People need to learn how to manage failure so it’s informational and not demoralizing.
“We know that the best predictor of human happiness is human relationships and the amount of time that people spend with family and friends.
We know that it’s significantly more important than money and somewhat more important than health. That’s what the data shows. The interesting thing is that people will sacrifice social relationships to get other things that won’t make them as happy — money.”
Professor Happiness, Harvard social psychologist Daniel Gilbert from an interview in the New York Times
Dan Gilbert directs a laboratory studying the nature of human happiness
Scientists at Cambridge University wondered to what extent hormones might influence investment decisions, so during a week full of earnings and government reports they studied testosterone and cortisol levels for “noise traders” at a major London brokerage firm to determine the extent to which they correlated to trading activities and results. Noise traders profit from market “noise” or disequilibriums, making even seconds-long trades to take advantage of small variations in stock prices. Their trades risked up to $2 billion at a time.
The scientists wanted to know whether testosterone and cortisol may contribute to the irrational bubbles and busts of market behavior.
According to an April 18th WSJ article (subscription may be required), researchers wanted to determine the extent of, “…the ‘winner’s effect,’ in which successive victories boost levels of testosterone higher and higher, until the winner is drunk with success — so overconfident that he can no longer think clearly, assess risk properly or make sound decisions.
‘I wondered whether the same thing was happening on Wall Street,’ said Dr. Coates. Too much testosterone might make traders foolishly overconfident, exaggerating a market’s rise. Too much cortisol, secreted in response to stress, might in turn make them overly shy of risk, making a market’s downward slide even more precipitous.”
The results: 82% of traders with high morning testerone levels made more money than usual. And those with high cortisol (stress) levels did not fare as well. “We actually think this molecule (testosterone) is destabilizing risk-taking,” Dr. Coates said, “rather than optimizing it.”
A person with one bee sting is highly motivated to get it treated. But a person with multiple bee stings does not have much incentive to get one sting treated, because the others will still throb. The more of a painful or undesirable thing one has (i.e. the poorer one is) the less likely one is to do anything about any one problem. Poverty is less a matter of having few goods than having lots of problems.
Poverty and wealth, by this logic, don’t just fall along a continuum the way hot and cold or short and tall do. They are instead fundamentally different experiences, each working on the human psyche in its own way. At some point between the two, people stop thinking in terms of goods and start thinking in terms of problems, and that shift has enormous consequences.