Homo Oeconomicus
Neurosciences, the rationality of choice and subjective element in economic crimes
Edited by Riccardo Borsari, Luca Sammicheli, Claudio Sarra
Introductory notes for a line of research
Summary: 1. Neurosciences – 2. The rationality of choice. – 3. Subjective element in economic crime. – 4. The difficulties of method.
1. Neurosciences
The first reference of the proposed themes for the Conference (and for a potential and stimulating line of research) leads us towards neurosciences and, in particular, towards that recent branch of study that has been labelled as neurolaw, which involves a deliberation of the challenges that the dynamic development of neurosciences subjects the world of law to, even to the point of challenging the concept of free will.
What is neurolaw? If we wished to pin-point the conventional date on which the branch “law-neurosciences” came into being, we could indicate the 29th of November 2004, when the monographic dossier by the name of Law and The Brain was published in the prestigious Philosophical Transactions of the Royal Society magazine. This booklet gathered various contributions by scientists and scholars with different educational backgrounds, which addressed the issues which arose from the meeting between law and neurosciences.
Ever since its beginning, this discipline has highlighted its salient features. The order of the chapters of a miscellaneous volume such as this one, in truth, already manifested that division in areas that later would be consolidated in subsequent developments. Some works (How neuroscience might advance the law by O’Hara; Law and the source of morality by Hinde; A neuroscientific approach to normative judgement in law and justice by Goodenough and Prehn), by questioning the foundations of the potential crisis that neurosciences could create when applied to the establishing assertions of the law, could be regarded loosely as pertaining to the “philosophy of law”. Some other papers, which addressed the problems which would arise when applying neuroscience as a tool of expertise in a trial, could easily be traced back to the classic “forensic sciences”: thus, for instance, the chapter on neurosciences as a possible technique for lie detection (A cognitive neurobiological account of reception: evidence from functional neuroimaging by Shen et al.) or those papers relative to the fundamental concept of liability (such as The frontal cortex and the criminal justice system by Sapolsky; and Responsibility and punishment: whose mind? A response by Goodenough). Finally, there appeared also some contributions regarding themes, albeit spurious, but of greatest relevance, such as the right of ownership (The property instinct by Stake), causal reasoning (A cognitive neuroscience framework for understanding causal reasoning and the law by Fugelsang and Dunbar) and, of course, the relationship between neuroscience and economic behaviour, a topic which is of special interest in the discussions of today’s study (such as Neuroeconomics by Zak or The neuroeconomic path of the law by Hoffman).
Later on, as has been confirmed by the most recent literature, the law-neuroscience debate structured itself following two distinct paths.
The first one is of a general nature; it could be described as radical, and it stems from the general theory of law. This line of reasoning questions how much and in what way are neurosciences able to suggest a new “model of operating for the human mind” so much so that it requires a revolution of the judiciary system. This revolution, which might stem from a naturalistic-reductionist assumption of the nature of human action, would need to impose, as a consequence, the formation of a criminal law that is essentially free from concepts which are deemed out of date and anti-scientific such as freedom, intention and responsibility.
The second path, which could be labelled as moderate, refuses a priori any debate regarding the general theory of law, and focuses on a deliberation about the potentially practical and immediate application (de iure condito) of the tools of scientific scrutiny offered by the modern neurosciences.
The point, as much as it interests us here, is that whichever approach we wish to take in a debate on neurolaw, legal experts have once again sparked the discussion on the relationship between law and ethics, which had never truly been put to bed.
The approach taken by neurolaw, and the challenge that this implies, focuses on the natural fact of ethical behaviour, also (and this is where it differs from traditional psychological sciences) through the analysis of the cerebral attitudes and components that appear linked to it. Therefore, even if we wish to set aside, for the moment, the internal debates on behavioural sciences regarding the real epistemological value of neurosciences, and the interdisciplinary ones regarding the impact of the same as a refounding of law, neuroscience has, in all truth, relit an interest on the concrete inquiry into the psychological dimension of criminal behaviour.
