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Are You Rational When It Comes to Money?

I just read a great blog post by Ben Hayden on Psychology Today. I tried leaving a comment but was enable to due to website difficulties. Instead I’ve reprinted the post here with my comment below. Click on the article title below to go to the original blog post on Psychology Today…

The Decision Tree

Decision-making from all perspectives.

by Ben Hayden, Ph.D., is an Assistant Professor of Brain and Cognitive Sciences at the University of Rochester.

Are you rational?

What do economists mean by rational and irrational?

Published on June 26, 2011 by Ben Y. Hayden, Ph.D. in The Decision Tree

My last post raised a lot of questions about rationality. Rather than reply to them individually, I decided to devote this column to the topic.

I talk to the public a lot about economic discoveries that violate assumptions of rationality. And one thing that always surprises me is just how pleased people are to hear about these violations of rationality. Gleeful even. Relieved to not be the only dummy out there.

It’s surprising that people are so excited because, when it comes to economics, violations of rationality are pretty darn recondite.

An economically rational individual is someone whose preferences obey certain formal rules that insulate them from economists’ bugbear: intransitive preferences. Intransitive preferences means I prefer an apple to an orange, an orange to a pear, and a pear to an apple. This pattern of preferences is distressing to economists because some opportunistic evildoer could come along and offer to trade me an apple for my orange plus a small fee, and then offer me a pear for that same apple plus an additional fee, and then offer me an orange for the pear plus another small fee. Then that evildoer winds up with a free lunch from me. And there’s nothing economists hate more than a free lunch. (Economists would say that this evildoer has turned me into a ‘money pump’).

Bottom of Form

But the real reason this bothers economists goes much deeper than their annoying perennial reminders about free lunches. In the early 20th century, economics struggled to establish itself as a formal and rigorous science. Economists craved respect. (Anyone who has heard economics called the dismal science knows it’s been an uphill battle). Many brilliant economists built the field a solid foundation that was axiomatic - based on a few simple and obvious rules - the same way Euclid did with geometry and Peano did with arithmetic. And to make these axioms, economists had to come up with an economist’s equivalent of mathematically true and false. And they chose the terms rational and irrational.

Aristotle and Plato

Aristotle and Plato Discussing Reason and Emotion

These words were not intended to describe what people do. Humans are not robots; most (but not all) economists know that. Even if we were, our brains are finite. We have to take mental shortcuts. We are approximately rational and even that only sometimes. We economic psychologists love the phase ‘bounded rationality’.

Economics 101 is one of the most popular undergraduate courses in the United States, and it often gives rationality a central place. But we all have money anxieties, so we are predisposed to hear personal judgment coming from our economics professors. Every year, a new crop of students thinks their teachers are criticizing them about how they manage their personal finances.

But that’s not it at all.

Violations of rationality are nothing to be ashamed of. They are like optical illusions in vision: they are universal and they provide clues to how the visual system works. We study irrationality because it gives us essential clues to help us learn how the brain makes economic decisions. And we do that because it leads us to solutions for the real irrationalities: depression, addiction, schizophrenia, and so on.

Invite your local economists to the bar, buy them a round of beer and ask them about it. They’ll admit (in my experience, cheerfully) that when they go to the store, they make the exact same mistakes as the rest of us do. Because we are all human. We are all irrational.

-          Ben

 ——————————————————-

Dear Ben:

Thanks for the insightful blog post! I have this difficulty with clients frequently - they want to believe the illusion that they are primarily, if not solely, rational individuals. This would be great if it were so, but as you point out, it’s not the case. And I find individuals vary on a spectrum as to how much of the time they spend being rational vs. emotional. My challenge, for years, has been to decipher how to become aware of and train the emotional mind.

 

Different emotions can increase or decrease our rationality, reasoning and focus. Anger, for example, makes us more focused and rational - to a point. Think of anger on a 1 through 10 scale with 1 being calm and 10 be enraged.  Anger can  be useful below a 5. Once you go above a 5, the emotional mind is in charge, rationality goes out the window and we become atavistic and primal.

 

Thank you for pointing out our ubiquitous illusion of rationality.

Best regards,

John L. Schinnerer, Ph.D.

Founder Guide to Self

Award-winning author, blogger and anger management coach

For a free copy of John’s award-winning book on reason and emotion, visit GuideToSelf.com, click on the yellow book icon and enter your name and email.

How to tell when someone’s lying

May 11, 2011 by Editor
From Kurzweil.net
Professor of psychology R. Edward Geiselman at the University of California, Los Angeles, has been studying for years how to effectively detect deception to ensure public safety, particularly in the wake of renewed threats against the U.S. following the killing of Osama bin Laden.

