The Framing Effect

Here's new research on the framing effect connecting it particular regions of the brain. How active is your orbital and medial prefrontal cortex? I added the graphs from the more detailed version of the article:

The Emotional Brain Weighs Its Options, by Greg Miller, Neuroscience News of the Week, Science Magazine: Faced with a decision between two packages of ground beef, one labeled "80% lean," the other "20% fat," which would you choose? The meat is exactly the same, but most people would pick "80% lean." The language used to describe options often influences what people choose, a phenomenon behavioral economists call the framing effect. Some researchers have suggested that this effect results from unconscious emotional reactions.

Now a team of cognitive neuroscientists reports findings on page 684 that link the framing effect to neural activity in a key emotion center in the human brain, the amygdala. They also identify another region, the orbital and medial prefrontal cortex (OMPFC), that may moderate the influence of emotion on decisions: The more activity subjects had in this area, the less susceptible they were to the framing effect. "The results could hardly be more elegant," says Daniel Kahneman, an economist at Princeton University who pioneered research on the framing effect 25 years ago (Science, 30 January 1981, p. 453).

Fig. 1. The financial decision-making task. At the beginning of each trial, participants were shown a message indicating the starting amount of money that they would receive (e.g., "You receive £50")... Subjects were instructed that they would not be able to retain the whole of this initial amount, but would next have to choose between a sure option and a gamble option... The sure option was presented in the Gain frame trials (A) as an amount of money retained from the starting amount (e.g., keep £20 of the £50) and in the Loss frame trials (B) as an amount of money lost from the starting amount (e.g., lose £30 of the £50). The gamble option was represented as a pie chart depicting the probability of winning (green) or losing (red) all of the starting money. The expected outcomes of the gamble and sure options were equivalent. Gain frame trials were intermixed pseudo-randomly with Loss frame trials. No feedback concerning trial outcomes was given during the experiment. [View Larger Version of this Image (114K JPEG file)]

In the new study, a team led by Benedetto De Martino and Raymond Dolan of University College London used functional magnetic resonance imaging (fMRI) to monitor the brain activity of 20 people engaged in a financial decision-making task. At the beginning of each round, subjects inside the fMRI machine saw a screen indicating how much money was at stake in that round: £50, for example. The next screen offered two choices. One option was a sure thing, such as "Keep £20" or "Lose £30." The other option was an all-or-nothing gamble. The odds of winning--shown to the subjects as a pie chart--were rigged to provide the same average return as the sure option. In interviews after the experiment, participants said they'd quickly realized that the sure and gamble options were equivalent, and most said that they had split their responses 50-50 between the two choices.

Fig. 2. Behavioral results. (A) Percentages of trials in which subjects chose the gamble option in the Gain frame and the Loss frame. Subjects showed a significant increase in the percentage of trials in which the gamble option was chosen in the Loss frame with respect to the Gain frame [61.6% > 42.9% (P < 0.001, t19 = 8.06)]. The dashed line represents risk-neutral behavior (choosing the gamble option in 50% of trials). Error bars denote SEM. (B) Each bar represents, for each individual subject, the percentage difference between how often subjects chose the gamble option in the Loss frame as compared to the Gain frame. A hypothetical value of zero represents a complete indifference to the framing manipulation (i.e., fully "rational" behavior). All participants, to varying degrees, showed an effect of the framing manipulation. [View Larger Version of this Image (66K JPEG file)]

But they hadn't. When the sure option was framed as a gain (as in "Keep £20"), subjects played it safe, gambling only 43% of the time on average. If it was framed as a loss, however, they gambled 62% of the time.

When the researchers examined the fMRI scans, the amygdala stood out. This brain region fired up when subjects either chose to keep a sure gain or elected to gamble in the face of a certain loss. It grew quiet when subjects gambled instead of taking a sure gain or took a sure loss instead of gambling. De Martino suggests that the amygdala activity represents an emotional signal that pushes subjects to keep sure money and gamble instead of taking a loss.

