THE FREUDIAN BASIS OF ECONOMICS

Modern findings about the big power of the unconscious in decision making, connects Economics with the classical postulates of Freud, the father of Psychoanalysis.

Sigmund Freud was one of the greatest intellectual figures of the 20th century, an Austrian neurological doctor of Jewish origin. Much of his work remains, to this day, highly controversial, where some academics point to his as a genius, while others highlight his alleged lack of scientific seriousness.

Freud tries to give an explanation to the way mind operates, proposing a structure divided into three parts: the id, the ego and the superego.

• The ID represents the primal impulses and constitutes the engine of human thought and behavior, motivation and our most primitive gratification desires.
• The SUPEREGO is the part that counteracts the id, representing moral and ethical thoughts.
• The EGO remains between them, and acts mediating between our primitive needs and our ethical and moral beliefs.

The Freudian theory covers several aspects of human psychic functioning, with a high preponderance the Austrian doctor gave to two points: the unconscious and the sensation of pleasure, repressed or not, in the interpretation of human behavior. Let's rescue the following paragraphs of Freud:

"The unconscious is the largest circle that includes within itself the smallest circle of the conscious, all conscious has its preliminary passage in the unconscious, while the unconscious can stop with this step and still claim full value as a psychic activity."

"The unconscious of a human being can react to that of another without going through the conscious."

The Freudian Basis of the XXI Century's Economics

Consumer Neuroscience today teaches (via neuroimaging techniques not available in Freud's time) that we do not know at all why we choose what we buy. The decision would be taken, to a large extent, below the threshold of consciousness, where our most instinctive biology and our most emotional parts, the Freud's ID, sharpen. The ID would elucidate the interest in the product, the intention to purchase and the loyalty to the brand. These elements correspond to the construction, induced by the promotional campaigns, of desires and brand loyalty. Undoubtedly, the Freud's postulates 100 years ago are not at all far from these modern findings.

The mechanism would work, at the ID, in the following way: certain sensory stimuli (induced by large corporations) activate deep areas of our brain. The reward system (limbic and subconscious), especially the nucleus accumbens and ventrial striatum, are put into action and drives to seek food, sex and safety, the three basic pillars of human survival.

Brands, creations of large corporations to induce, seek to activate brain areas that regulate the sense of belonging, making us part of a group, a tribe, a community. All this, together with the natural tendency to imitate and / or empathize with everything that surrounds us (mirror neurons), leads us to consume much less rationally than we believe, pulling down the dogma of free choice, the sovereignty of the consumer.

Therefore, the Marketing of Emotions tries to strongly exploit the Freudian concept of the ID - the most primitive and hidden instincts of the human being, to create value and, ultimately, benefits. Today it seems as a strong resurrection of Freud's ideas, at least under the Consumer Neuroscience field (http://discovermagazine.com/2014/april/14-the-second-coming-of-sigmund-freud).

Dopamine and consumer pleasure center

That is, we live clearly today in a world where, thanks to Neuromarketing, corporations are learning to find product mixes that give maximum sensory enjoyment to the consumer (visual, tactile, auditory enjoyment, etc.), generating a true Freudian Economy, in the sense of enjoyment and pleasure, not repressed this time. The cerebral reward system, around the ventral striatum and the nucleus accumbens (limbic system), where the neurotransmitter king is dopamine, is key in this process.

It turns out that this neurotransmitter influences the sensation of pleasure in the brain, and therefore, shapes the tastes and preferences of consumers. Its secretion increases during pleasant situations and stimulates one to look for that activity, occupation or pleasant goods and services.

Dopamine area is considered as "pleasure center", since it regulates motivation and desire and causes us to repeat behaviors that provide us with benefits or pleasure. It is released with both pleasant and unpleasant stimuli, causing us to demand more of something, or to avoid them if the result is unpleasant. It is very studied also in the case of addictions.

Its objective is clear: to make us want to repeat one or more behaviors, as a way to assure existence. For example, the pleasant sensation we feel when having sex or eating something delicious, makes us want to repeat the action, ensuring the survival of the species through the reproduction and / or consumption of food. That is to say, for Economics, dopamine is of vital importance, being one of the main responsible for modeling the consumer's preference curves, and the whole valuation-pricing system of the economy.

To sum up

Neuroeconomics shows today that the unconscious basis of behavior, highlighted by Freud, connected to the dopamine centers of pleasure or cerebral reward, are not far from the economic reality, and today large corporations are designing real experiences of pleasure for its consumers, generating a truly Freudian paradise of high added value for companies, which at some point will lead governments to assess how much danger they represent in terms of purchase addictions, but that today represent great profits for companies.

Author: Sebastián Laza

Sebastián Laza is a Behavioral Economist, specialized in the interrelation between Cognitive Neuroscience and Decision Making.

He also is the Executive Director of the Applied Neurosciences to Management and Economics Program (National University of Cuyo, Argentine) and the Neuroeconomics's Coordinator of the  of ​​the Latin American Institute of Applied Neurosciences (http://neurociencias.online/).

Additionally, he is the author of NEUROECONOMICS: THE DISRUPTIVE PATH (2018): https://www.amazon.com/NEUROECONOMICS-DISRUPTIVE-PATH-Sebastian-Laza/dp/1718177844