Money and the Brain
Our brains are wired to improve the odds of survival. We crave what looks rewarding and avoid what looks risky. Similar to Malcolm Gladwell’s, Blink: the Power of Thinking without Thinking, emotions like hope, surprise, regret, fear and greed – as a matter of biology – affect our decision making.
Neuroscientist, Brian Knutson, at Stanford University, concluded that the brain fires neurons more when it anticipates reward then when it gets it. Dr. Knutson’s mentor, Jaak Panskepp of Bowling Green State University in Ohio, calls that function “the seeking system.”
Paul Slovic, a psychologist at the University of Oregon, says our anticipation wiring acts as a “beacon of incentive” that helps us pursue rewards that require patience and commitment. Hence we work hard for imagined wealth in the future and forego smaller gains in our present.
To test whether memory improves when anticipating financial rewards researchers used fMRI to view brain activity. It was revealed that looking at potentially rewarding pictures set off more intense activity in the hippocampus. The hippocampus is the part of the brain that houses long term memory. Emrah Duzel, neurologist, says “The anticipation of reward is more important for memory formation then is the receipt of reward.”
The amygdala is the reflexive part of the brain that acts like an alarm system. Neuroscientist, Gregory Berns, led a study of brain activity when following what others did versus going it alone. When people went against the consensus they showed heightened activity. Berns called it “the emotional load associated with standing up for one’s belief.” The same areas of the brain that trigger physical pain are activated by social isolation. In other words, you go along with others because it hurts not to.
Neurologists, Antonio Damasio and Antoine Bechara, conclude from research tests on persons with damaged amygdalas that decisions are driven by fear even though they do register in the thinking part of the brain and the mind has no idea of being afraid. Just like Gladwell’s Blink: the Power of Thinking without Thinking reveals, Damasio finds that without fear the human brain keeps trying to beat the odds regardless of logic. “The process of deciding advantageously is not just logical but also emotional.”
[i] He Money article by Jason Zweig is excerpted from Your Money and your Brain, copyright 2007. Published by Simon & Schuster and reprinted with permission.