Fig. 3. fMRI results. (A) Interaction contrast [(Gsure + Lgamble) – (Ggamble + Lsure)]: brain activations reflecting subjects' behavioral tendency to choose the sure option in the Gain frame and the gamble option in the Loss frame (i.e., in accordance with the frame effect). ... (C) Reverse interaction contrast [(Ggamble + Lsure) – (Gsure + Lgamble)]: brain activations reflecting the decision to choose counter to subjects' general behavioral tendency. ... Effects in (A) and (C) were significant at P < 0.001; for display purposes they are shown at P < 0.005. (B and D) Plots of percentage signal change for peaks in right amygdala... (B) and ACC... (D). Error bars denote SEM. [View Larger Version of this Image (136K JPEG file)]

De Martino says he expected to find that subjects with the most active amygdalas would be more likely to keep sure gains and gamble when faced with a certain loss. But no such correlation turned up. Instead, activity in OMPFC best predicted individuals' susceptibility to the framing effect. De Martino speculates that OMPFC integrates emotional signals from the amygdala with cognitive information, such as the knowledge that both options are equally good. "People who are more rational don't perceive emotion less, they just regulate it better," he says.

Fig. 4. Rationality across subjects: fMRI correlational analysis. Regions showing a significant correlation between rationality index [between-subjects measure of susceptibility to the framing manipulation...] and the interaction contrast image [(Gsure + Lgamble) – (Ggamble + Lsure)] are highlighted. (A) Orbital and medial prefrontal cortex (OMPFC) ... Effects were significant at P < 0.001; for display purposes they are shown at P < 0.005. (B) Plot of the correlation of parameter estimates for R-OFC with the rationality index for each subject (r = 0.8, P < 0.001).

"It's a nice, strong correlation between individual differences in behavior and individual differences in the brain," says Russell Polldrack, a neuroscientist at the University of California, Los Angeles. Yet Elizabeth Phelps, a cognitive neuroscientist at New York University, cautions that fMRI studies alone can rarely prove a brain region's causal role. She suggests examining people with damage to the amygdala or OMPFC to clarify how these regions contribute to the framing effect. [View Larger Version of this Image (148K JPEG file)]

Comments

[James Kroeger]

What kind of conceivable benefit is this kind of research supposed to offer to society?

I've long felt that 'choice theory' is one of the least useful branches of economic science.

I prefer this kind of explanation of the role that emotions play in human behavior.

[Emmanuel]

James Kroeger: The answer to your question, I'm afraid, is marketing. Combining behavioral decision theory with neuroscience, i.e. "neuromarketing" may be the next big thing in marketing. As consumption accounts for over two-thirds of the economy, it could turn out to be a very u$eful branch of economic science as sales pitches become increasingly sophisticated by using neurological insights--for marketers at least.

I think I get your point though, "As if American consumers aren't insolvent enough..."

[cm]

James Kroeger: Your remark is very condescending. This is a piece of basic research, the stuff out of which progress is made. It has probably been true for most research results that their value has not been apparent for most, to say it politely, "practical" contemporaries.

I'm quite sure that when Bell Labs or Xerox PARC were cut to pieces similar questions about what conceivable benefit the facilities offer to the corporate bottom line were asked.

Note that this is not an endorsement of the research or its conclusions, but certainly a meta-endorsement of research.

Even if this particular result is not of great significance, it will motivate further research. At least they are not researching weapons technology.

[Bruce Wilder]

Faced with a decision between two packages of ground beef, one labeled "80% lean," the other "20% fat," which would you choose?

Of course, that's not a choice, is it? The choice is between 80% lean and 85% lean, or 20% fat and 15% fat. Does that make a difference?

JK:What kind of conceivable benefit is this kind of research supposed to offer to society?

Good question. Is this research positive, prescriptive, normative? Inevitably, whatever insight gained will feed back into BOTH the design of marketing and propaganda, and into the (mal)education of an educated society. Are we feeding an arms race between the "hidden deceivers" and informed consumer?

Some would say that the real function of the economics, like law, in society, is to further the systematic rationalizing of behavior, and the channelling, suppression and control of purely emotional (albeit organic) behavior. MBA students (this has been documented) do not learn much about economics or finance as academic subjects, but they do become significantly more objectively rational in their decision-making, and considerably less conventionally ethical.

