Neuroeconomics: Getting to the Root of How We Think About Things

Where do business and brain science meet? In some fascinating places.

Giant pharmaceutical and biotech companies like Pfizer and Merck invest millions of dollars in developing treatments for neurological disorders like Alzheimer’s. And it’s not just a big-company field. According to Business Insider, startup companies that are focused on drug development and other activities related to neuroscience raised $548.5 million in investments between January and September 2022, giving them capital to grow their companies and their ideas.

This is but one area – however high-powered – at the intersection of business and the brain. There are more. As Dr. Michael Platt illustrated to Wharton Global Youth students through his exploration of brain-centered brand loyalty, researchers are also studying the role that the human brain plays in consumer choice and management strategy.

Dr. Elizabeth Johnson.

We spoke with Dr. Elizabeth “Zab” Johnson, executive director of the Wharton Neuroscience Initiative at the Wharton School of the University of Pennsylvania, to help bridge our understanding of how brain science is challenging and advising the business world.

The Neuroscience Initiative, she says, is busier than ever doing projects with companies and collaborators. “It’s becoming increasingly known that analytics is going to be the future of business, so why not get to the root of how we think about things? Get to the data in your brain itself?” says Johnson, who is also an adjunct professor of marketing at Wharton. “One of my favorite things is to show students all the different ways that neuroscience is being put into practice in jobs and industries.”

Here are 3 ways Dr. Johnson and her colleagues are investigating and advancing how the study of the brain can improve business.

The neuroscience of teaming. How can neuroscience help companies manage their employees better and build a more effective working environment?  A big project in the works at the Wharton Neuroscience Initiative is using neural data to figure out how to strengthen teamwork through enhanced team chemistry. “We take well-controlled lab studies and see how they apply in the real world,” notes Johnson. “We’re partnering with a global consulting company to see if we can measure aspects of the way they process a stream of videos to predict whether or not that means they will be well-suited or well-connected to people at their work. Then we look at ways for them to use that kind of prediction to help make people feel connected to one another. That is a huge issue in the future of work, especially as people are working remotely. They are feeling very disconnected…We are also studying innovation. Can we change the makeup of teams so that they include people who will be much more creative together?”

Neuromarketing. This is the OG of business and brain science that started back in the 1970s. Also called consumer neuroscience, it refers to measuring physiological and brain signals to better understand the choices and decisions that customers make – and then applying more optimal marketing strategies. For the past few years, Dr. Johnson – whose research primarily focuses on vision and visual behavior to understand how human observers look and navigate through the world — has teamed up with Wharton’s Barbara Kahn, a retail expert, to teach a Visual Marketing class to undergraduate students. Visual cognition is the way the brain responds to visual stimuli. Companies are better understanding visual cognition to build more effective marketing and advertising strategies. “A great example is the thumbnail [images] that streaming services like Netflix create to help you find the show you want to watch,” says Johnson. “They use the biological understanding of the human visual system to deconstruct all the frames of any given show so the thumbnails might be the most visually eye-catching. And then they take personal data on your preferences. If you really like romances or sci-fi, you’re more likely to be presented with a thumbnail that is both very visible to you, but also aligns well with your preferences.”

Companies on campus. Neuroscience as it applies to business is “exploding around us” right now, observes Johnson, in part because the technology used to study brain function, even on the periphery, is less expensive. Heart-rate monitors, for example, give you insight into cognition. Consumer wearable devices measure athletic ability and as Johnson says, that type of data can extend to “peak performance anything,” depending on what is being measured. She is eager to bring companies to Wharton’s campus to illustrate neuroscience in action. These have and will include people from the human and machine decision-making team at Toyota Research Institute, a vision scientist at Snapchat, and a leader from Ernst & Young’s Research, Learning and Development team. “The analytics that are coming from neuroscience are having an impact on every area in business,” Johnson concludes. “I can’t think of an area in business that isn’t touched in some way or couldn’t be touched by these developments.”

Conversation Starters

Netflix’s use of visual cognition to appeal to customers is a fascinating combination of brain science and consumer behavior. What other strategies have you encountered, particularly online? Think about advertising and banner placement. How are marketers using where and how we observe things to more effectively capture our attention?

Have you explored neuroscience at all? Possibly even neuroeconomics? What did you learn from the experience? Share your story in the comment section of this article.

Would you study neuroeconomics? Why or why not? Do you believe in the transformative power of brain science for business?

Leave a Reply

Your email address will not be published.