Human World

Gregory Burns on the brain, pain and personal finance

Gregory Berns: Economics is all about decision making.

That’s neuroscientist Gregory Berns. He’s investigating how the human brain makes painful financial decisions. In his lab, he simulated financial risk by asking subjects to make decisions about receiving an electric shock.

Gregory Berns: Many types of pain – whether it’s physical or emotional – utilize the same parts of the brain.

Berns observed people in an MRI while they weighed their options about physical pain.

Gregory Berns: The choice was whether to take a bigger shock sooner, or a smaller shock later. Now I can tell you that rationally, it’s like, why would anyone want to take a bigger shock?

But about half of his subjects took the bigger shock. And in the real world, Berns said, investors sometimes do the same thing – by prematurely selling a stock that’s lost value, instead of waiting for the stock to rise again.

Gregory Berns: There are pretty much two types of people. People who put things off, and people who care so much about the pain that they would just rather get it over with as quickly as possible, even if it hurts more.

Berns suggested just knowing the ways people are wired to cope with pain – or the threat of it – could help governments create sounder economic policies.

Our thanks to:
Gregory Berns
Emory University
Atlanta, GA

Posted 
January 20, 2009
 in 
Human World

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