Research
July 19, 2012
Discovery: Dopamine as ‘Risk Avoider’
Famously known as the brain’s “feel-good chemical,” dopamine is no longer associated only with thrilling activities: it can have the opposite effect.
Past research has linked dopamine to risk-taking – it can explain the thrill of sky-diving or venturing out on the Grand Canyon’s glass-bottom walkway. But new research on the brain has uncovered dopamine’s role in the tendency of people to avoid risks. The new findings, by Harvard Medical School researcher Michael Treadway and colleagues at Vanderbilt University, have implications for all types of human behavior – including whether we’re willing to take financial risks.
Different people exhibit “different appetites for a certain amount of risk and how they experience risk and how gun shy they are,” Treadway said. This may depend on where the effects of dopamine take place in the brain.
That’s a dopamine molecule. We typically talk about financial behavior and psychology or use terms like motivation and decision making. The truth may be hard to grasp, but it all comes down to gooey chemical interactions in our gray matter.
It’s long been known that rats and people with more dopamine are willing to work harder — neuroscientists call this “work effort.” This takes place, because dopamine receptors are activated in our limbic system – the “emotional brain” buried in the cerebrum – and in our prefrontal cortex.
What the new research found is that dopamine receptors in another region of the brain cause the opposite reaction. In the insula, which is deep within the temporal and frontal lobes and is connected to the neighboring limbic system, dopamine receptors may act as the brain’s “cost avoider.” This plays out as people hold back from certain activities, including financial activities that they deem as too risky.
The researchers determined this by giving research subjects amphetamines, which trigger dopamine production in the brain. Then the subjects played a game. They could be guaranteed to earn one dollar by pushing a button 30 times – a task that takes minimal “work effort.” Or they could push a different button 100 times, and they might win $1.24 to $4.30 – or nothing at all; the probability of winning was 88 percent. This forced subjects to weigh the costs and benefits of their choices. The researchers compared each individual’s selection with the dopamine levels in scans of their brains. [When rats perform this test, healthy ones show a strong preference for the high-effort option.]
Treadway explained dopamine’s impact on behavior as being “associated with less willingness to work.” Put another way, the people with higher dopamine levels in the insula went for the easy wins.
Different people have different levels of activity in each section of the brain, and it changes depending on what they’re doing. But the combined activity helps to determine the actions we’ll take – financial or otherwise.
How does dopamine affect your behavior?
DA is complicated but simple. It is a very old neurochemical found in most organisms.
It is tied to seeking food. Lack of it triggers food/resources seeking behavior. Of course, all finance is simply resources seeking/exchanging/hoarding/etc..
Inherited deficits in dopamine receptors leads to addictions of all sorts. Addictions are actually self-harming hyper-seeking and consumption behaviors.
There is some research that more affluent folks have more and better dopamine receptors systems thus are less distracted being forced to “feed” a broken DA brain.
All this has broad practical implications for financial behaviors.
The use of the term “risk” in the above article is likely wrong. “Risk” = known probability of outcome. “Uncertainty” = unknown probability of outcome.
In financial services the two are generally confused or misrepresented.
Animals/human aren’t really “risk” averse, all brains are uncertainty averse however.