The Brains Behind Making Financial Decisions

What happens in the brain when choosing between two financial products? How about when the decision is perceived as ‘risky’? Can individual decisions be a predictor of how financial markets work?

These are the sorts of questions that have emerged from the developing relationship between neuroscience and finance… sometimes called “neurofinance” or “neuroeconomics”.

Understanding what happens in the brain when we make financial decisions is relatively new science but it is already proving to be interesting.

The neuroscience

A new lab at the University of Miami’s School of Business has been set up to examine the relationship between the brain and finance.

Using electroencephalography (EEG) to measure electrical activity in the brain, and eye-tracking technology, it conducts experiments on finance students without the need for expensive fMRI technology.

One of the lead researchers explains what the neuroscience is trying to discover:

“Money doesn’t exist in nature. When a person says, ‘I’m going to save 20% of my paycheck to put into a retirement account,’ is that the same part of the brain a squirrel would use to put away nuts for the winter?”

“We’re trying to figure out what parts of the brain we use today to make financial decisions, what they were originally intended to do, and the consistency they have.”

The common assumption is that the decisions we make (regarding finances or anything else deemed as ‘important’) are purely rational decisions, taken without emotions interfering. In terms of finance there is a vast array of metrics used that allow us to make ‘informed’ decisions.

However, the findings from the lab back up previous neuroscience that shows that emotion plays a very important part in all decision-making.

The work of neuroscientist Antonio Damasio demonstrated that people with damage in the part of the brain where emotions are generated are also unable to make decisions – even simple ones like what clothes to wear.

In one of the experiments, students are given two institutions with exactly the same metrics, but with different names of people who run the funds. The latter information should not be a factor in the analysis of which fund to go with, but students consistently choose an American-sounding name over a foreign-sounding name. This is the effect of emotions in the decision-making process.

Can this help explain financial markets?

Neuroeconomics is a growing field that encompasses many fields including neuroscience, experimental and behavioural economics, cognitive and social psychology, theoretical biology, and mathematics.

One of the questions at the forefront of the field is whether understanding what happens in an individual’s brain when they make a financial decision may be extended to financial market behaviour.

The lead researcher at the University of Miami’s School of Business suggests the following:

“If you really think about the market, it’s a collection of people doing stuff. If you really want to understand group behavior, it makes sense to understand how they would make decisions at an individual level.”

A study from the California Institute of Technology sheds more light on this, suggesting that it is a biological impulse to predict how others behave – and that this helps to drive the type of fluctuations in the markets seen in ‘booms’ and ‘busts’. It was found that, rather than making dispassionate decisions based solely on explicit price and value data, traders were driven to predict how the market will change from the behaviour of other traders (in the belief that others in the market knew better than them).

Next time you are about to make a financial decision, stop and think: what is driving this decision? Is it really just analysis and numbers? Or are there emotions bubbling away in the background driving it?

A 12-Pack of Tips to Beat the Heat

Much of the nation is under a heat advisory issued from the National Weather Service, while many other regions are close to dangerous temperatures.

This means people are at risk for common heat-related illnesses such as heat stroke, heat exhaustion, heat cramps and heat rash.

The Centers for Disease Control (CDC) say the best defense for heat-related illness is prevention. The CDC suggests to stay out of the heat and inside where there is air conditioning. If your house does not have air conditioning, find shelter within public places such as movie theaters, malls or public libraries.

If you do choose to exercise outdoors, here are 12 other tips to help beat the heat and stay cool.

* Limit outdoor activity to early morning or evening hours if possible. Spending time outdoors for activity and exercise during the middle of the day can cause rapid dehydration and possible heat exhaustion.

* Eat fruit. Get natural nutrition and an energy boost and hydration with a snack that brightens up your day.

* Go swimming. When was the last time you went swimming? What could be a better way to cool off than taking a nice swim? You can exercise and stay cooler at the same time, but remember to keep taking water breaks. Even when swimming you can get dehydrated.

* Where proper outdoors clothing. Wear light colored, moisture wicking clothes to help stay cooler. Also, wear a hat and use sun block to further block the sun’s powerful rays.

* Wearing a hat, sunglasses and sunscreen of SPF 30 or higher will provide extra protection from the sun.

* Tweak your training routine. When the temperatures get too hot, it’s really not practical to be outside. So either get up early in the morning or train late at night outside, or move the workout indoors into your home gym. Get a treadmill or elliptical trainer for your home.

* Plan ahead. Use your time wisely to have enough left over to schedule some of these stress relievers. It’s hot out, but with a little planning we can all stay cooler – and calmer.

