Our Brain And Money
No money in your bank account? Blame your brain. Scientists in the emerging field of “neuroeconomics” – a hybrid of neuroscience, economics and psychology – are making stunning discoveries about how the brain evaluates rewards, sizes up risks and calculates probabilities. This story, from CNN Money Magazine looks into the wonders of imaging technology that can observe the precise neural circuitry that switches on and off in our brains when we invest. Those pictures make it clear that our investing brain often drives us to do things that make no logical sense – but make perfect emotional sense. The human brain developed to improve our species’ odds of survival. You, like every other human, are wired to crave what looks rewarding and shun what seems risky. To counteract these impulses, your brain has only a thin veneer of modern, analytical circuits that are often no match for the power of the ancient parts of your mind. And when you win, lose or risk money, you stir up some profound emotions, including hope, surprise, regret, greed and fear. Coming to greed, why is it so hard for most of us to learn that the old saying “Money doesn’t buy happiness” is true? After all, we feel as if it should. The answer lies in a cruel irony that has enormous implications for financial behavior: our brains come equipped with a biological mechanism that is more aroused when we anticipate a profit than when we get one. The other emotion that’s discussed in depth here is fear. How, what people are afraid of may not be that scary in pure analytical terms. The implication of how studies like these could make a difference to the way we think of money is still unclear. But it all worth read, anyway.