The article is called “Money on Your Mind.” It is talking about how perceived rewards can adversely affect our rational decision making. Lennick and Jordan (1) start by giving a case study in which a financial investor by the name John Sanders lost about one hundred thousand of the money he could have gained if he maintained his shares in the stock exchange market.
The authors understand the causes of making an irrational decision. They explain that, our brain is composed of three different parts each of which is responsible for making a different decision. We have the rational part, emotional, and habit center. In our life, we are exposed to different kind of stories, some good, and some bad. In the event of sad stories, for example, rumors about job retrenchment or redundancy, they get to the emotional brain, which panic and goes under stress. Within a matter of milliseconds they get to the rational brain which is not able to make a rational decision because the emotional mind has already panicked. We start seeing the possibilities of being retrenched and we may even cancel any plans we might have taken such as taking a mortgage or buying a car.
The mind is responsible for making financial decision and it is triggered by the messages we receive on the day to day activities. Any good message received will result into a rational decision being made and the opposite is true. Lennick and Jordan (4) explain that, we have two systems in the brain; the danger system and the reward system. The danger system gets activated when we receive news that threatens our survival. When it is activated, it affects the whole body and a person may tend to shake or sweat without even realizing. On the other hand, the rewards system helps us identify and acquire things that we want such as ice scream, chocolate, beautiful cars or a good house. It helps us to admire the things that makes sense in our life or which can make our life more comfortable and develop the desire to acquire them.
However, I would like to ask the Lennick and Jordan to explain what happens if we fail to acquire the things we have identified. This is because I have been having so many things that I admire but have not managed to acquire most of them. What happens to the reward or danger system in such a case? I find this article very interesting given that, it explains what happens in the real life. In a scale of one to ten, I would rate its quality as eight. We have so many opportunities and threats that influence the decisions that we make. Our financial performance is determined by the message we receive from the money market. Some people may respond immediately to such messages while others take their time to weigh the costs and benefits of their decisions.
Although we are wired to behave in ways that often get us into financial problems, our brains still have the capability to avoid making such decisions. Lennick and Jordan (5) observe that, the brain can change its decision if we subject to the right perspective. Financial advisers have the responsibility of assisting their clients in making rational decisions in cases of financial troubles. I would recommend them to read this article and extend it to their clients.
Works Cited
Lennick, Doug and Jordan, Kathy. Money on Your Mind: The Brain’s Role in Financial Decision-Making. New York: FPA Press, 2010.