world of scarce resources, and it seems like within cognitive economics. A lot of this has to do with attention, which is really scarce. Exactly. There are couple of other resources like energy. And concentration and focus. But attention is really the key. The key thing here we instead of seeing in a traditional economic environment you've certain amount of money and you want to optimize it by buying the best combination of products. You have a certain amount of time and attention in your minds and you want to optimize by spending on the things are most enjoyable to you the things that give you the the most reward, but like isn't part of behavioral economics explaining how so often I fall into a trap of not optimizing for those things, right? In other words, that you know, I'll be led to distraction or I will run out of energy, or I'll just be, you know, kind of lazy for a little while and watching TV, and so those other things won't be optimizing for anything that I really prize. I have just been led there either by circumstances sometimes deliberately or by like the flaws in my own head. You know, what I mean when we talk about optimization would we really mean, they're so up to my. Nation happens at a given moment. The you don't really you can't really Altemus across your whole life or even cross a whole day and say I'm gonna plant out every moment of the day to give myself the maximum return. What you do as you optimize right now. So right now, there may be something on your screen. There may be something in your pocket. Maybe something in your mind that you can think about and those small number of alternative stimuli will one of them will pull your attention more than the others. And so you're you're doing a very short term local to my station, and if you're lucky, and if you set up your life in the right way, or if you train yourself in the right way than the things that draw your attention moment to moment will be consistent with the things that you would want to spend your time on long-term. But sometimes they're not that that seems like another analogy we can draw to like the economy in the physical world, which is when we talk about competition, we usually talk about companies competing. With each other or entrepreneurs competing with each other to come up with product in our minds, it's different stimuli competing for those scarce resources of tension, and energy and concentration and all that's going on in our heads. We don't conscious of it. But it ends up directing a lot of where those resources and up going. Yeah. Yeah. I think that where the the research in cognitive economics meek goal as in the same way. As in the physically Konomi, we have developed understanding of win that competition between companies or competition between people has positive effects for the whole economy. And I think we will develop these kind of theories and cognitive economics as well to understand. What are the conditions? We should set for themselves to make sure that the moment by moment. Competition of stimulus ends up making us happy in the long run shirt. There's another concept that I keep thinking about which is delayed gratification that. It seems like that would play some kind of a prominent role in understanding cognitive 'economics and sort of how we manage short-term has long-term goals. If by definition in a given moment or focused on a short term goal. So how do we align? The short term and the long term when the long term goal doesn't have appealing short-term stimuli. You know what I mean? Yeah. Greek question because this was actually part of my inspiration for getting into cognitive economics or getting into the psychology behind. It was understanding exactly that trade off. How are we capable of acting on behalf of future self when our future self, well doesn't exist? You yourself control me and tell me put away some money for my retirement or don't eat donuts because you'll regret later and. The mechanism through which happens is essentially some mental simulation. So I am able to simulate in my mind. Now, what my future self might feel like and by doing that, I can gain an EMMY or I can gain a version of the reward that my future self will experience of my future self will be happy than I will be happy. No by being able to imagine the future self and this actually maps across to empathy with other people as well. So if I imagine you're feeling imagine how my family members feeling they're happy than I will be happy to. So we have a way through this through mental simulation of both delaying our own gratification. But also cooperating with other people in society. Okay. Now that we have some understanding of cognitive economics is when it tries to do what do you think or some of the potential applications to our lives? What do we? Would you investigating within the realm of cognitive economics that you think could have an impact like what are some examples? So like a lot of economics. You have applications that are for the individual and applications that are for companies and businesses companies and businesses can use. This research for to inform their advertising, if you are one of those companies that wants to influence someone's preferences and influence how they won't spend their time. They in designing your marketing designing the user interface for your products to maximize how you capture people's attention as as important application. Conversely as an individual you might wanna fight against them. So by understanding, how your attention shapes and understanding how you can train yourself to focus your attention onto the areas that are most valuable to you not most valuable to Facebook or HBO, then you you may end up better off on your terms. So there's there's developing tools for individuals. There's -veloping marketing strategies for businesses, and then even out the public policy and the governmental level there's been lots of talk in the last decade or so about things like gross national happiness. The idea that governments might not just want off to mice the GDP levels in economy, but my actually want to and legitimately trying to help people to be happier. Their populations to to be to have greater well-being. And so I think that will be an important area in the future. There are there are valid political questions about do we want our governor. Getting involved in those questions, but fundamentally governments do try to me because happy just usually trying to through economic growth, and and other kind of the tea real policy levers, so it's inevitable that they're going to try to do it through psychologically was to. This episode of the indicator was produced by Dr is Ravi on an edited by paddy Hirsch, our interns will Rueben and the indicator is a production of NPR.

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