The Neurobiology of Market Madness

We were supposed to be living in a rational world. According to neoclassical economics, people are “rational agents” who logically assess their own best interests and then act accordingly. Like cogs in a Swiss watch, their behavior can be predicted and modeled.

Thanks to the world’s ongoing economic paroxysms that view has largely gone out the window.  Since 2007, everyone – investors, consumers, management— has seemingly jumped from panic to euphoria and now back to panic again.  The economy not as a mathematical system so much as a collective madness.

John Coates is a uniquely well positioned to understand what’s going on. He spent 12 years as a trader in London and New York, working first for Goldman Sachs and then Deutsche Bank. What he saw in real life was totally at odds with economic theory. “It was the dot com bubble,” he recalls. “People had classic, clinical symptoms of mania. They were delusional, euphoric, over-confident — you couldn’t get them to shut up.”

Most traders worth their salt would have figured out how to turn this insight into a a play that would make them a killing on the market. But Coates wasn’t that guy. Instead of stoking his greed, it fueled his curiosity. He wondered: how does what physically goes on inside the brain and body affect the market’s ups and downs? So Coates ditched Wall Street, went back to school, and wound up a research professor in Cambridge University’s neuroscience department. Then, armed with scientific apparatus, he went back to the trading floor. He measured the hormone levels of professional traders as they went about their business, buying and selling. And what he found gave him a surprising insight. Continue reading The Neurobiology of Market Madness

Near Death Experiences: Science and Skepticism

In response to my recent post about near-death experiences (NDEs),  several readers wrote in and described their own brushes with the beyond. Writes Tamara,

I started to panic but no one could hear me, I couldn’t breath, I could barely move. Then I got real calm and reached under me and pulled the plug out without even thinking about it. It was like I was watching myself from outside of my body. My body rolled itself over so I was face up. Then my vision shot out of the bathtub and it was as if I was shooting through the sky, I was running through the grass in our backyard and then back to the sky and then I was in space and the stars were shooting past me.

So here’s the question du jour: was Tamara’s experience an untimely glimpse into the world that awaits us beyond death? Continue reading Near Death Experiences: Science and Skepticism

Top 10 Secrets of Effective Liars

As I’ve written earlier, human beings have an innate skill at dishonesty. And with good reason: being able to manipulate the expectations of those around us is a key survival trait for social animals like ourselves. Indeed, a 1999 study by psychologist Robert Feldman at the University of Massachusetts showed that the most popular kids were also the most effective liars. Just because our aptitude is hardwired doesn’t mean it can’t improve with practice and skill. Here are ten techniques that top-notch liars use to maximize their effectiveness. (By the way, this information is offered as a way to help detect deceit in others, not to practice it yourself. Honestly!) Continue reading Top 10 Secrets of Effective Liars

“Boy, Was I Wrong About Him”: Why It’s So Hard to Size People Up

Malcolm Gladwell’s bestseller Blink was premised on the idea that our subconscious minds are more gifted than we imagine, and can form uncannily accurate judgments very quickly in very little time. Now, in the past, I’ve criticized certain aspects of this book, and so have other people. But lately I’ve been thinking about the part in which he extols our intuitive ability to quickly understand, with just a few seconds’ exposure, the essence of a person’s personality. He quotes producer Brian Grazer describing how he intuited right away the actor’s exceptionable likeability, and goes on:

My guess is that many of you have the same impression of Tom Hanks. If I asked you what he was like, you would say that he is decent and trustworthy and down-to-earth and funny. But you don’t know him. You’re not friends with him. You’ve only seen him in the movies, playing a wide range of different characters. Nonetheless, you’ve manged to extract something very meaningful about him from those thin slices of experience, and that impression has a powerful effect on how you experience Tom Hanks movies.

This has always struck me as a rather implausible argument. Continue reading “Boy, Was I Wrong About Him”: Why It’s So Hard to Size People Up

Figure Out a Problem, And Make it Impossible to Solve

Today is a beautiful day for a run in New York’s Central Park — sunny and cool, with the trees wearing the first pale-green lushness of early spring. My wife and I were jogging around the park, pushing our 1.5-yr-old in a jogging stroller, and lamenting the difficulty we’ve been having getting our weight down, even though we’ve been exercising a good deal more now that the weather has gotten nice.