An interest which, given the historic period in which we live in, is constantly harassed by the economic agenda and by its also ethical tasks, and which can only take it out on a specific sector of criminal law, namely that one which deals with the economy and economic criminology.
2. The Rationality of Choice
In the relationship between behavioural sciences and economic criminality, a paradoxical situation seems to come to light: the stronger the general links between psychology and economics are (here we refer to behavioural economics), the less they are reflected in a forensic psychology of an economic nature.
We must not forget the established and thriving literature of a “psychological-economic” nature: the only Nobel prize won by any scholar of psychology was that awarded to Daniel Kahnemann regarding the distortions in reasoning in the economic environment (in fact it was the Nobel prize for Economics).
And the question that psychologists are asked is this one: how come there are so many contributions on behalf of psychology into the field of economics but so few into the fields of criminology and economic criminal law? Why is it that, amongst the thousands of pages in works on juridical and forensic psychology of great importance, there is no mention of its possible applications in a legal-economic field?
If we wished to theorise an answer, it would appear that forensic psychology believes it can only legitimately intervene in the execution of “emotive” legal situations. And it appears that criminological contemplation of a psychological nature (known as psychological criminology) lacks interest in the investigation of inaccurate psychological mechanisms that underlie economic crimes, entrusting other approaches, especially of a sociological sort, with the inquiry. A sort of division based on competence: “we’ll deal with abuse and violence, you take fraud and evasion”.
The interesting point is that such “de-psychologising” – also from a cultural point of view – from the interpretation of crimes of an economic nature is highlighted also on many points in the legal field.
There is the feeling that, even if on the basis of the principles and the structure of the crime, the evaluation of economic crimes requires the verification of the psychological component (subjective element) not unlike any other crime. When it comes to the aforementioned offences the same verification appears to be shifted into the background. Thus, it runs the risk of “transforming” into crimes with an almost objective responsibility and of often evoking the paradigm dolus in re ipsa. This feeling is confirmed also by a simple “quantitative measuring” of the space assigned to it in the verdicts regarding economic crimes, often greatly reduced in respect of the analysis of the objective element.
Thus we can prove the mirroring to what we have just observed with regards to the psychological field: the legal expert turns to the psychologist and psychology (understood here in the most loose sense of behavioural sciences) generally only when he finds himself in need of an explanation on behaviours which have been distorted by the pathology of emotions or passions, and not when it is necessary to understand “cold” behaviour such as, in fact, those of an economic nature.
Here, then, we have reached the theme of the rationality of choice, hypothetically assimilated to economic behaviour as a potential explanation – on both sides – of that phenomenon of “de-psychologising” of the economic crime.
The concept that needs to be analysed more in depth is then the focus on ascertaining whether if, and how much, economic crimes, in primis fiscal ones, are categorised and revised as economic behaviour (let us here consider the theory of evasion as costs/benefits), and so the conduct with penal relevance becomes an economic behaviour. An economic behaviour marked by a supposed rationality of choice. And therefore there is the risk that the in-depth analysis of all the undertones of the psychological procedures of reproachable conduct could be absorbed into a model of rational action that is in itself voided of ulterior psychic connotations (the ascetic behaviour of the homo oeconomicus): all that which can be the object of a psychological investigation for the judgement results by itself, even without knowledge, to be excluded for the very behaviour which it refers to.
