Turbulent times

This week’s topic revolved around mental illness and different disorders. The book discussed anxiety and affective disorders, as well as schizophrenia.

Anxiety disorders, for instance, are characterized by individuals expressing and reacting to fear in the face of stimuli that people perceive “inappropriately” as threatening. These include panic disorders, agoraphobia (anxiety about situations where escaping or leaving would be difficult), social phobia or other specific phobias.

The number of anxiety disorders diagnosed has been increasing in many parts of at least the Western world, and the finance industry at large has not been void of this development. Jobs in some realms of finance, such as investment banking, are characterized by long working hours, fast-paced deadlines and often competitive social dynamics, all of which can induce pressure and stress. Even though the hallmark of anxiety disorders is the brain’s inappropriate stress response to a stressor, a high-stress environment, can be argued, could be likely to cause individuals to feel stress even when there is no apparent threat. There have been multiple cases (e.g. here and here) reported of employees in the banking sector suffering from anxiety or even depression and from time to time, harrowing incidents of suicides.

Furthermore, some research has been conducted on how exposure to the stock market – an individual’s involvement in buying stocks and consequently following the development of the stock price – induces anxiety. A particular piece of research studied the impact of exposure to the stock market on the mental health of Chinese participants, when the market was particularly turbulent. The research showed clear results of such exposure inducing anxiety, even when the stock prices were increasing.

It was great to read about the treatments for the different disorders and how these have advanced throughout the years. We wish the best of luck for the scientists working in these fields also for future discoveries!

ASD and decision-making

This week our book chapter discussed “the wiring of the brain”, explaining how neurons form by proliferating, migrating and differentiating to their different functions in the nervous system and connect by allowing their axons to grow and attach to other neurons.


At first glance and ponderation, we found it a bit difficult to link this week’s reading to issues in behavioural finance or economics. But fear not, we managed to pull through with it in the end! J


The book talks about the autism spectrum disorder (ASD) and how, even though the disorder is heritable, the exact genetics of its development are still studied. ASD seems to be due to gene mutations which occur already in the parents’ sperm or egg cells and are passed on to the children. DNA sequencing technology has enabled scientists to locate the ASD symptom -inducing genes and quantify them to a total of hundreds. This suggests according to the chapter that there are many different cellular processes during brain development that can be the reason for ASD, as they are disrupted.


In the much-mentioned behavioural and sustainable finance -course, we had to study a cognitive bias, and test whether our classmates were susceptible to this bias. Our group chose to focus on the framing effect, a bias which asserts that the way a question or situation is framed, e.g. by the words used or pictures shown, can influence decision-making. Our test results showed that there was at least some inclination towards such bias also amongst our class.


Online, I came across a research paper (Shah et al., 2016) that combined these two topics: the way people with ASD are affected by the framing effect! It seems very interestingly that people with ASD are less prone to adhere to the framing effect and be fooled by this cognitive bias when making decisions. The researched reasons for this entail a reduced tendency of individuals with ASD to incorporate emotional information into the decision-making process.


A couple of weeks back in this blog we touched upon some interesting research relating to dopamine receptor activation, and the way in which this can influence the impulsiveness of our decisions.

Our attention in chapter 6 of the book was caught by Solomon H. Snyder’s account on how he and his colleagues successfully identified opiate receptors for the first time in the 1970s. During this period of time “hundreds of thousands of American soldiers” fighting in the Vietnam war were addicted to heroine, to such an extent that it was called an epidemic. One study estimated that during the war, 43% of the around 14 thousand men who returned from Vietnam had used some narcotics during their time in battle (Robbins et al., 1974). Even though the terrors of war are in practice unimaginable to us, it’s easy to understand at least a simple logic of why soldiers would resort to drugs in the midst of such chaos.

Why is it, however, that in everyday life people get addicted to drugs?

If one would really want to explore this question, there would surely be hundreds of points of views to take, even if only looking for academic explanations and answers. Sociological or economic rationales, for instance, have to our knowledge provided important insight for policy-making regarding drug addiction and abuse.

However, if looking at this question from the point of view of cellular-level action in the brain, earlier neuroscience research seems to have pointed at least a answer again to the same brain’s dopamine system and its provision of a feeling of instant gratification to the user. Drugs such as cocaine and methamphetamine cause nerve cells to release too much of the dopamine neurotransmitter, which can make one feel “euphoric”. In addition, your brain learns to release dopamine also not only due to the drugs but due to other cues that relate to the drug use, therefore disturbing your “reward circuit”.

From a behavioural economics or science point of view, such decision to pursue immediate satisfaction was also discussed during a lecture. Our lecturer talked about preferring chocolate – which in some research has also been proven to release dopamine, and at least influence other neurotransmitters – immediately in the moment or, for example, in two hours’ time. The economics research explained people’s inability to wait for gratification even for a couple of hours, by our time preferences for “consumption”. Given the same good now or in the near future, studies show we mostly prefer taking the product right away, and this can be modeled mathematically by discounting the utility received from a good into the future. Additionally, our lecturer pointed out that often humans are also incapable of making consistent choices over time.

Increasingly, however, there seems to be a view among neuroscientists that the effect of drugs is not only limited to their influence on the dopamine system, but also to cognitive patters stored in the frontal lobe. These include decision-making abilities, planning and memory. Therefore, there are surely even more areas of overlap for neuroscience and behavioural economics, when focusing on drug abuse and addiction.

Dope-amine decisions

In recent lectures for a course in the Business School called Behavioural and Sustainable Finance, the hot topic has been human decision making. How do individuals evaluate the benefits and risks of different options, what kinds of personal traits guide us to choose certain alternatives and what larger scale systematic decision making patterns exist, are some of the questions behavioural economics and finance attempt to answer.

The approach to examine such questions has originated in psychology and revolves around comprehending different “heuristics and biases” that we humans demonstrate, by acting against a rational, economic value -maximising decision making which the more orthodox economics literature argues for.

Studying the synapse, and specifically chemical synapse this week, got us thinking about the links this neural could have with our decision making capabilities. Of course the most obvious connection is that in the first place, synapses are the basis for many of our cognitive abilities!

By a quick google search, however, we also found some interesting research on how different neurotransmitters affect our behaviour and decision making. For instance, Gaalen et al. (2006) studied how dopamine-related processes affect impulsive decision-making in rats. Their results showed that the rat’s ability to restrain from instant gratification, and therefore make a less impulsive decision, depended on the activation of their dopamine D1 receptor.

The study mentions that such understanding is important, for instance, for comprehending conditions such as ADHD or ADD. But these learnings perhaps speak also to the behaviour of larger groups and could help us understand why some people choose to make impulsive decisions on the stock market. One can therefore build interesting bridges between the two courses and topics!