Maybe, this research is just part of the social science counterpart to Derrida's meta-analysis of narrative: the evolving, almost Hegelian coming to consciousness of man-as-storytelling-animal, human nature's instinctive impulse toward domination turned inward, and expressed as the rational attempting conquest of the irrational thru thru self-mastery, Aristolein logical analysis taking apart Sophical persuasion and exposing it to the desiccating light of reason.

;-)

[donna]

Well, I think realizing that emotions and the amygdalya are affecting one's "rational" decisions is a pretty important thing. And there is a difference between knowing this is true and having it so vividly demonstarted in this type of study.

Sure, the results could be useful to marketing. It's also useful to those of us that like to be more able to resist marketing or realize how we're being manipulated.

[James Kroeger]

Maybe, this research is just part of the social science counterpart to Derrida's meta-analysis of narrative: the evolving, almost Hegelian coming to consciousness of man-as-storytelling-animal, human nature's instinctive impulse toward domination turned inward, and expressed as the rational attempting conquest of the irrational thru thru self-mastery, Aristolein logical analysis taking apart Sophical persuasion and exposing it to the desiccating light of reason.(Big Smile) That was great, Bruce! You're quite skilled with the code, aren't you? Very impressive...

[James Kroeger]

The relationship between The Emotional and The Rational in decision-making is simply this: the emotion one feels at any time during the decision-making process is simply a response to the 'odds' that the rationial part of the brain is calculating. When the odds do not look good, fear is experienced. When the odds look favorable, hope is felt. These feelings are dependent on the odds that the rational part of the brain is perceiving. In other words, the emotion we feel is a function of our relative ignorance of all the variables that are involved. The less-informed we are, the more likely we will miscalculate the odds we face.

If the rational part of the brain concludes that a particular guess is a 'sure loser', then sadness will felt emotionally, but it is not the sadness that will have any kind of causal impact on the decision. The rational part of the brain makes that decision, based on the information it has available. The sadness simply reflects the conclusions of the rational side of the brain. When one individual makes a more rational choice than another individual makes, it is invariabley because the 'more rational' individual had a more accurate perception of the 'real odds.'

It's not that "emotional people" make 'bad' decisions because they are emotional; it's that people who make 'bad' decisions become emotional because that is the logical emotion to feel when the rational part of the brain miscalculates the odds (due, usually, to a lack of information).

DeMartino is heading down the wrong path when he says, "People who are more rational don't perceive emotion less, they just regulate it better."

[Bruce Wilder]

Emotions are social, not individual. We generate emotions by imagining relationships, when we are actually engaged in a social relation and even when we are not. When you get that, you can begin to escape the cultural assumptions that put any understanding of psychology at odds with cultural individualism.

says...

Donna said; "..the results could be useful to marketing. It's also useful to those of us that like to be more able to resist marketing or realize how we're being manipulated."

It is so much more than marketing though, as everyone who has watched those tactics being used in politics knows.
Language choices do matter and if someone chooses to use your subconsious choices against you, it would be better to understand when, and what, they are trying to accomplish.

[tom s]

"What kind of conceivable benefit is this kind of research supposed to offer to society?"

You call this useless? You ain't seen nothing.

I spent a whole year calculating the intermolecular forces between a Helium atom and an ethyne molecule. Now that's what I call useless.

[James Kroeger]

At least they are not researching weapons technology.I'll grant your point here, cm. I won't go so far as to condemn this kind of research as a waste of precious resources, but I certainly don't think it's inappropriate for individuals to perceive certain fields of research as having greater value [or promise] to society than others. In my personal judgment of all the variables involved, I don't see how society stands to benefit from choice theory.

For me, the Perfect Knowledge assumption says it all. If all economic agents had Perfect Knowledge, then society could be expected to experience an optimal benefit. So we need to do what? We need to optimize the amount of knowledge that economic agents have in order to optimize the performance of markets to society's benefit, right?

So my question is this: what kind of additional benefit is choice theory supposed to provide us all with that would not already be achieved for us through closer-to-perfect knowledge?