* Drink two to four glasses of fluid each hour to keep the body’s hydration at optimum levels.

* Avoid caffeine and alcohol which increase the risk of dehydration.

* Rest in shady areas.

* Beat the heat by taking a cool shower or bath.

* Do not leave anyone or a pet in a parked car. Temperatures can quickly rise inside a parked car

How to Beat the Heat – Staying Cool During Summer Heatwaves

As temperatures heat up across the country and we find ourselves in a heatwave, it’s more important than ever to stay cool and beat the heat. Here are five tips you can use to make sure you and your family stay safe during the hottest days of summer.

Dress the part – Wear light clothing that breathes easy. Most experts advise on wearing cotton. There are new clothing products on the market that help to keep you cool and wick moisture away. Check out your local sporting goods store. Wearing light colored clothing helps to reflect the sun away. Stay away from dark color clothes which could make you warmer.

Take it slow – It is recommended that on really hot days that you limit your physical activity outdoors. Especially during the hottest times of the day. If you normally exercise outdoors, it’s wise on these hot days to move that to either early morning or very late in the evening. If you have to be outside, slow down and take your time.

Stay hydrated – Keep a bottle of water with you on those really hot days. You are going to lose a lot of water through sweating when temperatures rise. As we’ve mentioned in previous articles, freeze a bottle of water then keep it with you during the day. The ice will slowly melt leaving you ice cold water to enjoy.

Stay inside – If your house has air conditioning stay inside to keep cool. If you don’t have an air conditioner head out for the day, go to the mall, a movie, or you public library.

Eat less – Many of us accustomed to eating healthy already eat smaller more frequent meals during the day. During the hottest days of the year spread your meals out and eat less but more frequently. If you eat too much and then get hot you run the risk of getting sick, and then possibly dehydrating from being sick.

Heat related injuries happen when the body can no longer keep itself cool On really hot and humid days the body can really struggle to keep cool. The humidity will make it harder for the body to stay cool because sweat doesn’t evaporate as quickly. Certain groups of people are also more at risk to heat related injuries such as the elderly, children, infants, and those with chronic illnesses. Be a good neighbor and check in on your neighbors during these hot days to make sure they are coping well.

According to the Red Cross there are three categories of heat-related illness.

Learn to recognize the signs of heat-related illness.

Heat Cramps – Heat cramps happen due to a loss of fluids and a loss of electrolytes. Symptoms of heat cramps involve muscle cramping and aching. This is an early sign that the body is having a hard time coping with the heat.

Heat Exhaustion – Happens during strenuous exercise or other activities in hot and humid conditions. Symptoms are: pale or flushed skin, excessive sweating, headache, nausea, weakness, and exhaustion.

Heat Stroke – Heat strokes are life threatening. A person suffering from heat stroke no longer has the ability to keep themselves cool. The bodies mechanisms that regulate temperature have shut down and are no longer functioning. Signs of heat stroke are changes in consciousness, dry skin, vomiting, and high body temperature.

Beating The Heat Without Air Conditioning

For many of you, air conditioning may be a way of life, as essential to your home as a floor and ceiling. But, for others, air conditioning just might not be in the cards, or your house. Perhaps your residence isn’t suited for air conditioning, maybe you have too many other home improvement projects to focus on, or perhaps it’s simply too expensive.

For those of you nodding in agreement, you may know that summer without air conditioning causes discomfort and frustration, as well as a desire to sue Mother Nature. However, even without A/C there are a few things you can do to beat the heat in your house, before the heat beats you.

Drink Water: Sitting in a hot house can be comparable to sitting in a sauna: if the sweat soaked towel fits, wear it. This means you must remember to do two things: put on deodorant and drink water. Even if you’re not thirsty, drinking water is the only way to replace the fluids you lose from sweating. Sports drinks, such as Gatorade, are also good to consume but soda, sugary juice, alcohol, and caffeinated beverages (such as iced coffee or iced tea) work in reverse: they tend to expedite the process of dehydration.

Take a Cold Shower: Taking a cold shower, keeping your head cool, or even dipping your hands in ice water are all tasks that can minimize heat. They might not be the most relaxing things, particularly the cold shower, but they are simple and effective. They are also tasks that will probably feel pretty welcoming after being showered in your own sweat for long periods of time.

Don’t add to the Situation: Your house is hot enough without you literally and figuratively adding fuel to the fire. For this reason, it’s important to avoid things that will create more heat: don’t turn on the oven or stove, don’t light candles, and don’t wash dishes or clothes in warm water. All of these acts can increase the temperature of your house by a few degrees, which might not sound like a lot but will certainly feel like it.

