Money on the Brain: How the Subconscious Mind Affects How You Spend
Just the thought of money causes your brain to react in ways similar to being high on cocaine.
Kabir Sehgal was a vice president in emerging market equities at J. P. Morgan in New York. He serves as an officer in the United States Navy Reserve, served as a speechwriter on a presidential campaign, and is a term member of the Council on Foreign Relations. He is the New York Times bestselling author of books including Coined, Walk in My Shoes (with Andrew Young), A Bucket of Blessings, and Jazzocracy. A Grammy-winning producer who has performed with Grammy-winning musicians as a jazz bassist, he co-founded an arts organization which merged with the Afro Latin Jazz Alliance. Sehgal is a graduate of Dartmouth College and the London School of Economics.
Kabir Sehgal: So, I looked at the topic of what's happening in the brain when we deal with the money. And there's a part of the brain that activates — it's called the nucleus accumbens. It's deep within the sort of evolutionary, the oldest part of the brain. And they compared people who make money to those who are high on cocaine. And remarkably the brain scans were almost identical because there was activation in this part of the brain called the nucleus accumbens. They also looked at brain scans of the people who are high looking at naked women, dead bodies and money. And what got the most activation? It was money. So money obviously acts as a neural stimulant and it makes us act in very sort of irrational ways. And so the part of the brain that lights up, again the nucleus accumbens, keeps on firing and firing and firing and obviously money excites us.
The nucleus accumbens is part of the reward center in the brain and it's part of the brain that activates when you're excited, when you're aroused, when you're feeling happiness or even joy.
There's many parts of the brain that activate when using money, but this is where it's concentrated, where we process rewards. And brain scientists have been able to scan your brain and they say okay you can invest in a stock that's more risky, a conservative bond, or something that's got no option at all like cash. And so they find that if there's activation in the nucleus accumbens, you're more likely to take the riskier option, meaning you're more likely to choose a stock. Where if there's activation in the insula, which is the anxiety center of the brain, you're more likely to be risk-averse and you're taking on investing in the bonds. So what they find is that obviously what happens in the brain can predict what your financial decision is.
Decision-making, our financial decision-making is what's made in what's called the sub cortical region below the neocortex, what we all know as the subconscious level. For example, when you sit outside on a sunny day, you're more likely to tip more for the waiter. You feel like you're in a better mood. The sun affects you and you tip more money, whereas if you sit inside, you tip less money. So researchers went back and looked at this and they said well one thing that we have really good data on are weather patterns over the last 80 years. We also have really good data on stock market prices over 26 countries. And they found that, sure enough, over 80 years that the markets were up considerably, annualized over 25 percent on sunny days versus those cloudy days. So it goes to show you that our brains are constantly being bombarded by all kinds of effects, the weather. I service investors for a living and I've never heard of professional investor say, "Hm, how does the weather make me feel? How should I invest?" But it's clearly having an impact on us. So, the takeaway here is we should be mindful of how money has a physiological change on us. So when I mention the word money to you, the thought of making money increases your skin conductancy. You're getting excitement from it. So a takeaway is just to be mindful that a lot of our financial decision-making are being made even when we don't think we're making them. Money is having an imperceptible effect on us.
One of the things that research finds is that when they flash the price of an object to you, the part of your brain that activates is the prefrontal cortex, meeting the part of the brain that sort of makes us human, the part that evolved to give self-awareness and reflection. So when we see the price, that part of the brain activates. And when the price is too expensive the insula activates, which is again part of the fear center. And when you make a bad financial decision, you may feel in your gut and there's actually a reason for that because there's a cell called a spindle cell. And there's some spindle cells in your stomach and they're connected to your insula in the brain. So when you make an irrational financial decision, when you put money in that stock and it falls precipitously, you feel it in your insula; you feel like in your gut that oh my gosh — that's a neurological mechanism. And so increasingly I think we're going to be seeing neuroscientists, they'll be able to forecast our financial decision-making based on what's happening in brains.
And they look at studies of identical twins. And when they separate identical twins, they find that they invest in a similar manner between stocks, bonds, and cash and currency. Of course genetics isn't the only thing, but genetics has a strong influence, not just on how we spend but even our credit scores. In one study they found that there's this one gene and those who have one variant of the gene are more likely to be risk-averse, have fewer credit lines, and have higher FICO scores, have higher credit scores. And just the inverse of that if you have another variant on that gene. So it shows that genes can help influence our credit score in a very statistically significant way.
New York Times best-selling author, investment banker, and Grammy-award winning jazz producer Kabir Sehgal returns to Big Think to chat about lessons in his book COINED: The Rich Life of Money and How Its History Has Shaped Us.
Did you know that just the thought of money causes your brain to react in ways similar to being high on cocaine? There have been myriad studies conducted over the years on the psychology of money. Here, Sehgal offers a highlight reel of some of the most notable findings.
