Investing the relationship between human mind and society through economic experiments and pursuing innovation to improve our future

Keigo Inukai Associate Professor, Department of Economics, Faculty of EconomicsKeigo Inukai completed his Ph.D. studies in 2010 at the Hokkaido University Graduate School of Humanities and Human Sciences. After serving as a visiting researcher at École Polytechnique in France and an instructor at the Institute of Social and Economic Research at Osaka University, he took his current position in 2018. His specialties include behavioral economics, experimental economics, and neuroeconomics. With a focus on economics, he engages in cross-disciplinary research on human behavior selection and decision-making mechanisms while integrating game theory, psychology, and neuroscience. His interests including taking videos of his pet dog Nagi, and on his days off can often be seen chasing her about with a camera in hand.

Technological advances bringing about new trends in economics

My specialties of behavioral economics, experimental economics, and neuroeconomics are discipline that conduct various experiments regarding how humans make economic decisions and what happens in the brain when organisms, including humans, make decisions. We attempt to verify these findings against economic models. These are relatively new endeavors in the field of economics, having attracted international attention since the start of this century, prompted by the spread of the Internet and advances in computing technology. It is now possible to acquire and analyze huge amounts of data in ways that were not possible in the days of experimenting with pen and paper, dramatically advancing our research.

Conventional economic theory is based on the premise that humans rationally behave in a manner that maximizes their own interests. However, actual humans are swayed by their emotions, and do not always behave rationally. Our studies investigate how such psychological habits, thinking patterns, and cognitive distortions affect decision-making. By incorporating our findings into economic theory, we can better mesh the reality of human beings with the gears of economic theory. Our results can also be applied to resolving social issues such as poverty.

For example, in regions receiving developmental assistance we often suggest use of fertilizer to increase crop yields and thereby raise people out of poverty, but we are faced with the problem of farmers otherwise using funds meant for purchasing fertilizer. This has been considered as being due to low educational levels in regions of poverty, but by taking a behavioral economics approach—performing a field experiment in which we allowed purchase of coupons that could be exchanged for fertilizer at any time—we saw a remarkable increase in the number of farmers purchasing fertilizer. Indeed, we found that in many cases fertilizer dealers never had any stock, so after harvest farmers would spend any available money on other things. Such experimental approaches to reducing poverty are now taking place around the world.

Courses utilizing one of Japan’s leading economic experimental facilities

In my courses, I have my students experience economic experiments involving situations such as markets and auctions. Our University hosts one of the largest facilities for economic experiments in Japan, allowing simultaneous participation by up to 44 subjects. When we actually perform a series of experiments involving interactive games, convert them into data, and analyze them, the results may or may not follow the economic theory students learn from lectures and textbooks. I then have students discuss amongst themselves possible reasons for this, or offer lines of thought for them to consider, allowing us to debate whether the difference is due to human behavior or our economic models. I hope that through such tasks, my students will acquire an economic perspective. Things like monetary policy and market theories seem remote from our daily lives, but by obtaining a good feel for them we can discover what makes economics interesting, and students could see how cutting-edge economics research is actually related to what they have learned.

From an interest in human social systems to becoming a researcher

I believe that in a sense, we can consider humans as “ultra-social animals.” For example, we even form cliques within high-school classes, and social rules tend to spontaneously arise within such groups. We humans make our own social rules and adapt ourselves to them. Some of these rules seem to take on a life of their own. From such an interest in human beings, I started graduate school studying psychology. After all, I figured, psychology must have accumulated vast amounts of knowledge regarding humans. What I discovered, however, was a lack of perspectives regarding human social organizations and systems, in response to which my mentor suggested I study economics instead. And thus I entered this field.

I grew up surrounded by nature in Nagano prefecture, so I’ve always loved animals, and I was particularly interested in social insects such as ants and bees. When combining these interests, I noticed that while there was a long history of accumulated knowledge regarding “people” in the humanities, there wasn’t much scientific discussion, even in biology, of “sapiens” in society. As someone working in the humanities and social sciences, I hope to reveal systems within human society through research that connects “people” with “sapiens.” That is how I ended up with my current research style of bringing together and working with researchers from diverse fields.

Innovation through a fusion of cutting-edge economics knowledge and the latest technologies

One of my current research projects, which I am conducting with researchers in information and communication technologies, is related to our sense of touch. We are very close to realizing technologies allowing us to transmit tactile sensations to remote people, which in the near future will for example allow people with visual or hearing disabilities to better enjoy sports and movies, or allow us to shake hands with people far away, allowing communication with higher emotional value than is possible today. My job is to think about how such technologies will alter human decision-making and behavior, and to create economic models that will encourage people to make better choices.

Looking further into the future, a society in which augmented reality and virtual reality technologies continue to advance will have a thinner barrier between the real world and the virtual world, which will no doubt drastically alter our decision-making. Today we are accumulating data and new technologies at an astounding pace, making our society more sophisticated. As new technologies become a part of our industry and lifestyles, economics can contribute to improving human lives by incorporating into our systems ingenuity and mechanisms that apply human behavioral habits and cognitive mechanisms. The core of economics is issues related not to money, but to the pursuit of people’s happiness and welfare. I hope I can help realize innovation toward that goal through research that transcends the boundaries of academic fields.