Consume Food that’s Spicy: It might seem weird to eat something with spice when your body is already hot enough, but spicy food will make you perspire, which ultimately helps cool you off. Spicy food that is extreme will also force you to drink more water, perhaps gallons of it. If you don’t enjoy spicy food, or don’t have access to it, still be vigilant in what you eat and don’t consume warm meals such as soups or stews.

Stay Away from the Sun: There are undoubtedly places in your house where the sun seeps in and beats down on whatever it can: an oak desk, the carpet, your cat, yourself. For this reason, it’s important to stay away from rooms that are particularly sunny, such as rooms with no curtains or those that face in the direction of sunlight. If possible, try to get away from rising temperatures by staying as low as possible: your basement will always be the coolest place in your house.

Don’t Wear Hats or Socks and Shoes: In the wintertime, you may notice your body becomes quite a bit cooler if you don’t have anything on your feet or your head. This is also true in summer. Instead of wearing socks and shoes around the house, go barefoot and in lieu of wearing a hat, wear nothing on your head, except maybe a wet towel.

Keep Windows and Doors Closed During the Day: The feeling that your house is stuffy might cause you to open a window or crack your front door just a smidge, but doing so when it is hotter outside than it is inside will increase the temperature of your house. Instead of letting in all of the hot air, keep windows and doors closed and keep your curtains and window shades drawn. When the temperature outside gets cooler, or become breezy, you will benefit from opening a window and cracking a door. But, until this happens, rely on your ceiling fan…and the above tips.

Beat Body Heat, the Natural Way

Body heat, also known as heat stress, is a common health problem these days and is especially exaggerated during the summer. The body is unable to cool itself, leading to several health issues like damage to the internal organs, heat cramps, rashes, pimples, dizziness and nausea.

Working outside in the hot weather especially in the tropics, exposure to the hot sun while exercising or working in places where the workspace are cramped and not airy, may increase your risk of heat stress. Maintaining body heat is quite important.

How to avoid Body heat?

Hydrate – It is very important to stay hydrated. Water flushes out toxins from the body and provides a cooling effect. Melons and cucumber are effective in preventing body heat. Being rich in water, they keep you hydrated and cool.

Avoid Spicy/Fried food – Stay away from hot, spicy food and avoid fatty and fried foods. This includes junk and fast foods too.

Stay away from caffeine/alcohol – Drastically reducing your caffeine & alcohol intake will go a long way in helping your body keep cool.

Reduce sodium intake – Follow a low sodium diet regime and replace your almond, sesame & corn oil with Coconut or Olive herbal oil instead

Change your diet – Nuts are known to cause a rapid increase in body temperature, so try decreasing your nut intake. Following a largely vegetarian food chart and reducing your red meat intake won’t hurt either.

Remedies for Body heat.

If however you already suffer from increased body heat, here are a few tips that will help you out.

Soaking your feet in a basin of cool water helps reduce excessive heat from the body

Drink a glass of fresh pomegranate juice mixed with a few drops of almond oil, every morning.

Another easy home remedy to relieve body heat, is to eat a spoonful of fenugreek seeds every morning.

Eat a handful of poppy seeds before you to go to sleep to get good rest and to maintain normal body temperature during the night. (Warning: Poppy seeds contains opiates and should not be consumed in large quantities or given to children)

Applying a fine paste of sandalwood and cold milk to the forehead and chest cools the skin and body instantly.

A tablespoon of honey in cold milk on a daily basis also helps.

Body heat may not be life threatening, but it’s implications on your health could be dire. So don’t ignore the symptoms, a slight alteration in your diet and lifestyle can make all the difference.

Beat the Heat and Survive the Summer

The “Dog Days” of summer are almost upon us and record temperatures are sweeping the country. Unfortunately we have the highest number of elderly and medically fragile people in history, and an aging infrastructure that is feeling the strain of heavy electrical use as our senior citizens struggle to stay cool.

We’re here to give you tips and tricks to help you beat the heat should you be susceptible to extreme temperatures, or should your power be out. Here’s a short list of suggestions:

1. Drink plenty of cool water to keep yourself hydrated and reduce your body’s core temperature. (Warm water won’t do this, and cold water might be a shock to sensitive systems.) Drink regularly, every hour, even if you don’t feel thirsty. Avoid soft drinks and alcoholic drinks that are actually diuretic and rob your body of the water it desperately needs.

