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What Your Brain Does When You Think About Money

Money is a taboo subject. We often balk at the idea of disclosing our full financial situation to people closest in our lives – from spouses-to-be to adult children. When it comes to how we deal with our own spending and saving habits, money and finance remains emotionally charged.

New scientific analysis tells a neuroscience-based story about how our brains react when we confront the issue. Using fMRI studies from the past two decades, researchers have given context to the way thinking about money and financial decisions affects our bodies. Here are three takeaways from the research review.

1. This is your brain making money. This is your brain on cocaine.

Yep, cocaine. A study from the late 1990’s compared participant’s brain activity when they were engaging in one of two “activities” – cocaine addicts were monitored while they were using their drug of choice, and non-addicts were monitored while they were playing games in which they could win or lose money. The results were astounding. Brain scans of the two groups were indistinguishable.

Why? The “gamblers” brain functions showed responses in a part of the brain tied to reward, pleasure, motivation, and addiction – the nucleus accumbens. This same part of the brain was activated when the cocaine addicts were high on their drug of choice.

These findings give some credence to that old adage that money is like a drug.

2. Your “gut feeling” is a real phenomenon.

You aren’t imagining that stomach pain you feel when your money is threatened. One 2003 study focused on the concept of getting a raw deal, and how that translates into brain and body function. In the research study, participants played a game (known among behavioral economists as the “Ultimatum Game”) where they were paired with a stranger, given a sum of money and asked to split it. One participant acted as the “proposer,” and the other as the “responder.” If the pair couldn’t agree on a split, no one got the cash.

Unfair offers to responders (particularly where the offer was less than 50% of the money) were associated with a spike in the area of the brain called the insula, which is associated with anxiety, pain, and hunger. In fact, the insula contains cells that are primarily found in the digestive system, which connects it to what’s going on in our stomachs.

So that gut feeling you have when a money matter turns sour is an actual physical event. The insula region is lighting up both your brain and your agitated stomach.

3. Risky decisions and safe decisions happen in different parts of the brain.

Another study from 2005 focused on fMRI’s of participants as they made choices between stocks and bonds. The participants were given limited information about the performance of the stocks and bonds, but two investing mistakes immerged.

The first mistake was described asrisk-seeking” – when the participant chose the stock when it was unwise. The second was “risk-aversion” – choosing the bond when a stock would have been more promising. In the brain, the two “mistakes” looked completely different.

Those risk-seeking mistakes were associated with high activation of the nucleus accumbens (just like in the cocaine and gambling study). Conversely, risk-aversion mistakes were linked to activation of the anterior insula, a space in the brain associated with self-awareness, feeling pain, anticipating pain, and empathizing with others. The brain maps confirm what most of us already know – dealing with money is an emotional process.

Related: 5 Bad Habits To Avoid When Investing


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