I was captivated this week by the PBS special Mind Over Money. This show featured the contrasting perspectives and studies of economists about how we make decisions about our money thoughts of which apparently light up a deep old part of the brain that also glimmers when either sex or food is considered. There is a camp of rational economists and the alternative view of behavioral economists who have an intense debate raging on how people and the marketplace behave. The rational folks theorize that we operate with self-interest and self-preservation as our primary motives, which lead us (as a whole and over time) to make thoughtful decisions about investing and everyday purchases'where risks and gains are clearly factored into our choices.
The behavioral folks, championed by Robert Shiller, the guy who warned us of Irrational Exuberance in 2000, caution that we are far more motivated by impulse and emotion, particularly social contagions. See 21st century real estate for the most recent and 15th century tulip bulbs for the first bubble frenzies'and of course the 1929 crash and 2008 Wall Street panic for bursting bubbles.
I was struck by how much this debate parallels the convictions of rational public health experts who seem to assume that if the public is informed with accurate information and the latest research on healthy behaviors, we will act rationally to protect our self-interests and decrease our Big Mac consumption and get those colonoscopies and flu shots.
But fast food purchases are rising and it appears that even when preventive health services are covered by insurance, mind over body is just as elusive as ethics at Goldman Sachs. Instead, so many of our choices reflect an innate desire for immediate satisfaction over long-term gains. It appears we haven't really come a long way baby instead that tiny pre-conscious bit of grey matter still just loves to be bedazzled and distracted.