The Reason Most People Have Horrendous Comedic Taste.

At the University of Haifa in Israel (of course), the finest of comedy research centers in the world, researchers S. G. Shamay-Tsoory, R. Tomer, and J. Aharon-Peretz have discovered how the brain processes sarcasm. Using people who are brain damaged, either with prefrontal or posterior lobe damage, as well as a control group of healthy individuals, the Haifa crew was able to pinpoint which areas of the brain were required to interpret sarcasm and intonated intent:

...understanding sarcasm requires a series of events - the brain’s language areas interpret the literal meaning of a statement, the right hemisphere and frontal lobes process the emotional context, while the prefrontal cortex integrates the two. (New Scientist)

Not surprisingly, those people with prefrontal cortex damage had the most difficulty with sarcastic interpretation.

You can check out the whole paper here, published by the journal Neuropsychology.