How your brain impacts your spending habits

Source: Best Health magazine, January/February 2013; Image: Thinkstock

The fields of psychology, neuroscience, economics and finance are coming together in an emerging field called ‘neuroeconomics’ that expands our understanding of what drives spending and saving behaviours. So far, there is general consensus among neuroeconomists (using magnetic resonance imaging to study brain activity) about the importance of two specific areas of the brain: the medial prefrontal cortex (MPFC), located just behind the forehead, and the dorsolateral prefrontal cortex (DLPFC), a smaller area set back in the prefrontal cortex. The MPFC is the area of the brain that represents value and is active when making decisions; when the DLPFC is active, it turns down the response in the MPFC. In other words, the DLPFC is a kind of watchdog area, responsible for exerting things like self-control and patience. (In one study, researchers gave people the choice of receiving $20 immediately, or receiving $100 in 90 days; most people consistently took the $20).

Paul W. Glimcher, a professor at New York University’s Center for Neuroeconomics, says, ‘The DLPFC is more active when we are exerting self-control and not choosing the impulsive short-term option.’ This knowledge holds promise for future treatments where lack of self-control is a serious issue, whether it is overeating or overspending. Research has shown that disrupting the DLPFC area with non-invasive use of magnetic waves increases participants’ impulsivity and willingness to accept unfair financial offers, says Glimcher. Conversely, another study at NYU is looking ‘at how to strengthen the DLPFC with ‘direct current stimulation’ (applying energy currents outside the skull). Glimcher points out, though, that such a treatment, which is at least five years away from public availability, comes with ethical considerations’namely, identifying the full impact of altering brain functions. ‘We may make someone who overspends less likely to spend in the moment, but that may have repercussions. For example, they may not buy their wife a birthday present,’ says Glimcher. ‘However, in some severe cases, the reward may outweigh the risk.’

Warren Bickel, professor and Wilbur D. Mills chair of alcoholism and drug abuse prevention at the University of Arkansas, is currently researching a method for boosting the ability to appreciate a future reward (e.g., putting off spending now to enjoy more money later): strengthening short-term memory. The study gave 27 participants, who were in treatment for stimulant use, either a memory task such as remembering a phone message or a group of exercises that did not affect memory. Those who did memory tasks had an increased ability to appreciate a future reward.

With the rise of a growing community of neuroeconomics researchers, Glimcher says it won’t be long until we have concrete findings and, possibly, tools for managing extreme and less extreme cases of overspending.

This article was originally titled "The fascinating science of spending" in the Jan/Feb 2013 issue of Best Health. Subscribe today to get the full Best Health experience’and never miss an issue!