(True or false? Choice theory only has advice to offer to individuals on how they might be able to benefit at the expense of others.)

[James Kroeger]

Emotions are social, not individual. We generate emotions by imagining relationships, when we are actually engaged in a social relation and even when we are not. When you get that, you can begin to escape the cultural assumptions that put any understanding of psychology at odds with cultural individualism.Could you possibly expand on these comments, Bruce? I'd really be interested in how you'd reconcile your thoughts with the analysis I go into here (the link I provided above). Emotions may be generated by imagining relationships, but note that fear of disapproval is not quite the same experience as actually experiencing it in real time.

[Blissex]

«What kind of conceivable benefit is this kind of research supposed to offer to society?»

As other people have said, to those segments of society that practise marketing it is useful. Marketing has been paying for a large part of psychology research for the past few decades.

The idea is very simple: that instead of busting their asses providing value, marketeers should provide the perception of value, on the assumption that most consumers buy because of the latter.

The goal is to make money arbitraging the gap between value and perception of value, and that can be a lot easier and more scalable a business model than providing value.

I hope that many know that often the cost of the packaging of consumer products is far higher that that of the product itself, because perception is driven more by the packaging than by the product.

The same could be said by the ever increasing amounts of fat, sugar and salt in consumer food: they are cheap and provide a high perception of value to our taste, which is wired for times where fat, sugar and salt were rare and precious.

Research like the above could make some people of businesses very rich...

[anne]

Asking after the benefit of this research is not condescending. The research as such is carefully done and interesting, but why should there be interest? The answer may come from the philosophic speculation by William James, that was highly controversial a century ago and still is. James suggested, and I have echoed the suggestion, that we are creatures unable to separate cognition to reasoned or rational and emotive. Cognition is a blend, we have argued. Such a blend was actually suggested even earlier by Charles Darwin, but a challenge to our ability to separate reason and emotion in thought can be quite threatening. The research here suggests, fightening or not, it is so.

[Betsy L. Angert]

Dear Mark . . .

Aside from of the economic aspects that many are speaking of, for me, this information is more than fascinating .

After reading Emotional Intelligence, by Daniel Goleman, my life changed. The first three chapters discuss the neuroscience of the brain. The author speaks of the physiology, and ultimately, he refers to psychology. The structure of our gray matter governs much of our being; it determines who we are and how we perceive the world.

I think it is extremely important to understand the amygdala, the emotional sentinel of the brain. The hippocampus is also an interesting study. Understanding each helps us understand why we rationalize choices, though belatedly. Humans give good reasons for what we do. We intellectualize in an attempt to justify our choices, be they economic, or professional, personal, or religious.

May you live long, learn much, and feel fulfilled . . . Betsy
Betsy L. Angert Be-Think

[cm]

Blissex: I don't think there is much arbitrage left of the type you are imagining. What is the purpose of marketing if not the very creation and management of perceptions, value-, need-, or otherwise? (Aside from advertising the very existence of a product/service/other thing.)

[cm]

James Kroeger: I must confess I could not read the whole article, only the excerpt presented here. As for that, I don't see either choice theory or gain at others' expense. The article purports to present research on how risk/benefit evaluation based on loaded verbal cues relates to neurophysiological processes.

I imagine that the "money game" that they use is just an easily understood case study of that general principle, and not the principal target. In any research where you have a limited number of "shots", you better devise something on which you are likely to get an "all else being equal" across all test subjects. Can you propose something (universally) better than games involving monetary gain/loss?

[James Kroeger]

anne:...we are creatures unable to separate cognition [in]to reasoned or rational and emotive. Cognition is a blend, we have argued.Blend, yes, but at the same time I think we can separate and clearly define the 'role' that logic plays vs. the role that emotion plays in decision making. I agree that certain unpleasant emotions (like fear and anger) can be 'dissipated' by logic, but it is a mistake to view emotion and logic as incompatibly different 'motives' that are normally opposed to each other.

I have argued that primary emotions like fear, anger, and desire-for-pleasure are biologically programmed 'feeling-responses' (to experienced or feared pain and experienced or yearned-for pleasure) that motivate us to act in the absense of the mind's intervention. These primary response 'instincts' are best understood as the 'default motivational program' that our brains will execute unless our minds perceive a superior response-alternative based on accumulated knowledge.

