Using Biomedical Technologies to Inform Economic Modeling: Challenges and Opportunities for Improving Analysis of Environmental Policies

Advances in biomedical technology have irrevocably jarred open the black box of human decision making, offering social scientists the potential to validate, reject, refine and redefine the individual models of resource allocation that form the foundation of modern economics. In this paper we (1) provide a comprehensive overview of the biomedical methods that may be harnessed by economists and other social scientists to better understand the economic decision making process; (2) review research that utilizes these biomedical methods to illuminate fundamental aspects of the decision making process; and (3) summarize evidence from this literature concerning the basic tenants of neoclassical utility that are often invoked for positive welfare analysis of environmental policies. We conclude by raising questions about the future path of policy related research and the role biomedical technologies will play in defining that path. *Roe and Haab are Associate Professor and Professor, Department of Agricultural, Environmental and Development Economics, Ohio State University, 2120 Fyffe Road, Columbus, OH 43210. The authors recognize funding from the Ohio Agricultural Research and Development Center and wish to thank David Beversdorf, Dan Burghart, and Michael Tilley for providing comments on the methodology section. All remaining errors are the responsibility of the authors.