3. Subjective element in economic crime
The topic, naturally, can’t even be merely summarised at this time; however, two cases are worthy of mention, albeit very different between them. These both exemplify very well the substantial “emptying” of the in-depth analysis of the subjective element in the economic crime: the false declaration to the market (the Ifil-Exor case), and the failed payment of the IVA due to the crisis of liquidity of the company. Emblematic is, in first instance, the notorious story of the equity swap forwarded by the managers of the financial company Exor at the time of the Fiat crisis. In that case, the statement released to Consob with regards to the purchase of Fiat shares, with a view to maintaining control, could have been considered “false” with regards its completeness (namely “reticent”). A “falsity”, however – as it appeared by the trial papers and the logic of subsequent behaviours – put into action for a specific purpose: not so much to alter the path of the shares market, but rather to cover up a contractual operation which was advantageous for the banks. The in-depth analysis of such a delicate event allows us to witness the disproportion between the attention placed on the aspects regarding the concrete survival of the illicit (in primis, on the link of cause), and that placed on the effective action of the guilty will. This disproportion (and lack) was immediately picked up on by an authoritative doctrine: “From here we may notice the essential relevancy of what might have been the effective content of the crime: if the falsified information was not intended to interfere illicitly on the mechanisms that determine the quotations’ progress, and neither, as is the hypothesis of the illicit administrative body that is under examination, to provide misleading elements to the financial instrument, but instead merely to keep a specific financial operation hidden from the market to avoid useless oscillations in the quotation of the title — for the sole purpose of thus maintaining intact its position of reference shareholder —, the offence that is being questioned is naturally to be excluded, simply because it is objectively non-existent”. In the case under examination, the subjective purpose underlying the reluctant declaration was pivotal (“…what it notices is the cause underlying that reluctance…”) and therefore the evaluation of the intention of that behaviour should have been a fundamental passage in the legal scrutiny of the fact. Such an evaluation, however, did not occur, according to authoritative commentators.
The second example that is well suited to our topic is that which recently emerged also in the legal proceedings regarding the cases of evasion due to uncollected tax. As is well known, the legislator intended to indict acts of mere omission of payment; that is solely the failed settlement, within the deadline, of the tributary debt, even when it is not supported by the goal of tax evasion. A choice that “…deprived these particular cases of an identity nature which are typical of the whole penal and tributary system, namely the necessity that the behaviours which are materially offensive to the interests of the treasury are also teleologically aimed at evading the taxes”. By excluding the specific fraud of evasion, important matters arise concerning the application of the penal sanction to acts of omission of payment which are not supported by the goal of evading taxes, rather made necessary by the total absence of liquidity (therefore imposed by the choice, and thus by the goal, to maintain the levels of employment, or to prefer the payment made by the creditors who could inject liquidity into the company, which would be useful to overcome the crisis, or rather to pay the essential supplies for the continuation of the company’s activities).
In such a scenario, a substantial division can be noticed between the jurisprudence of merit which, through different legal procedures (e.g. absence of fraud; state of necessity; force majeur), has recognised on numerous occasions the non-punishability of such conducts; and the jurisprudence of legitimacy, which has instead remained often unmoved on the closed position on the sense of the lack of effectiveness which is exempt from the omissions due to crises of firm liquidity.
In the viewpoint of the conference, said hypotheses acquire particular interest as they well recall the scenarios used by neuroscientists, such as “moral dilemmas”, to study moral neuropsychology. These are cases in which we would be curious to find out what would emerge if the neuroscientist were to submit the moral dilemma of a choice between “pay tax not cashed in to an insolvent State” rather than “let go the loyal employee due to a crisis of liquidity”. We would then maybe have evidence of a total dissociation between the naturalised ethic and the reasoning of certain judgments.
And, finally, the case United States vs. Semrau deserves to be mentioned. In such legal event we find: a) a psychologist received a summons to appear before the court; b) the accused was indicted for an economic crime ( “healthcare fraud”, a kind of falsified invoicing to the entity for national medical assistance – Medicare); c) a verdict centred on the evaluation of the subjective element (that is the fraudulent intention in the invoicing rather than an error in the interpretation of technical modalities of accounting codification); d) the issue in trial of whether or not to apply neuroscientific techniques (the accused had, as a matter of fact, proposed to the court an fRMI for the truth of his own statements).