For example, consider our biologically programmed fear of sudden, unexpected, loud noises. A small child will naturally be quite frightened by the sound of a loud clap of thunder. But her fear will dissipate if she hears the explanation that the thunder can't hurt her, but only the lightning can, and then only when you are not protected by adequate shelter. If others show no sign of fear when the thunder claps, she might even become mostly indifferent when another storm comes.

Knowledge can displace fear, but only if it is accurate and it is able to assuage the fears of that part of the brain that perceives threats. The problem with some conjectures in cognitive therapy is that some of them are not at all accurate, but are only an product of wishful thinking.

With respect to the above discussion, the problem is not that emotion can sometimes 'improperly' influence us into non-beneficial decisions; it's that knowledge is lacking (that might otherwise assuage the "emotional part of the brain") whenever an "emotional" decision is wrongly made.

[Bruce Webb]

Well I scrapped a number of comments I composed. Not focused enough. So let me try to put this in the form of some questions.

Classical Economics seems to start from a position that Homo Oeconomicus is a Rational Economic Actor reacting perfectly to Supply and Demand. All else is Market Clearing.

Is that a fair depiction of the position of Classical Economics?
If so what are the implications of this study?

Because it has to mean something when you move decision making in part from the frontal cerebral cortex to the amygdala.

After all Magpies and packrats alike react to glitter and shine. And quantifying that is going to be a challenge.

[James Kroeger]

Because it has to mean something when you move decision making in part from the frontal cerebral cortex to the amygdala.Yes, it means 'something' to recognize that certain instinctive/impulsive/sub-optimal decisions can be 'fixed' if more information becomes available to otherwise-oblivious economic agents, but what more could it mean beyond the basic understanding that full-knowlege of all relevant variables is necessary in order to arrive at the best decisions?

I would assert that decision-making is moved from the frontal cerebral cortex to the amygdala whenever useful/pertinent information is not available to an economic agent. Our 'default programming' takes over. Supply the useful/pertinent info and the decision-making moves back to the frontal cerebral cortex.

For example, when glory-seeking politicians successfully rally the citizenry to support an unnecessary war, it occurs because the citizenry (or rather, the press) are not aware of all of the variables involved that would reveal the folly of the misguided leader's call to action if they were known.

Uhh...didn't Socrates (or was it Plato) say something like that?

[jp]

It's demonstrations like this that make me distrust the Libertarian emphasis
on maximizing individual freedom. We're rationalizing, not rational, creatures. And
in our consumption oriented society those invisible biases will be exploited to
maximize private gain while externalizing costs. The individual who made poor
choices due to how the choices were presented is castigated for not "thinking about
consequences" or "making poor lifestyle choices". Free will ain't so free.

That said, because we cannot know a priori which choices presented to individuals
will be poor, we should err on the side of freedom of choice. When there is
evidence of negative externalities we (via legislation and regulation) should act. Of
course there is push back from those having the private gains (see global warming,
mandatory seat belts, cigarettes), but pre-regulation (a la the European Union and
its regulations on items which could be determined by the market) has
results just as bad not pushing back negative externalities to the private gainers.
In the case of pre-regulation, some positive goods will be still-born having failed to
negotiate the barrage of bureaucratic regulations, while in the case of the lack of
post-facto regulation we would skew economic results as Altria increases its
profits while the emphysema patient and his family are impoverished.

Curiously, it seems that we in the United States have been in the area of best policy,
with our constant bickering over freedom vs regulation. It ain't pretty, it's noisy, but
it has allowed self-regulation.

[David Glover]

To those sneering at 'marketing' I'd point out that the communications techniques used by marketers (focused on persuading people) are equally useful for attempting to persuade people to do things that are "good": to quit smoking, to avoid unsafe sex and drink driving etc. And of course they're the techniques used by many religions to attract and retain their followings (downside risk doesn't get much bigger than the promised "fires of hell"!).

Personally I find anything that sheds light on how our brains work both fascinating and extremely practical.