2. Eat small, light, non-spicy meals. Eating heavy meals cranks your metabolism and can raise your body temperature. Also, digestion robs you of energy. Since the heat is already robbing you of some energy, you don’t need to add to this drain by taxing the digestive system. However, don’t skip meals since it’s food that replenishes the electrolytes you lose through sweating and increased water consumption.

3. Some sources suggest you wear “light colored, loose fitting clothes.” However, that’s only if you’re going outside. If you go outside, go with that rule and also wear a loose fitting hat or carry an umbrella for shade. Forget the fashion rules, follow the heat rules. (By the way, royal blue and/or white are the best colors to wear for their heat reflective qualities. Ever wonder why most tarps and boat awnings are blue? This is why.) For indoors though, forget all those rules and go with the “bare as you dare” notion. The more exposed skin you have the more efficient your cooling-by-sweating process can work. Also, be sure to tie up long hair, and if you have a beard, consider shaving in order to remove all that facial insulation.

4. Though “bare as you dare” is the way to go indoors in limited AC, most of us would prefer to have good air conditioning. If yours is out, or if power sources are uncertain, go someplace that has AC like the mall or other places that don’t mind people coming in and hanging around a while. Also, you can “AC pool” with friends just like you’d car pool. Go to a friend’s house who has a good AC system.

5. Failing to find another source of AC, and considering that the power might be out, here are a couple more tips. First, stand-alone floor unit air conditioners aren’t that expensive and can run off regular household current without the need for the special 220 volt outlets. This means that they can be operated using the smaller gas-powered electric generators. Can’t afford a generator? You can probably afford a power inverter which can sometimes be found for under twenty dollars. They plug into your car’s cigarette lighter and, using an extension cord, can power an appliance like your stand-alone AC, or at least some fans. Speaking of your car, if nothing else, if your car has AC you can ride around during the hottest hours of the day, providing you can afford today’s gas prices. If absolutely nothing else, go to your nearest “dollar store” and see if they have any of those little battery-powered fans.

6. Can’t afford a stand-alone AC but you have a generator? Your generator or power inverter can also power your fridge and/or freezer where you should have two-liter plastic bottles full of water filling up every empty space in both the fridge and freezer parts. Having cold water is a great thing. You drink cool water and use cold water to soak towels to wrap around your neck, wrists, and ankles where the veins and arteries are closest to the surface. This is one of the best ways to reduce your body temperature. Also, setting up a few of the frozen two-liter bottles in front of a fan can blow a nice cool breeze your way.

7. Now that we’ve talked about keeping you cool in the heat, let’s backtrack a bit and talk about reducing the heat you might experience. Naturally, the first rule is “block the sun.” Do what you can to reduce the sunlight that hits your house or comes in through the windows. Keep the shades drawn, and you might even consider hanging a white sheet or blue tarp as an outside awning on the side(s) of the house that catch the most sun. These tarps are also effective if placed on the roof as they’ll reflect the sun’s rays.

8. Next in cooling the house come ventilation and insulation. If you have an attic, and the power is on, you should have a vent fan that keeps air flowing through the attic. Along with that, we suggest you have roof vent turbines, or a ridge vent (your home supply store can tell you all about these). In extremely hot weather, you might set a garden sprinkler on your roof and let it run for the hottest couple of hours of the day provided your area is not on water restriction. As for “insulation” one way to insulate parts of the house is to close off seldom-used rooms (especially those on the sunny side of the house), and close off their AC vents if any. This blocks heat and also reduces the area that your limited AC has to cool.

While we’re here, we’d be remiss in our duties if we failed to give you the symptoms of sunstroke and heat exhaustion, both of which require medical attention:

Heat Exhaustion: Symptoms include heavy sweating, and skin may be pale, cool, or flushed. The victim will also exhibit a weak pulse, with fainting, dizziness, nausea, or vomiting.

Sun Stroke (sometimes called heat stroke): Symptoms are high body temperature, hot, dry, red, skin (usually with no sweating), rapid shallow breathing, and a weak pulse. Sun stroke is the more dangerous of the two.

The most immediate first aid for either of these is to get the victim into a cool spot, and reduce their body temperature with ice-cold wet towels around the neck, wrist, and ankles. You can also put them in a bathtub of cool water. Don’t use cold water in the tub as that will shock the system. Regardless of your first aid measures, you should seek immediate medical assistance.

Remember, hot weather is nothing to ignore, even if you’re not among the elderly or medically fragile. Heat can affect everyone. Play it safe, stay cool, avoid exertion, and stay healthy. Also, when considering heat safety, don’t forget your pets.