“Semrau”’s case is one that curiously appears to summarise all the themes that wish to be a part of our study: the general theme (the in-depth analysis of the psychological component in economic crime versus a more clear “administrativisation” of the subject in matter); the specific theme (the abstract possibility of submitting the subjective element of the crime to a technical-scientific evaluation) as well as the tools offered by the most modern of behavioural sciences (the neuroscientific techniques).
The problems of method
In the title of this brief introduction, we were discussing a line of research. In fact it is believed that, at this moment in time, it is necessary to begin with a simple theory of study, especially given the difficulties concerning method. For if, in principle, the interest and the current interest in the topics are shared by many, what by no means must be neglected is the modernity of such a line of research.
These difficulties are those pertaining to science and to interdisciplinary approaches, that encounter a whole array of obstacles, some of these true and real, others perhaps related more to the sociology of the research.
Firstly, it would be imperative to clearly outline which “level of inquiry” we wish to focus on when potentially embarking upon a neurocognitive analysis of economic crime. This theme, after all, is the same as that of traditional criminal or legal psychology: for within it, different levels of study tend to become confused. A legal psychology that focuses on the study of psychological dynamics of the people involved in legal contexts (without any direct link to the normative fact) clearly differs from a legal psychology that, instead, dedicates itself to the psychology which produces legal effects (such as in suggesting a possible interpretation of a specific norm). The former, evidently, is closer to the way of reasoning and of “doing research” of the world of behavioural sciences; the latter, on the other hand, appears to be closer to the methodology of legal sciences.
And therefore also with regards our theme it would be necessary to clarify, in the line of research, which is the methodological focus: is it a psychology of the economic deviance or is it the use of behavioural sciences in the formulation (iure condendo) and in the interpretation and application (iure condito) of the legal norms that discipline the subjective component of economic crime? Evidently, given a few areas of overlap, it is down to different manners of scientific enquiry.
Here then is, on the one hand, the centrifugal force of the abundance of perspectives of analysis (legal, psychological-cognitive, social, philosophical, from which the present volume) and, on the other, the necessary centripetal counterforce that requires a specific method of research and study.
The awareness of this cognitive tension should act as a guide in the continuation of the sketched out line.
Who has participated: Marta Bertolino, Riccardo Borsari, Giovannangelo De Francesco, Luigi Ferrari Antonio Fiorella, Stefano Fuselli, Maria Beatrice Magro, Paolo Moro, Carlo Enrico Paliero, Tommaso Rafaraci, Rino Rumiati, Luca Sammicheli, Claudio Sarra, Giuseppe Sartori, Andrea Zangrossi.
This volume hosts the Acts of the Interdisciplinary Conference “Homo oeconomicus. Neurosciences, the Rationality of Choice and Subjective Element in Economic Crime”, which, from various perspectives, has dealt with the theme of the psychological dimension that is at the base of criminal behaviour, with a particular focus on the economic penal matter. The idea behind it takes root from the belief that the debate between legal experts, philosophers, psychologists, and neuroscientists can contribute to a methodology of inquiry into the mens rea. This would allow us to understand the psychological dimension of the agent, and therefore (attempt to) define the risks of a blamewhortiness judgement centred around the dolus in re ipsa paradigm – an event which is well known when it comes to economic criminality, which is a stage of widespread “de-psychologisation” of the illicit and a place of elections of ex ante evaluations, on behalf of the agent, regarding the cost-benefits which originate from the criminal act. The figure of the Homo oeconomicus, of the individual as a rational choice-maker, lacking in any emotive component, and who cannot be influenced by the surrounding context, carries with it a kind of surrender of the evaluation of the psychological moment, and of marginalisation of free will. Therefore, it is especially economic crimes that highlight the urgency of finding and studying new inquiry techniques which allow to critically assess the subjective moment so as to prevent the danger of relinquishing it as a void glimmer.
