“Natural science has moved ahead by studying progressively smaller units,” Laibson told me. “Physicists started out studying the stars, then they looked at objects, molecules, atoms, subatomic particles, and so on. My sense is that economics is going to follow the same path. Forty years ago, it was mainly about large-scale phenomena, like inflation and unemployment. More recently, there has been a lot of focus on individual decision-making. I think the time has now come to go beyond the individual and look at the inputs to individual decision-making. That is what we do in neuroeconomics.”To avoid confusion: Economics is still "about large-scale phenomena, like inflation and unemployment." It is not like we have exactly nailed those problems yet. But maybe Laibson is right that we need to redefine "microfoundations" as starting at the neuron and building up from there.
By the way, Laibson will once again be giving an ec 10 lecture this fall.
Thanks to The Austrian Economists for the pointer.