Detecting a liar

Geiselman and his colleagues have identified several indicators that a person is being deceptive. The more reliable red flags that indicate deceit, Geiselman said, include:

* When questioned, deceptive people generally want to say as little as possible. Geiselman initially thought they would tell an elaborate story, but the vast majority give only the bare-bones. Studies with college students, as well as prisoners, show this. Geiselman’s investigative interviewing techniques are designed to get people to talk.

* Although deceptive people do not say much, they tend to spontaneously give a justification for what little they are saying, without being prompted.
* They tend to repeat questions before answering them, perhaps to give themselves time to concoct an answer.
* They often monitor the listener’s reaction to what they are saying. “They try to read you to see if you are buying their story,” Geiselman said.
* They often initially slow down their speech because they have to create their story and monitor your reaction, and when they have it straight “will spew it out faster,” Geiselman said. Truthful people are not bothered if they speak slowly, but deceptive people often think slowing their speech down may look suspicious. “Truthful people will not dramatically alter their speech rate within a single sentence,” he said.
* They tend to use sentence fragments more frequently than truthful people; often, they will start an answer, back up and not complete the sentence.
* They are more likely to press their lips when asked a sensitive question and are more likely to play with their hair or engage in other “grooming” behaviors. Gesturing toward one’s self with the hands tends to be a sign of deception; gesturing outwardly is not.
* Truthful people, if challenged about details, will often deny that they are lying and explain even more, while deceptive people generally will not provide more specifics.
* When asked a difficult question, truthful people will often look away because the question requires concentration, while dishonest people will look away only briefly, if at all, unless it is a question that should require intense concentration.

If dishonest people try to mask these normal reactions to lying, they would be even more obvious, Geiselman said. Among the techniques he teaches to enable detectives to tell the truth from lies are:

* Have people tell their story backwards, starting at the end and systematically working their way back. Instruct them to be as complete and detailed as they can. This technique, part of a “cognitive interview” Geiselman co-developed with Ronald Fisher, a former UCLA psychologist now at Florida International University, “increases the cognitive load to push them over the edge.” A deceptive person, even a “professional liar,” is “under a heavy cognitive load” as he tries to stick to his story while monitoring your reaction.
* Ask open-ended questions to get them to provide as many details and as much complete information as possible (“Can you tell me more about…?” “Tell me exactly…”). First ask general questions, and only then get more specific.
* Don’t interrupt, let them talk and use silent pauses to encourage them to talk.

———————————

In my job, I’m constantly looking for ‘tells’ to see if people are telling the truth or lying (or somewhere in between). The emotional mind gives a lot of information away without our conscious awareness. Human beings have exquisitely tuned emotion-detecting radars. To find out more about how to use your radar to live a more satisfying life, visit www.GuideToSelf.com for a FREE copy of my award-winning self-help book, Guide To Self: The Beginner’s Guide to Managing Emotion and Thought.

For those interested in turning down the volume on anger, visit my new online anger management site http://webangermanagement.com.

All the best,

John Schinnerer, Ph.D.

Founder Guide to Self, Inc.

Award-winning author, blogger, anger management expert

Mindfulness Training Changes Brain Structure in As Little As Eight Weeks

Mindfulness is a 2500-year-old practice that focuses on the nonjudgmental awareness of thoughts, feelings, sensations and state of mind. Mindfulness is a staple of many positive psychology programs due to it’s wide-ranging positive health benefits. Mindfulness has been shown to be significantly helpful in reducing symptoms of depression, anger, anxiety, obsessive-compulsive disorder and even speeds the healing of physical ailments such as psoriasis. Mindfulness rests on a mountain of research spanning over 30 years demonstrating its effectiveness in such areas.

Mindfulness as resting rocks

Most recently, active participation in an 8-week mindfulness program was shown to make noticeable physical changes in brain areas associated with memory, sense of self, empathy and stress. In a new study coming out in the January 30 issue of Psychiatry Research: Neuroimaging, spearheaded  by Massachusetts General Hospital (MGH) researchers share the results of their study, the first ever to demonstrate mindfulness-produced improvements over an 8-week period in the brain’s grey matter.

Mindfulness - One of the Best Tools Available for Stress, Anxiety, Anger & Depression

“Although the practice of mindfulness is associated with a sense of peacefulness and physical relaxation, practitioners have long claimed that mindfulness also provides cognitive and psychological benefits that persist throughout the day,” says Sara Lazar, PhD, of the MGH Psychiatric Neuroimaging Research Program, the study’s lead author.

Prior studies found structural differences between the brains of experienced mindfulness practitioners and individuals with no history of mindfulness, with thickening of the cerebral cortex in areas associated with awareness and emotional intelligence. But those studies were unable to conclude that those differences were truly produced by the practice of mindfulness.