Sandra, it turned out, had just been reading an article in the New York Times Sunday Magazine about just this very topic. Gretchen Reynolds delves into the issue of exercise and weight loss, and the discouraging research that has found that, for women especially, exercising more makes you hungrier, so you eat more and wind up counteracting the calorie-burning you’ve been doing. Writes Reynolds:

In practical terms, the results are scientific proof that life is unfair. Female bodies, inspired almost certainly “by a biological need to maintain energy stores for reproduction,” Braun says, fight hard to hold on to every ounce of fat. Exercise for many women (and for some men) increases the desire to eat.

Upon hearing this information, I was of two minds. On the one hand, I was pleased to have an explanation for this annoying phenomenon. On the other hand, I thought: is the urge to find explanations for our behavior ultimately self-defeating? Continue reading Figure Out a Problem, And Make it Impossible to Solve

"Go Toward the Light": The Science of Near-Death Experiences

Modern medicine has proven so adept at saving victims of cardiac arrest that a good number of people are walking around today who at one time or another were considered clinically dead. While this is a good thing in and of itself, it has the side benefit of having generated numerous reports of the shadowy psychological condition that people experience when they’re close to “the other side.” So consistent are these reports — combining the sensation of floating, seeing oneself from an outside perspective, and moving through a tunnel towards light — that they have earned an official moniker, “Near Death Experiences,” or NDEs.

Just what is behind these eerily similar reports? To those of a certain mindset, they are a  supernatural phenomenon, an early glimpse of the afterlife that awaits. To those of a more materialist persuasion, these sensations must be generated by some common brain architecture that gets activated under intense stress. As it happens, this latter view has just received some intriguing scientific backing, in the form of a paper in the latest issue of the journal Critical Care. A key component of NDEs, it appears, is carbon dioxide in the blood. Yes, the same thing that makes Cokes fizzy also makes your life flash in front of your eyes. Continue reading "Go Toward the Light": The Science of Near-Death Experiences

Cutest Psychology Experiment EVER

For anyone interested in psychology, having a child is a fascinating experience, turning us all into amateur Jean Piagets. Having just written a book about the interplay between the frontal cortex and the amygdala (among other things), it was extremely interesting to observe a human being who had seemingly very little frontal cortex activity at all. Whatever he was feeling, boom, there it was on his face, no modulation or suppression at all. As a baby he could go through a dozen distinct facial expressions in the span of a minute.

Now that Rem is a year and a half, he’s exhibiting new and fascinating behaviors all the time. Just the other day he busted out with a move that was simultaneously hilarious and baffling. Once I figured it out, it blew my mind. Continue reading Cutest Psychology Experiment EVER

Top 7 Management Secrets of Blackbeard the Pirate

Peter Leeson does not talk like a pirate. But the George Mason University economist has figured out how to think like one. In his book The Invisible Hook, Leeson argues that, despite their reputation as anarchic ne’er-do-wells, 18th-century pirates roamed the seas in pursuit of rational economic goals. In fact, they had a lot in common with small business people of today. “They were profit-motivated,” Leeson says, “and they confronted obstacles that a lot of modern small businesses also confront in their attempt to pursue profits.” There’s plenty that today’s managers can learn from the scurvy dogs of yore. Here are the top seven tips: Continue reading Top 7 Management Secrets of Blackbeard the Pirate

Heartbroken? Take a Tylenol. (Seriously)

The kind of pain that you feel when you get rejected socially feels different from the hurt you feel when you break your leg or scald your hand. But neurologically speaking, they’re closely related. As researcher Naomi Eisenberger has shown, circuitry underlying both kinds of pain are found in the anterior cingulate cortex.

But if that’s the case, can a drug that dulls pain in the body have a similar effect on one’s emotions? A surprising new study suggests that the answer is yes. Continue reading Heartbroken? Take a Tylenol. (Seriously)

Brooke Mueller and Charlie Sheen: Why Won’t She Leave Him?

The facts are straightforward: on Christmas Day, Charlie Sheen’s wife, Brooke Mueller, called 911, frantic that a switchblade-armed Sheen had threatened her. Police arrested Sheen, then released him after he posted an $8500 bond.

And then, yesterday, their lawyer told US Weekly that the couple were happily back together: “They’re very much in love, and they want to try to work it out. I think they had a really bad day, which is probably an understatement, but they need their privacy and they need some time.”

Three letters: WTF?

But as baffling as the story seems to be, science can offer an explanation.

Continue reading Brooke Mueller and Charlie Sheen: Why Won’t She Leave Him?