MONTREAL—Rational calculations do not dictate financial decisions, as psychologists have revealed in recent years. Emotions often sway our spendthrift or miserly ways. In particular, positive feelings promote risk taking—gambling in Vegas, say, or going on a shopping spree—whereas bad moods prompt protective selling or saving. In some cases, our feelings may have an obvious origin: studies show that sunshine breeds stock surges, whereas clouds curtail purchasing. But much of what influences our spending is far more subtle—subliminal, in fact. Now psychology graduate student Julie L. Hall of the University of Michigan reports at the Cognitive Neuroscience Society 2010 annual meeting that subconscious emotional cues have a far greater impact on financial risk taking than conscious ones do. What is more, one particular brain region mediates the connection between what influences our feelings and the financial decisions we make.

Hall and her colleagues used functional magnetic resonance imaging to scan the brains of 24 men and women while the subjects glanced at happy, angry and neutral faces of the sort that, according to previous research, can affect an onlooker's mood. Some of these faces were clearly visible, whereas others flashed so briefly—appearing for a mere 30 milliseconds—that the subjects could not consciously see their expressions. After viewing each face, the men and women were supposed to perform a simulated investment task: choosing between two risky, high-payoff stocks and a safe, low-payoff bond.

As expected, the investigators found that viewing the happy faces caused the subjects to pick the riskier financial alternative—that is, the stocks—far more often than seeing the neutral faces did. The happy visage also triggered a flurry of activity in a brain region called the nucleus accumbens, which has long been associated with the processing and anticipation of rewards such as food, money and drugs. But the expressions that had the greatest effect on both risk taking and the activity of the nucleus accumbens were the ones that people could not consciously process, suggesting that mood-altering cues that matter most to our bank accounts—and the stock market—are not obvious ones like the weather but rather those that buffet our emotions beneath our awareness.

Thus, Hall suggests, people might make better financial choices if they learned to recognize their own moods—in part by becoming more alert to the environmental cues and experiences that contribute to them—before deciding to splurge on a fancy sports car or gamble on a dicey stock. "When investors are experiencing large gains in the stock market, they are likely to feel extremely happy and confident, which may lead them to ignore risks, which could in turn could lead to losses," Hall says. Knowing that such euphoria could be financially perilous, an individual might be able to put the brakes on his or her spending. And if a consumer can't intuit his or her own risky state of mind, a brain scanner can: electrical commotion in the nucleus accumbens not only parallels a person's propensity for positive thinking but also is the neural barometer of financial risk taking.

9 Comments

1. 1. galaxy_man 12:45 PM 4/20/10

   I look forward to the day when our robot overlords free us from these troublesome mental quirks by implanting cold logic processors in lieu of our flawed organic grey matter.

   Reply | Report Abuse | Link to this

2. 2. sleeprun 03:39 PM 4/20/10

   "Unconscious" used to conote something almost ghost-like or spiritual, now the data is clear that it is really "preconscious" and fairly mechanical. These are increasingly critical issues, along with cognitive changes with aging, as more of the population will live (far longer) off of investments.
   
   If understanding and better managing "mental quirks" could help prevent investment losses for a family, that might be a good thing.

   Reply | Report Abuse | Link to this

3. 3. suzabelle 11:55 PM 4/20/10

   ...Buyer beware if you start getting 15 second intro commercials before connecting to your Ameritrade, Schwab, or other investment site account!

   Reply | Report Abuse | Link to this

4. 4. Estecla 12:31 AM 4/21/10

   Onece i was plaiying poker online,
   i got that feeling like a state of mind in wich it was very dificult to loose,
   but now is very common thay i loose all the time, by taking risks thath usually werent took
   it is very difficult to reach that state of mind, when u calculet enviromental possivilities in every hand very fast and acccurately
   i belieb in ur studies really great stuff

   Reply | Report Abuse | Link to this

5. 5. choppam 05:07 AM 4/22/10

   galaxy man writes: I look forward to the day when our robot overlords free us from these troublesome mental quirks by implanting cold logic processors in lieu of our flawed organic grey matter.
   
   He's on to more than he might think. Forget the implant idea - if there's going to be a next step in human evolution connected with thought, and making it more useful to us, then it'll have to give us a switching mechanism between everyday emotional processing and logical processing - or find some optimal way of combining them. Some kind of improved innate management of leftbrain/rightbrain functions.

   Reply | Report Abuse | Link to this

6. 6. e_caroline 07:29 PM 4/23/10

   This is another in plenty of studies by psychologists, economists and just plain observers of the human condition that indicate that rationality is not the norm when it comes to economic choices.
   
   Knowing this, one can work ever so slightly harder than others at being rational in economic decision-making and, at least, not give oneself an unintended hosing.

   Reply | Report Abuse | Link to this

7. 7. louace_omega 10:51 AM 6/13/10

   As a mature man I find that I don't seem to give those looks a second glance anymore but really appreciate and find attractive the woman that can put herself together well whether casual or sophisticated and carries herself with class and confidence, as you do.
   Well done, like it a lot.
   <a href="http://www.Replica-HANDBAGS-shop.com/"><a href="http://www.Replica-HANDBAGS-shop.com/">http://www.Replica-HANDBAGS-shop.com/</a></a>
   

   Reply | Report Abuse | Link to this

8. 8. bagsoutlet 11:54 PM 11/8/10

   Hi, I think your article its very important and interesting,good work, thanks for sharing!
   
   http://www.discountbagsoutlet.com/

   Reply | Report Abuse | Link to this

9. 9. buysnsmall 04:57 AM 12/4/10

   BUYSNS MALL is rich in designer handbags,low-cost,Fashion,luxury,free shipping!you can compare these products on the site! I like these bags in
   http://www.buysns.com/
   http://www.veseen.com/.
   
   Louis Vuitton,Gucci,Chanel,Burberry,Louis Vuitton handbags,Gucci bags,Chanel bags,Burberry bags,Louis Vuitton wallets,Gucci wallets,brand bags,cheap brand bags,Dior,Prada,Coach,Hermes,Louis Vuitton women handbags,Gucci women handbags,Chanel women handbags,Brand replica,high-precision world brand imitation,
   http://www.buysns.com/
   http://www.veseen.com/
   http://www.martfc.com/
   http://www.buysns.com/
   http://www.veseen.com/
   http://www.martfc.com/
   Handbags,LV bags,Cheap Louis Vuitton Bags,LV Handbags On Sale,Louis Vuitton wallets,Louis Vuitton New Arrivals,Louis Vuitton Classics,Gucci,Chanel,Hermes,Dior,Prada,Coach,Burberry, http://www.buysns.com/
   http://www.veseen.com/
   http://www.martfc.com/
   http://www.buysns.com/
   http://www.veseen.com/
   http://www.martfc.com/
   
   Chanel's Facebook page has already attracted two million friends, while Hermes, which launched its Facebook page in August, has gathered more than 180,000 fans. http://www.buysns.com/ Chanel women handbags,Louis Vuitton, Gucci,Chanel,Burberry, Hermes,Dior,Prada,Coach,Burberry http://www.veseen.com/ http://www.martfc.com/With classic bags including the Kelly and the Birkin already within its stable, Hermes is better placed than most to capitalise on the trend to less obvious luxury for customers who can afford them. The French luxury brand reported a 55.2 per cent surge in second-half profits and predicts a 12 per cent jump in overall sales this year.
   http://www.buysns.com/
   http://www.veseen.com/
   http://www.martfc.com/
   

   Reply | Report Abuse | Link to this