In this study, magnetic resonance images were taken of the brains of sixteen (16) participants two weeks before and after they took part in the 8-week Mindfulness-Based Stress Reduction (MBSR) Program at the University of Massachusetts Center for Mindfulness. In addition to weekly meetings that included the practice of mindfulness — which focuses on nonjudgmental awareness of thoughts, feelings and sensations — participants received audio files to use for daily guided mindfulness practice. Participants tracked the amount of time they practiced mindfulness each day. A set of MRI brain images were also taken of a control group of people who did not practice mindfulness over the same 8-week period.

Mindfulness, stress management, anger management tools

Mindfulness group participants spent an average of 27 minutes daily practicing mindfulness exercises. Their answers to a mindfulness questionnaire showed significant improvements in mindfulness and meta-cognition compared with pre-study responses.

Physical Changes In Brain Due to Mindfulness Practice

The analysis of brain images found increased grey-matter density in the hippocampus, which is associated with new learning and long-term memory, as well as in brain regions associated with self-awareness and empathy.

Decrease in Stress & the Amygdala

Those who reported a decrease in stress also had a decrease in grey-matter density in the amygdala, which is associated with the presence of anxiety, depression and stress. Interestingly, no such changes were seen in the control group, indicating that the brain changes were not a result of the inevitable passage of time.

“It is fascinating to see the brain’s plasticity and that, by practicing mindfulness, we can play an active role in changing the brain and can increase our well-being, reduce stress and quality of life.” says Britta Hölzel, PhD, first author of the paper and a research fellow at MGH and Giessen University in Germany. “Other studies in different patient populations have shown that mindfulness can make significant improvements in a variety of symptoms, and we are now investigating the underlying mechanisms in the brain that facilitate this change.”

John Schinnerer, Ph.D., Founder of Guide to Self, Inc.

John Schinnerer, Ph.D. is in private practice in Danville, CA teaching clients the latest tools to manage emotions such as anger, anxiety and depression. Using positive psychology, he helps clients achieve happy, thriving, meaningful lives. He graduated summa cum laude from U.C. Berkeley with a Ph.D. in educational psychology. John hosted over 200 episodes of Guide To Self Radio, a prime time radio show on positive psychology, in the San Francisco Bay Area.   He wrote the award-winning book, ‘Guide To Self: The Beginner’s Guide To Managing Emotion and Thought.’ He sits on the Advisory Board of PsychCentral.com, one of the top psychology sites on the web. He may be reached via email at John@GuideToSelf.com.  His award-winning blog on positive psychology, Shrunken Mind is at http://drjohnblog.guidetoself.com. His newest blog on positive psychology and anger management can be found at http://webangermanagement.com.
Story Source:
The above story is reprinted from materials provided by Massachusetts General Hospital.

Journal Reference:
1. Britta K. Hölzel, James Carmody, Mark Vangel, Christina Congleton, Sita M. Yerramsetti, Tim Gard, Sara W. Lazar. Mindfulness practice leads to increases in regional brain gray matter density. Psychiatry Research: Neuroimaging, 2011; 191 (1): 36 DOI: 10.1016/j.pscychresns.2010.08.006

Top Five Flirting Styles For Falling in Love

Top 5 Flirting Styles for Falling in Love

ScienceDaily (Nov. 6, 2010) — A little self-awareness can help people struggling in the world of relationships, says Jeffrey Hall, assistant professor of communication studies at the University of Kansas.

Hall recently completed a study into styles of flirting among dating adults, surveying more than 5,100 people regarding their methods of communicating romantic interest.

“Knowing something about the way you communicate attraction says something about challenges you might have had in your past dating life,” Hall said. “Hopefully, this awareness can help people avoid those mistakes and succeed in courtship.”

He identified five styles of flirting: physical, traditional, polite, sincere and playful.

• Physical flirting involves the expression of sexual interest in a potential partner. People who scored high in this form of flirting often develop relationships quickly, have more sexual chemistry and have a greater emotional connection to their partners.

• Traditional flirts think men should make the first move and women should not pursue men. Because they adopt a more passive role in dating, women with this style are likely to report trouble getting men’s attention and are less likely to flirt or be flattered by flirting. Traditional men often know a potential partner for a longer time before approaching them. Both genders tend to be introverted and prefer a more intimate dating scene.

• The polite style of flirting focuses on proper manners and nonsexual communication. Although they are less likely to approach a potential partner and do not find flirting flattering, they do tend to have meaningful relationships.

• Sincere flirting is based on creating emotional connections and communicating sincere interest. Although women tend to score higher in this style, it is advocated by both genders. Relationships involve strong emotional connections and sexual chemistry and are typically meaningful.

• People with playful flirting styles often flirt with little interest in a long-term romance. However, they find flirting fun and enhancing to their self-esteem. They are less likely to have important and meaningful relationships.

Hall said that for the most part, there was little difference between genders within each flirting style.

