This is my final post of 2022 (#43). Thank you for joining me so far on the journey highlighting decision-making and the brain.
'What have you learnt so far?’ is a common question I get. Today's blog is an opportunity to review the key insights I have uncovered and a direction for 2023.
The main topics we have covered this year are the history of the brain, cognitive biases, happy hormones and group dynamics. Please check out the back catalogue (Blog | Deciders (hartejsingh.com) for the individual posts.
1) What did I learn in 2022? (Key insights in italics)
Our brain is over 500million years old - the earliest version of the brain covered reward, movement and fear. This very same brain has been added to with each ancestor from the worm to us today. The old part of our brain (old brain) was formed when we were a small animal with a short lifespan.
As we lived in more complicated terrains, had longer lives and required higher functions the new brain developed on top of our old brain. Sometimes the old brain and new brain will both come up with its own answer. 2) When we find ourselves trapped between something we would like now and the impacts it might have in the future, I believe that to be a battle between our old and new brain.
2) Are we rational?
I would say at best, sometimes. Thinking is expensive in terms of energy and we make 35,000 decisions each day. Our brain is used to making decisions using shortcuts. In nature the most important decisions we would make would be to avoid a predator or dangerous foe where speed was favoured over accuracy, but the important decisions we face today have a different nature. 3) Better decision-makers know which decisions to focus on. I will cover this at some point, but broadly speaking, the most impactful decisions are ones that keep coming up cover health, relationships, finance, purpose and joy. 4) Most of these decisions require suppressing our immediate wants for our higher long-term interests or as Goldman's Gus Levy called it ‘Long-term greedy’. I believe we are better at making short term sacrifices when we set long-term goals.
In summary, we get better at decision-making when we focus on things that matter, create the right conditions, take the right advice and keep score. A good and simple barometer Is ‘am I progressing on a good path?’. Speaking to trusted friends, family, colleagues and mentors is a great way to get a fresh view on your decision-making.
3) Why are happy hormones important?
The happy hormones (Dopamine, Oxytocin, Serotonin, Endorphins) are in-built rewards for motivation and survival. They encourage us to do things that are good for us. I believe a lot of misery is an imbalance of these hormones.
- Poor motivation is often a lack of dopamine
- Loneliness is often a lack of oxytocin
- Serotonin is often a lack of respect
- Unease is often a lack of endorphins
Sometimes the imbalance is lifestyle ie not doing activities that release these hormones, other times it is more to do with your body not releasing them. Having these hormones out of balance can materially impact your decision-making e.g. low dopamine is correlated with drug use.
4) Group dynamics:
Individual decisions (even individual expert results) can be bettered in groups, when there is a good mix of skills, group dynamics and the right incentives in place. Sadly the modern office still does not take advantage of what we know about decision science. Mob-handed and unaccountable meetings produce poor returns on the time invested.
Roll on 2023... A special thanks to Harsh Rob Wes, William, Dan, Amit, Laetitia, Bobby, Holly, Peter, Mathieu, Aaron and Chris for the feedback on topics the result of which I think we have a really exciting set of topics to come next year.
6 topics for next year:
1) The anatomy of a decision
2) Emotional Intelligence
3) Applications of decision-making to investing and trading
4) What they do not teach you at school
5) The links between physical/mental health and decision-making
6) Learning how to learn
All that's left to do is say a huge thank you for the support, feedback, corrections, challenge and encouragement. I hope you get to end 2022 on a high and will be back fresher than ever in January.
I would love it if you spread the word, so please do subscribe and share it with your friends.
Summary posts on each topic: