The Only Thing We Have to Fear…

In his excellent book “Your Money and Your Brain,” Jason Zweig writes with extensively-researched detail about the ways that strong human emotions (such as fear, greed, regret, and surprise) can distort our perceptions and lead people people to take actions that may not serve their long-term best interest. While his book deals primarily with how people are with their money, his overview of neuroscience is broadly applicable to humans today, when the widespread Pandemic of Fear (No, not Corona–fear of Corona!) has got people stocking their pantries with toilet paper and questioning their safety with every pedestrian they pass on the street.

In addition to detailing the results of many related psychological experiments of human behavior, Zweig’s book is chalk full of stories of erratic actions and foolish financial decisions made by people compromised by their emotions. Whether blinded by greed, paralyzed by fear, shocked by surprise, or deluded by regret, our reflexive emotions have a way of distorting reality (which leaves us susceptible to making errors of judgment).

For instance, people tend to over-estimate the likelihood of really bad things happening. Zweig writes,

[M]ost people think war takes more lives than homicide–which they believe kills more people than suicide. In fact, in most years, war kills fewer people than conventional homicides do, and the number of people who take their own lives is almost twice the number of those who are murdered.

“Your Money and Your Brain,” 155

According to Zweig, this is because things like war and homicide conjure up more dangerous-seeming, vivid images in our mind. Our brains tend to rank such things as a higher risk than suicide, which is done solo and where the victim and the perpetrator are the same (therefore, in a sense reducing the sense of “danger” to others). The same is true when it comes to the perceived likelihood of fatalities caused by animals: sharks, snakes, alligators and bears are perceived as highly dangerous to human life, yet every year, more people die in crashes with deer than by all the other animals combined–in fact, seven times more! (p155)

Zweig points out that people react similarly with their money:

Every investor’s worst nightmare is a stock market collapse like the Crash of 1929 that ushered in the Great Depression…And yet, based on history, the odds that U.S. stocks will lose a third of their value in a given year are only 2%. The real risk is not that the stock market will have a meltdown, but that inflation will raise your cost of living and erode your savings… Riveted by the vivid fear of a market Chernobyl, [people in a survey cited] overlooked the more subtle but severe damage that can be dealt by the silent killer of inflation.


In other words, inflation (the silent killer) is, in a long run, probably a bigger threat to people’s wealth than market crashes. However, because it conjures up no vivid, scary images in our minds–unlike a sudden crash–it can easily be ignored. Often, to our detriment 🙁

These points all help Zweig support his central thesis, which is, in the immortal words of FDR, that the only thing we have to fear is fear itself (or any emotional state that compromises our judgment):

[M]uch of the world’s misfortune is caused not by the things we are afraid of, but by being afraid. The most terrible devastation wrought by Chernobyl, for instance, did not come out of its nuclear reactors. Instead, it came from the human mind…Anxiety, depression, alcoholism, and suicide ran rampant among the residents who could not afford to leave. Fearing that their unborn babies had been poisoned, expectant mothers had more than 100,000 unnecessary abortions. The damage from radiation was dwarfed by the damage from the fear of radiation, as imaginary terrors led to real tragedies on a massive scale.



In our present situation, it seems to me that similar things are happening, at least on the emotional level: people are letting their actions be controlled by their fear. Yet could the fear of the risk be just as bad (or worse) than the risk itself?

I’m not trying to minimize the danger here. The point is, the actual likelihood of a threat occurring and the fear of that threat are not the same thing. Very often, people’s fear can become as much of a problem as any actual threat!

No doubt, there has been an almost unprecedented amount of uncertainty brought up by our current situation. Humans, like stock markets, don’t like uncertainty! It is understandable why fear could be so rampant. Zweig goes on:

Dread and knowability come together to twist our perceptions of the world around us: We underestimate the likelihood and severity of common risks, and we overestimate the likelihood and severity of rare risks–especially if we have never personally experienced them. When we feel we are in charge and we understand the consequences, risks will seem lower than they truly are. When a risk feels out of our hands and less comprehensible, it will feel more dangerous than it actually is.


Apparently this fear response is wired into our brains, via the amygdala. Zweig goes on:

[T]he amygdala can flood your body with fear signals before you are consciously aware of being afraid. If you smell smoke in your home or office, your heart will hammer and your feet will start flying well before any fire alarm goes off. In the presence of real or potential danger, the amygdala waits for nothing. “You don’t need to fall of a ten-story building in order to be afraid of falling off it,” says neuroscientist Antoine Bechara of the University of Southern California. “Your brain doesn’t need actual experience.”


This certainly explains the sensations I (and I’m sure billions of others) have felt at times over the last few months!

Certainly, the present Pandemic qualifies as a risk that “feels out of our hands and less comprehensible.” Yet could it also “feel more dangerous than it actually is” ? Strange behaviors such as grocery store raids and massive stock market sell off seem the result of a high-level fear response coming from many millions of human brains. Yet the fear of a thing is not the same as the thing actually happening.

Certainly time will tell if such fears are warranted. But I think it is a mistake to assume that all fear is correct, when it is very possible that it is not.

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