The research results likely will be used by future researchers who study courtship behaviors, Hall said. But he added that such information has overall value to society.

“In some ways, the very early part of developing relationships is important to the success of long-term relationships, including marriages,” he said.

The results of the survey appear in the October issue of the journal Communication Quarterly. Hall co-authored the article with Steve Carter, senior director of research and product development at eHarmony.com; Michael J. Cody, professor in the Annenberg School for Communication at the University of Southern California; and Julie M. Albright, adjunct professor of sociology at USC.

Take the flirting styles survey: http://connect.ku.edu/tests/flirt/

University of Kansas (2010, November 6). Self awareness can help people navigate rocky seas of relationships. ScienceDaily. Retrieved November 7, 2010, from http://www.sciencedaily.com¬ /releases/2010/11/101101082901.htm

To life, love and laughter!

John Schinnerer, Ph.D.

Founder Guide to Self, Inc.

http://www.GuidetoSelf.com

John Schinnerer positive psychology coach love flirting relationships

The Battle Going on In Your Mind - Automatic Vs. Conscious Minds

There is a battle going on in your mind. There are two factions in your mind. Sometimes these two get along and sometimes they are in conflict. At times, the two cooperate. At times, they act in direct opposition to one another.

The two factions are your rational, thinking mind and your automatic, emotional, subconscious mind. Here is the latest study to examine the differences between the two sides…

ScienceDaily (Nov. 8, 2010) — Expert typists are able to zoom across the keyboard without ever thinking about which fingers are pressing the keys. New research from Vanderbilt University reveals that this skill is managed by an autopilot, one that is able to catch errors that can fool our conscious brain.

The research was published in the Oct. 29 issue of Science.

“We all know we do some things on autopilot, from walking to doing familiar tasks like making coffee and, in this study, typing. What we don’t know as scientists is how people are able to control their autopilots,” Gordon Logan, Centennial Professor of Psychology and lead author of the new research, said. “The remarkable thing we found is that these processes are disassociated. The hands know when the hands make an error, even when the mind does not.”

For  a free PDF copy of the award-winning book Guide To Self: The Beginner’s Guide to  Managing Emotion and Thought, visit http://www.GuideToSelf.com and enter your name and email address. This book outlines the latest proven tools for optimal human functioning - tools to manage your negative emotions (anger, anxiety, sadness and stress) and turn up the volume on your positive emotions (gratitude, curiosity, awe, love,  joy, pride, hope, happiness and passion). It also helps you become more aware of your automatic mind and the shortcuts it takes without your consent.

To determine the relationship between the autopilot and the conscious brain, or pilot, and the role of each in detecting errors, Logan and co-author Matthew Crump designed a series of experiments to break the normal connection between what we see on the screen and what our fingers feel as they type.

In the first experiment, Logan and Crump had skilled typists type in words that appeared on the screen and then report whether or not they had made any errors. Using a computer program they created, the researchers either randomly inserted errors that the user had not made or corrected errors the user had made. They also timed the typists’ typing speed, looking for the slowdown that is known to occur when one hits the wrong key. They then asked the typists to evaluate their overall performance.

The researchers found the typists generally took the blame for the errors the program had inserted and took the credit for mistakes the computer had corrected. They were fooled by the program. However, their fingers, as managed by the autopilot, were not — the typists slowed down when they actually made an error, as expected, and did not slow down when a false error appeared on the screen.

In two additional experiments, the researchers set out to probe awareness more deeply. In the second experiment, they had the typists immediately judge their performance after typing each word. In the third, they told typists that the computer might insert or correct errors and again asked them to report on their performance.

The typists still took credit for corrected errors and blame for false errors in the second experiment, and still slowed down after real errors but not after false ones. In the third experiment, the typists were fairly accurate in detecting when the computer inserted an error, but still tended to take credit for corrections the computer had made. As with the other two experiments, the typists slowed down after real but not after false errors.

The research is the first to offer evidence of the different and separate roles of conscious and unconscious processing in detecting errors.

“This suggests that error detection can occur on a voluntary and involuntary basis,” Crump, a postdoctoral fellow in psychology, said. “An important feature of our research is to show that people can compensate for their mistakes even when they are not aware of their errors. And, we have developed a new research tool that allows us to separately investigate the role of awareness in error detection, and the role of more automatic processes involved in error detection. The tool will also allow a better understanding of how these different processes work together.”

The research was supported with funding from the National Science Foundation.

1. Gordon D. Logan, and Matthew J. C. Crump. Cognitive Illusions of Authorship Reveal Hierarchical Error Detection in Skilled Typists. Science, 29 October 2010: Vol. 330. no. 6004, pp. 683 - 686 DOI: 10.1126/science.1190483

To life, love and laughter,

John Schinnerer Ph.D.

Founder Guide to Self, Inc.

http://www.GuideToSelf.com

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