Why Do We Sacrifice the Best for the Good?

Why is it so easy for us to put off doing the things we know would make life better only to continue doing the things that gratify us now? Even when we commit to long-term goals like diet, exercise, saving or planning, we marvel at how easily we are distracted by momentary temptations. The problem in a neurological nutshell is that we have a flaw built into our brains – we overvalue immediate gains at the expense of long-term opportunities or costs.

If we are honest with ourselves, we admit that our emotions too often get the best of our decisions. And throughout history we’ve believed that it was our logic, our rational brains that separated us from the wild beasts.

I’ve written before of Jonah Lehrer’s book “How We Decide.” In it Lehrer recounts how Plato likened our mind to a chariot pulled by two horses. The driver represents the rational brain, holding the reins and deciding where the horses will run. One of the horses is well bred and behaved, but the other, oh the other. In Plato’s words, “He is of an ignoble breed . . . companion to wild boasts and indecency . . . and just barely yields to horsewhip and goad combined.”

The obstinate horse represents negative, destructive emotions. The job of the charioteer is to keep the dark horse from running wild and to keep both horses moving forward. Sounds a lot like modern life too, doesn’t it?

Scientists are now learning that our centuries-old assumption that logic is superior to emotion is a deeply flawed one. Within the last twenty some years scientists have discovered that emotions, specifically dopamine, play the dominant role in our learning and ultimately, in our decision making.

Lehrer says that “feelings are not simply reflections of hard-wired animal instincts. Instead, human emotions are rooted in the predictions of highly flexible brain cells, which are constantly adjusting their connections to reflect reality. Every time you make a mistake or encounter something new, your brain cells are busy changing themselves. Our emotions are deeply empirical.”

According to Lehrer, “what’s interesting about this system is that it’s all about expectation. Dopamine neurons constantly generate patterns based on experience: if this, then that. The cacophony of reality is distilled into models of correlation that allow the brain to anticipate what will happen next.” If all goes according to plan, the dopamine neurons secrete a burst of enjoyment.

Seems our brain stem (most basic bodily functions) and limbic region (animal emotions) are very similar to those of other primates and behave just the same in similar experiments. It is in our frontal cortex that makes us superior. This region is the domain of reason, intelligence, and morality, which separate us from the animals. For centuries it has been accepted that reason, intelligence, and morality enable us to rebel against the primitive feelings to make dispassionate and logical decisions – WRONG.

Lehrer quotes the Roman Poet Ovid’s “Metamorphoses” as capturing this psychology in the person of Medea who is in love with Eros, against the will of her father. “I am dragged along by a strange new force. Desire and reason are pulling in different directions. I see the right way and approve it, but follow the wrong.”

So how do we avoid being “dragged along by a strange new force?” I’m no psychologist, but in my 32 years as a financial advisor I’ve observed people’s behavior in a wide variety of circumstances and under the powerful magnifying glass we call money. As a result my experience, the ‘forces’ are only rarely strange, anymore. They can be summarized as:

Fear . . . Greed . . . Complacency.

The forces are arranged in regressing order of recognition. We generally know pretty quickly when we are afraid and we generally have no trouble acting on it. But greed can be more insidious. At worst we are completely oblivious, and do not recognize it until it is pointed out. Finally, there is complacency. By definition it is passive. Months or years can go by before we recognize the cost of inaction. Complacency is not easily recognized by others because they have no measure of how we are doing relative to our life goals. Nor do we if we haven’t written them down and measured our progress.

From a financial point of view, the answer to the question of how to avoid being “dragged along by a strange new force,” to avoid reacting instead of ‘pro-acting’ is; one – build a strong relationship with a trusted financial advisor, two – develop a life plan that includes both your wants and your needs (desires and reason), and three – communicate often with your advisor to share any strange new forces pulling on you.

We are not wired to go through life alone. We may work ourselves out of fear on our own (though we need not), but greed often requires a nudge of recognition from others. Complacency can only be recognized by those who know our plans and best by our trusted financial advisor.