Dead Bodies, Naked Women or Money. Which Excites You More? | Big Think
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So I looked at the topic of what's happening in the brain when we deal with money. There's a part of the brain that activates; it's called the nucleus accumbens. It's deep within the sort of evolutionary, uh, the oldest part of the brain. 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've also looked at brain scans of people who are high, looking at naked women, dead bodies, and money. 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. The part of the brain that lights up, again, the nucleus accumbens, keeps on firing and firing and firing. Obviously, money excites us.
The nucleus accumbens is part of the reward center of the brain, and it's part of, uh, the brain that activates when you're excited, when you're aroused, when you're feeling, um, happiness or even joy. There are many parts of the brain that activate when using money, but this is where it's concentrated, where we process rewards. 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 no option at all, like cash."
They find that if there's activation in the nucleus accumbens, you're more likely to take the riskier option. I mean, you're more likely to choose a stock. Well, if there's activation in the insula, which is the anxiety center of the brain, you're more likely to be risk-averse and to take on investing in the bonds.
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 made at what's called a subcortical region below the neocortex, what we all know as the subconscious.
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.
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." They found that, sure enough, over 80 years, the markets were up considerably, annualized over 25% 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 serve as an investor for a living, and I've never heard a professional investor say, "Hmm, 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. Right? When I mentioned the word money to you, the thought of making money increases your skin conductance; you're getting excitement from it.
So, a takeaway is just to be mindful that a lot of our financial decision-making is being made even when we don't think we're making them. Money is having an imperceptible effect on us. One of the things the research finds is that when they flash the price of an object to you, um, the part of your brain that activates is the prefrontal cortex, meaning 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, uh, fear sensor. When you make a bad financial decision, you may feel it in your gut, and there's actually a reason for that.
Because there's a part of, there's a cell called a spindle cell, and there are some spindle cells in your stomach, and they're connected to your insula in the brain. So when you make an irrational financial decision...