Physioeconomics (Ofer Abarbanel online library)

Physioeconomics (or physio-economics) is an extension of experimental economics research that collects physiological parameters in addition to recording behavior. These measures can include skin conductance, blood pressure and the pulse of the subject. Experiments typically present subjects with economic decisions in a game–like context.

The term has also been used by Philip M. Parker in his book Physioeconomics to refer to his theory of the physiological basis of economics, according to which the equatorial paradox (that countries further from the equator have higher GDP per capita) is explained by the pressure on humans located in cold climates to restore their physiological homeostasis, for example by agriculture and wealth-creation.


Traditional experimental economics places individuals in situations where they have to make decisions about questions that affect their real or theoretical pocketbooks. Such experiments are conducted in a controlled laboratory environment. The analysis of the experiments is limited to the evaluation of market outcomes and questionnaires. The survey provides only subjective impressions. Another issue is that questionnaire answers often follow social norms rather than revealing the subject’s real view. Physiological parameters, such as skin conductance, provides additional, objective measurements that allow a deeper insight into the decision making process.

Particularly in the study of markets and negotiations, understanding the behavior and motives of participants is necessary. Therefore, the influence of emotions on decisions and behavior is of great interest. Physiological measurements can help explain these elements. The methodology for physically measuring emotions is well–researched and provides an established means dar.[citation needed]

Differentiation from related fields

The field of neuroeconomics examines brain activity in economic decision situations with methods of magnetic resonance imaging or electroencephalography, and so can be considered a subfield of physio-economics. As of 2011, these technologies are considerably more expensive than other techniques of physio-economics.


To ensure applicability and present a useful complement to experimental economics, the following conditions were placed on the measurement methodology:

  1. Implement observations on multiple subjects should be implemented in a parallel environment of a normal PC-Pool.
  2. Convenient equipment that does not require advanced training,
  3. Subjects sit upright and maintain eye contact.
  4. Employ unobtrusive measurements in a neutral environment.
  5. Avoid measurements that cause unpleasant after-effects.

Physiological parameters that satisfy these conditions are particularly good, the electrodermal activity, heart rate and blood pressure. While the focus so Neuroeconomics with neural activities in economic decision situations that are in the research Economics exclusively for Physio-physiological parameters.



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