Singing about pricing (Is it, too, like dancing about architecture?)

Michael Giberson

At Knowing and Making, Leigh Caldwell writes about “a charming pop song by the delightful young artist Jessie J” about “the important and neglected issue of pricing.” Initially he is pleased with the song, but ultimately “his faith in humanity is shaken. Shattered, in fact.”

A great deal of drama for a short post.

New York Times article advances public view of environmental issues surrounding hydrofracking

Michael Giberson

At first it seemed like just another newspaper article on the potential environmental dangers of fracking to produce natural gas from shale, but on second look there is something new in the New York Times article, “Regulation Lax as Gas Wells’ Tainted Water Hits Rivers.” Most such stories, and much of the public’s attention, have been focused on the possibility that a badly drilled well could taint groundwater. The new article reveals that disposal of the produced water recovered during fracking operations is likely the more important environmental concern. While produced water is (generally supposed to be) treated before being returned to waterways, some of the facilities used for treatment may not be capable of providing the services needed.

The web version of the story includes extensive related materials, including interactive maps, spreadsheets filled with data, and perhaps most significantly 1,113 pages of documents with annotations provided by the Times (described as the most significant documents out of more than 30,000 pages the Times reviewed for the project). The documents were collected via open records requests, obtained directly from regulators in the Marcellus shale region, or leaked to the Times by state or federal officials.

No doubt that a badly-drilled or poorly finished well can create problems, but the enviro-hype and associated docudrama film have insisted that this is the biggest problem. Probably not. The industry can reasonably point out that thousands and thousands of hydrofracking wells have been completed and of those many thousands only a handful have been linked to any kind of groundwater issue. In fact, as one of the documents points out, fracking has been used for years in Pennsylvania without a lot of controversy to produce coal-bed methane. The bigger hazards may be in produced waters downstream from drilling operations.

Some of the documents relied upon are several years old, and some reports are preliminary rather than final. There is much more to be learned, including – possibly – that the wastewater disposal problems are not as serious as the story suggested (or, of course, it could be worse).  Clearly, this newspaper article isn’t the end of the story, but it does the service of advancing the public’s understanding of the issue.

UPDATE, March 7: Fracking wastewater not causing radioactivity issues in Pennsylvia rivers

New working paper: Mirror neurons, Adam Smith, and sympathy

Lynne Kiesling

Mirror neurons have captivated my attention for the past year. Think about the last time you were out walking around and smiling, and you noticed that others who saw you started smiling themselves (this happens to me all the time, is that strange?). Even that simple unconscious mimicry is triggered by our brain’s mirror neuron network. So, too, is your reaction when you watch someone drink a beer; even if you do not drink it yourself but only observe someone who is taking a drink, the same neural network activates in both your brain and in the brain of the person you are observing. Those are mirror neurons in action.

The mirror neuron system is a highly distributed, complex neural network, located in several regions of the brain and differentially active depending on the nature of the action undertaken or observed. Although networked across different areas, mirror neurons are concentrated in the premotor cortex, an area in the brainʼs frontal lobe that uses sensory information to plan, choose, and implement motor action. Most of this systemʼs activity is not conscious, and occurs without our having a sense of developing the abilities to perform actions effortlessly. Neuroscientists studying mirror neurons think that the mirror neuron system is part of what enables us to understand the actions of others and what creates a sense of interconnectedness and shared meaning, even between people who are complete strangers.

How is this research relevant to economics? What interesting economics questions can be illuminated by incorporating an understanding of the mirror system? I’ve been thinking about these broad questions for the past year, and have been working on two projects addressing aspects of them. At a very broad, evolutionary level, reading the neuroscience and the philosophy of mind literature arising from the mirror neuron work indicates that the mirror system is a neural framework for the evolution of anonymous coordination and cooperation — that is, cooperation even among strangers. This question is of great interest to those (economic historians, experimental economists, cognitive psychologists) studying the origins and foundations of impersonal exchange. Impersonal exchange relies on trust being embodied in social institutions (in contrast, for example, to direct personal relationships and trust in personal exchange). Is it possible that the mirror system is a neural framework for the social institutions that enable impersonal exchange?

My answer is yes. More specifically, in The Theory of Moral Sentiments in 1759 Adam Smith put forward a related argument, that humans innately desire the sympathy of others, desire aspects of interpersonal harmony, and therefore also want to behave in ways that will deserve such sympathy in return. This innate desire for sympathy leads to decentralized coordination and ultimately to the (formal and informal) social institutions of civil society, including institutions that enable cooperation and impersonal exchange. I think Smith’s articulation of the sympathetic process in Moral Sentiments is one of the most profound contributions to our analyses of human action and social institutions. But what do mirror neurons have to do with the Smithian sympathetic process?

That is the question I tackle in my new working paper, Mirroring and the Sympathetic Process: Some Implications of Mirror Neuron Research for Sympathy and Institutions in Adam Smith:

In The Theory of Moral Sentiments, Adam Smith asserts that humans have an innate interest in the fortunes of other people and desire for sympathy with others. Recent neuroscience research on mirror neurons has now provided evidence consistent with Smith’s assertion, suggesting that humans have an innate capability to understand the mental states of others at a neural level. This capability provides an important foundation for the Smithian sympathetic process, which has three components: sympathy as a synthesis of empathy with reason-based judgment, an external spectatorial perspective on the actions of others (and one’s own actions), and an innate imaginative capacity that enables an observer to imagine herself in the situation of the agent. This sympathetic process, and the neural framework that the mirror system appears to provide for it, predisposes individuals toward coordination of the expression of their emotions and of their actions. In Smith’s model this decentralized coordination leads to the emergence of social order, bolstered and reinforced by the emergence and evolution of informal and formal institutions grounded in the sympathetic process. This paper presents an argument that a sense of interconnectedness and the shared meaning of actions are essential foundations for the Smithian sympathetic process and the resulting decentralized coordination and emergent social order. The mirror neuron system appears to provide a neural framework for those capabilities.

In the paper I provide a survey of the mirror neuron literature, focusing on the neuroscience evidence and on the implications of mirror neuron evidence for the human philosophy of mind/theory of mind. The really striking and meaningful connection between Smith’s argument and the mirror neuron evidence is the extent to which the mirror system seems to enable imagination, which is crucial for achieving fellow-feeling with another person and his/her situation. Both the mirror neuron literature and Smith emphasize the impassable cognitive gap between one person and another, and that for two people to have a shared understanding of actions that would enable cooperation and social coordination, imagination is essential since we can’t get fully into the consciousness of another person.

The economic relevance of the mirror neuron research goes beyond the “see, Smith was right back in 1759, even without the neuroscience!” A neural framework that predisposes us to have shared meaning of actions is going to reduce cognitive barriers to coordination and cooperation, and I think a natural extension of that simple observation is that it makes it (at least somewhat) easier to find focal-point social institutions.

I don’t expand on this point in the paper, but I do also think there is a dark side to this neural framework for coordination and focal points — not all focal points are going to be as social beneficial and value creating as those that enable decentralized coordination and exchange in civil society. Bandwagon effects, or even coordination on agreement to behave in ways that harm some people (such as discrimination) are entirely possible under this framework. So I wouldn’t characterize the mirror system as the neural root of all possible social happiness, but would rather suggest thinking about it as a neural framework that enables us to form shared meanings of actions, and therefore to coordinate in ways that are mutually beneficial. Other ideas and factors (such as merit, leadership, vision, persuasion) must also come into play to create socially beneficial decentralized coordination. Our neural foundations provide but one part of the story.