Blame it on the lizards

According to “Mind Over Money,” a special report broadcast last week on PBS, a section of the brain humans share with lizards often leads to irrational decision making when it comes to money (as well as food and sex). When this part of the brain is activated, emotions trump reason, which may explain why so many mainstream economists failed to predict the crash of 2008, the show concluded.

“One of the main reasons people make irrational decisions is the influence of immediate emotion,” Jennifer Lerner, a Harvard University professor, said during the program. “Being in a fearful state propels us toward risk-averse choices, whereas being in an angry state propels us toward risk-seeking choices. And we are typically completely unaware of these influences; they are opaque to introspection.”

The show featured both economic rationalists, who believe that humans usually act in their own best interests, and economic behaviorists, who believe that emotions have a marked effect on economic behavior, often a negative one.

Through a series of experiments, the program demonstrated that the economic behaviorists might be on the right track. In one case, study participants bid on a $20 bill; it ended up going for $28.

In another, individuals who had just seen a depressing movie were willing to pay four times more for a water bottle than a group who had not seen the film.

Perhaps, they were channeling their inner lizard.