How fear plays a role in our finances
What was your reaction when you first saw the stock market drop earlier this week? Something like this?
Despite all the advice about playing the long game when it comes to the stock market, the first reaction a lot of us have when we see all that red is fear. David Zald is a professor of psychology and psychiatry at Vanderbilt University, and it’s his job to figure out what fear is and why it makes us do what we do.
“Areas in the brain such as the amygdala and hypothalamus start firing away, and they create multiple things going on at once. A major part of it also is what’s going on physically. You know that tension in the stomach? Our eyes will basically go wide so we can take in any information that we need, adrenaline starts pumping. And there is what we refer to as a fight or flight response. But even in situations where there’s nothing to run away from, we’re still geared up to act in those situations.“
But how we react to that fear depends on the person. Some seek fear — and can even get addicted to it.
“There are very different thresholds for triggering these responses,” he says. Where as some people will respond to even very minor provocations with a full-out, ‘It’s a disaster, it’s a catastrophe!” sort of response, there are many others where you have to push it to a really high level before they start to respond to emotionally.”
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