Lehrer continues to discuss how a feeling can easily fool us even when we may think it is a smart decision. Our emotions don’t always lead us to the correct answers in life. He starts out with the example of one of the most popular television game shows, Deal or No Deal. For the most part, this is a game of dumb luck. It has no code to figure out or any numerology to interpret. And yet, Deal or No Deal is also a game of demanding decisions. In all reality, the contestants should really figure out whether or not it would be a good deal mathematically when they are pressed with the decision to take the Banker’s offer or to continue to play. But like Lehrer states, if they all played the game being completely rational like this, it would be boring. No one wants to watch people do arithmetic. Instead, like expected, many contestants rely on their feelings and impulses to make some risky choices. “While this instinctive decision-making strategy normally works out just fine…there are certain situations on the game show that reliably fool the emotional brain” (Lehrer). There have been contestants that make terrible choices and reject deals that they should have accepted. People on the show loose fortunes because they trust their emotions at the wrong time.
In one story a man, named Frank, on the Dutch version of Deal or No Deal, loses more than €100,000 in fewer than 3 minutes. What caused this man, along with many others, to make a stupid decision to not take the money offered and wishfully kept opening other cases when his chances didn’t even look good? During the game he opened the case with his largest amount remaining, making the Banker’s offer decrease. An analysis done by a team of behavioral economists says that after this decrease in proposal, a player typically will become excessively risk-seeking, meaning that he is much more likely to reject a perfectly fair offer. “The contestant is so upset by the recent monetary loss that he can’t think straight” (Lehrer). Frank continued to open more cases, digging himself deeper and deeper into a hole. This is result of a very simple flaw rooted in the emotional brain, it’s technical name being loss aversion. “When a person is confronted with an uncertain situation – like having to decide whether to accept an offer from the Banker – the individual doesn’t carefully evaluate the information, or compute the Bayesian probabilities, or do much thinking at all” (Lehrer). Instead, they trust their emotions and instincts, depending on mental shortcuts – skipping the math all together. Even professional money managers are vulnerable to this bias, so what makes us do this? The answer is, because we are afraid to take a loss – it feels bad. “We try to postpone the pain for as long as possible; the result is more losses” (Lehrer). Loss aversion makes us irrational when it comes to evaluating risky gambles. Lehrer states that there is no rational reason for us to treat gains or losses so differently, but we still do. The only way to avoid it is to know about it.
Along the same lines, letting our emotions foolishly make some decisions, Lehrer discusses how easily people can get into debt with credit cards. I loved this part of the book because it really made me think and realize how true this is. He writes about a financial counselor in the Bronx who helps dozens of people every day cut up their credit cards and develop plans for them to get out of debt. The problem with credit cards is that people don’t really feel like they are spending that money they’re charging on it. Cards make transactions abstract, so you don’t really feel the downside of spending money like you would with cash. “Brain-imaging experiments suggest that paying with credit cards actually reduces activity in the insula, a brain region associated with negative feelings” (Lehrer). In this case, spending money doesn’t feel bad, so why not spend more! Our feelings are looking at the immediate rewards, they’re not even thinking twice about the long-term fiscal consequences. “The emotional brain just doesn’t understand things like interest rates or debt payments or finance charges” (Lehrer). We buy whatever we want now, and decide we’ll figure out how to pay for it later. Feelings trick us into making foolish financial decisions, buying what we can’t afford. An experiment showed that when we start thinking about an immediate reward, the brain areas associated with emotion, such as the midbrain dopamine system and nucleus accumbens, were turned on. These are the cells that make us run up credit card debt. I found this so relevant to my life at the moment because I just caved in and got a debit card recently, even though I was trying not too for reasons just like these. Obviously, I can’t get myself in debt, it’s not a credit card, but I knew it would be much easier for me to spend money if I had a card then if I always needed cash on me. I finally gave in this year because it’s too hard to have cash all the time in college, and I found myself spending more and more. For example, right after I read this part of the book on the credit cards and debt, I went out to grab food. I contemplated if I wanted to get a more expensive item then I usually do, telling myself it didn’t matter since I had my card. I knew that if I had to pay with cash though, I would get the much cheaper deal because I have always trained myself to do that. I was tempted to get the more expensive item, but after just reading how it was my feelings taking over and how we need to be able to control that, I decided to save the money and get the cheaper item even though I wanted the other one. “It’s not easy for the brain to choose a long-term gain over an immediate reward – such a decision takes cognitive effort…” (Lehrer). I liked that I was able to apply what I just read to something in my life, even if it only saved me a few dollars. “…you can’t always get what you want, but sometimes not getting what you want is just what you need” (Lehrer). We need to remember this because it is important that we know how to compensate for our flaws when things like our emotions lead us astray.
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