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How would the ability to genetically customize children change society? Sci-fi author Eugene Clark explores the future on our horizon in Volume I of the "Genetic Pressure" series.
- A new sci-fi book series called "Genetic Pressure" explores the scientific and moral implications of a world with a burgeoning designer baby industry.
- It's currently illegal to implant genetically edited human embryos in most nations, but designer babies may someday become widespread.
- While gene-editing technology could help humans eliminate genetic diseases, some in the scientific community fear it may also usher in a new era of eugenics.
Tribalism and discrimination<p>One question the "Genetic Pressure" series explores: What would tribalism and discrimination look like in a world with designer babies? As designer babies grow up, they could be noticeably different from other people, potentially being smarter, more attractive and healthier. This could breed resentment between the groups—as it does in the series.</p><p>"[Designer babies] slowly find that 'everyone else,' and even their own parents, becomes less and less tolerable," author Eugene Clark told Big Think. "Meanwhile, everyone else slowly feels threatened by the designer babies."</p><p>For example, one character in the series who was born a designer baby faces discrimination and harassment from "normal people"—they call her "soulless" and say she was "made in a factory," a "consumer product." </p><p>Would such divisions emerge in the real world? The answer may depend on who's able to afford designer baby services. If it's only the ultra-wealthy, then it's easy to imagine how being a designer baby could be seen by society as a kind of hyper-privilege, which designer babies would have to reckon with. </p><p>Even if people from all socioeconomic backgrounds can someday afford designer babies, people born designer babies may struggle with tough existential questions: Can they ever take full credit for things they achieve, or were they born with an unfair advantage? To what extent should they spend their lives helping the less fortunate? </p>
Sexuality dilemmas<p>Sexuality presents another set of thorny questions. If a designer baby industry someday allows people to optimize humans for attractiveness, designer babies could grow up to find themselves surrounded by ultra-attractive people. That may not sound like a big problem.</p><p>But consider that, if designer babies someday become the standard way to have children, there'd necessarily be a years-long gap in which only some people are having designer babies. Meanwhile, the rest of society would be having children the old-fashioned way. So, in terms of attractiveness, society could see increasingly apparent disparities in physical appearances between the two groups. "Normal people" could begin to seem increasingly ugly.</p><p>But ultra-attractive people who were born designer babies could face problems, too. One could be the loss of body image. </p><p>When designer babies grow up in the "Genetic Pressure" series, men look like all the other men, and women look like all the other women. This homogeneity of physical appearance occurs because parents of designer babies start following trends, all choosing similar traits for their children: tall, athletic build, olive skin, etc. </p><p>Sure, facial traits remain relatively unique, but everyone's more or less equally attractive. And this causes strange changes to sexual preferences.</p><p>"In a society of sexual equals, they start looking for other differentiators," he said, noting that violet-colored eyes become a rare trait that genetically engineered humans find especially attractive in the series.</p><p>But what about sexual relationships between genetically engineered humans and "normal" people? In the "Genetic Pressure" series, many "normal" people want to have kids with (or at least have sex with) genetically engineered humans. But a minority of engineered humans oppose breeding with "normal" people, and this leads to an ideology that considers engineered humans to be racially supreme. </p>
Regulating designer babies<p>On a policy level, there are many open questions about how governments might legislate a world with designer babies. But it's not totally new territory, considering the West's dark history of eugenics experiments.</p><p>In the 20th century, the U.S. conducted multiple eugenics programs, including immigration restrictions based on genetic inferiority and forced sterilizations. In 1927, for example, the Supreme Court ruled that forcibly sterilizing the mentally handicapped didn't violate the Constitution. Supreme Court Justice Oliver Wendall Holmes wrote, "… three generations of imbeciles are enough." </p><p>After the Holocaust, eugenics programs became increasingly taboo and regulated in the U.S. (though some states continued forced sterilizations <a href="https://www.uvm.edu/~lkaelber/eugenics/" target="_blank">into the 1970s</a>). In recent years, some policymakers and scientists have expressed concerns about how gene-editing technologies could reanimate the eugenics nightmares of the 20th century. </p><p>Currently, the U.S. doesn't explicitly ban human germline genetic editing on the federal level, but a combination of laws effectively render it <a href="https://academic.oup.com/jlb/advance-article/doi/10.1093/jlb/lsaa006/5841599#204481018" target="_blank" rel="noopener noreferrer">illegal to implant a genetically modified embryo</a>. Part of the reason is that scientists still aren't sure of the unintended consequences of new gene-editing technologies. </p><p>But there are also concerns that these technologies could usher in a new era of eugenics. After all, the function of a designer baby industry, like the one in the "Genetic Pressure" series, wouldn't necessarily be limited to eliminating genetic diseases; it could also work to increase the occurrence of "desirable" traits. </p><p>If the industry did that, it'd effectively signal that the <em>opposites of those traits are undesirable. </em>As the International Bioethics Committee <a href="https://academic.oup.com/jlb/advance-article/doi/10.1093/jlb/lsaa006/5841599#204481018" target="_blank" rel="noopener noreferrer">wrote</a>, this would "jeopardize the inherent and therefore equal dignity of all human beings and renew eugenics, disguised as the fulfillment of the wish for a better, improved life."</p><p><em>"Genetic Pressure Volume I: Baby Steps"</em><em> by Eugene Clark is <a href="http://bigth.ink/38VhJn3" target="_blank">available now.</a></em></p>
We look back at a year ravaged by a global pandemic, economic downturn, political turmoil and the ever-worsening climate crisis.
