Have you ever wondered why you can become revved up and an exuberant risk taker, when flying high, or hesitant and risk-adverse, when cowering from your losses in the stock market?
We have the impression that it is our deliberative mind that makes the most important decisions in our life: where we work, where we live, whom we marry.
But contrary to this, biological evidence points toward a decision process in our brain system—the basal ganglia—brain circuits that consciousness cannot access.
For a better understanding of this, let’s dive deep into the biology of risky behavior (money, food, and sex).
Dopamine the pleasure molecule
Dopamine is an intriguing molecule that fuels an almost addictive love of exploration and physical risk taking. Not only does it surge most powerfully when we perform a novel physical action that leads to an unexpected reward; it also drives our eternal obsession with money, that ultimate predictor of good times (or so we hope).
Dopamine has been called a “pleasure molecule” and a “reward molecule” but more important than the reward itself is the ability of these neurons—and they are very quick in doing so—to predict the imminent arrival of pleasure and reward.
In fact, dopamine already spikes, when receiving information predicting an imminent arrival of pleasure. Perhaps that’s why we check our hand-phone averagely 110 times per day, in anticipation of those little pleasant surprises of … (you fill in the blanks).
Dopamine stimulates the wanting and our level of motivation to pursue it: If I had that job, how happy would I be? If my portfolio would grow by 10% every single year, how rich would I be?
In addition, dopamine neurons implement temporal-difference learning—which entails learning a sequence of decisions leading to a goal—and is particularly effective in uncertain environments, like the world we live in.
While we’re considering those various decision options, prospective brain circuits evaluate each scenario, and the temporary level of dopamine registers the predicted value of each decision.
As Dr. Morikawa emphasized, “People commonly think of dopamine as a happy transmitter, or a pleasure transmitter, but more accurately, it’s a learning transmitter. It strengthens those synapses that are active when dopamine is released.”
So, how can we ensure that we make sound decisions when we possess a fast dopamine system that values the spiking of dopamine more than the actual reward (be it money, food, or sex) itself?
Moreover, the amount of dopamine released is not so much dependent on the absolute amount of reward, but on how unexpected it is. In other words, it enjoys risk, short-term risk.
What do I mean with that?
A misfiring of the dopamine system, for example, can cause the Current Moment Bias:
We have a really tough time imagining ourselves in the future and altering our behaviors and expectations accordingly, because most of us would rather experience pleasure in the current moment, while leaving the pain for later.
And this is a bias which is of particular concern to economists—that is, our reluctance not to overspend and to save money—and health practitioners. Indeed, a certain study showed that, when making food choices for the coming week, 74% of the participants chose fruit; however, when the food choice was for the current day, 70% chose chocolate. Huh?
Dopamine is the fuel of risk-taking and addictions
Stock trading provides some of the highest rewards available in our economy, though they are highly uncertain, and attaining them entails “predicting” the future and taking huge risks. In extreme cases, a constant increase of the risk is required to get a similar dopamine rush.
Risk concentrates the mind—and the body—like nothing else, altering our physiology in ways that have profound and lasting effects.
To handle risk in a “high evolved” manner isn’t a matter of mind over body; it’s a matter of mind and body working together. We all have it in us to be transformed from dog to wolf; however, the question is whether we would be able to understand the causes and the consequences.
Why do I share this?
Our challenge is that the dopamine system is very fast, and on the other side in the mental civic war, we have our cognitive system, which is actually better suited to guide long term choices in uncertain environment, but which can be slow to operate.
Hence, we combine information from both systems (that’s apparently a compromise produced by the forces of natural selection); nevertheless, this combination is not always according to the tested recipe for long-term success.
That’s why we have to give ourselves time for decisions, especially when we are in situations that are likely to be driven by the dopamine system.
We might want to take a break, let our cognitive system do its work, come up with a more well-considered long-term beneficial decision, and then, act.
“If you cannot face up to your fear of failure, you will never be rich. Fear rules us, so if you can rule your fear you can chart your own destiny.” — Felix Dennis
“If you don’t take risks, there is nothing you can do that makes you grand, nothing.” — Nassim Taleb
“The longer your money is invested in the stock market, the lower the risk.” – Unknown (but very true)