Whether you're a liberal or a libertarian, it's generally accepted across the political spectrum that, in some form, the opportunity to make a lot of money drives the economic recessions and depressions the global economy experiences.
Since we seem doomed to repeat the mistakes that brings us to the brink of economic meltdown every few decades, is there perhaps a scientific explanation for our behavior?
According to a study soon to appear in Cortex, monetary gain, or even the mere possibility of receiving a reward, is known to activate an area of the brain called the striatum, and high-risk/high-gain decisions cause higher levels of activation than more conservative decisions.
Researchers from the Department of Neurology at Kyoto University used functional magnetic resonance imaging (fMRI) to study hemodynamic changes in the brains of 17 healthy volunteers performing a monetary task. The volunteers were given an initial stock of money and then required repetitively to press one of two buttons, which resulted in either an increase or decrease of the money stock, depending on whether their choice agreed or disagreed with a number that appeared randomly after the button had been pressed.
One button was a low-risk option and the other involved high-risk, so that more money was gained or lost when choosing the high-risk option. The volunteers were also able to keep track of the total money stock throughout the task.
The research team found higher levels of activation in volunteers when choosing high-risk/high-gain options, compared to low-risk/low-gain, and when gaining money, compared to losing money. It did not matter how much money was gained, since small gains stimulated the volunteers' striatum as much as large gains. They also found that overall striatum activity increased with the total amount of money in stock.
According to the authors, these results show that "risky tactics and pleasure of monetary gain are correlated with activation of the striatum" and that this finding demonstrates "the concept of the striatum as a major reward-related brain structure".
Citation: The study will appear in the January issue of Cortex.
Can Science Explain Our Foolish Financial Decisions?
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