Billions are at risk of missing out on the digital leap forward, as growing disparities challenge the social fabric.
Image: Global Risks Report 2021<h3>Widespread effects</h3><p>"The immediate human and economic costs of COVID-19 are severe," the report says. "They threaten to scale back years of progress on reducing global poverty and inequality and further damage social cohesion and global cooperation."</p><p>For those reasons, the pandemic demonstrates why infectious diseases hits the top of the impact list. Not only has COVID-19 led to widespread loss of life, it is holding back economic development in some of the poorest parts of the world, while amplifying wealth inequalities across the globe.</p><p>At the same time, there are concerns the fight against the pandemic is taking resources away from other critical health challenges - including a <a href="https://www.weforum.org/agenda/2020/09/charts-covid19-malnutrition-educaion-mental-health-children-world/" target="_blank" rel="noopener noreferrer">disruption to measles vaccination programmes</a>.</p>
A new study explains how a chaotic region just outside a black hole's event horizon might provide a virtually endless supply of energy.
- In 1969, the physicist Roger Penrose first proposed a way in which it might be possible to extract energy from a black hole.
- A new study builds upon similar ideas to describe how chaotic magnetic activity in the ergosphere of a black hole may produce vast amounts of energy, which could potentially be harvested.
- The findings suggest that, in the very distant future, it may be possible for a civilization to survive by harnessing the energy of a black hole rather than a star.
The ergosphere<p>The ergosphere is a region just outside a black hole's event horizon, the boundary of a black hole beyond which nothing, not even light, can escape. But light and matter just outside the event horizon, in the ergosphere, would also be affected by the immense gravity of the black hole. Objects in this zone would spin in the same direction as the black hole at incredibly fast speeds, similar to objects floating around the center of a whirlpool.</p><p>The Penrose process states, in simple terms, that an object could enter the ergosphere and break into two pieces. One piece would head toward the event horizon, swallowed by the black hole. But if the other piece managed to escape the ergosphere, it could emerge with more energy than it entered with.</p><p>The movie "Interstellar" provides an example of the Penrose process. Facing a fuel shortage on a deep-space mission, the crew makes a last-ditch effort to return home by entering the ergosphere of a blackhole, ditching part of their spacecraft, and "slingshotting" away from the black hole with vast amounts of energy.</p><p>In a recent study published in the American Physical Society's <a href="https://journals.aps.org/prd/abstract/10.1103/PhysRevD.103.023014" target="_blank" style="">Physical Review D</a><em>, </em>physicists Luca Comisso and Felipe A. Asenjo used similar ideas to describe another way energy could be extracted from a black hole. The idea centers on the magnetic fields of black holes.</p><p style="margin-left: 20px;">"Black holes are commonly surrounded by a hot 'soup' of plasma particles that carry a magnetic field," Comisso, a research scientist at Columbia University and lead study author, told <a href="https://news.columbia.edu/energy-particles-magnetic-fields-black-holes" target="_blank" rel="noopener noreferrer">Columbia News</a>.</p>
Event Horizon Telescope Collaboration<p>While there might not be immediate applications for the theory, it could help scientists better understand and observe black holes. On an abstract level, the findings may expand the limits of what scientists imagine is possible in deep space.</p><p style="margin-left: 20px;">"Thousands or millions of years from now, humanity might be able to survive around a black hole without harnessing energy from stars," Comisso said. "It is essentially a technological problem. If we look at the physics, there is nothing that prevents it."</p>
Scientists use new methods to discover what's inside drug containers used by ancient Mayan people.
- Archaeologists used new methods to identify contents of Mayan drug containers.
- They were able to discover a non-tobacco plant that was mixed in by the smoking Mayans.
- The approach promises to open up new frontiers in the knowledge of substances ancient people consumed.
PARME staff archaeologists excavating a burial site at the Tamanache site, Mérida, Yucatan.
A popular and longstanding wave of thought in psychology and psychotherapy is that diagnosis is not relevant for practitioners in those fields.