I know not everyone visiting this journal will care about the attached excerpt but I found it fascinating, maybe because it reinforced my own thinking!
About a year ago I started receiving an unsolicited eletter from an investment manager, John Mauldin. I’d never heard of him, and usually when I get unsolicited stuff from investment people (who are mostly looking for business from me for my clients) I look at it once and then hit the delete button after that.
However Mauldin periodically has some good stuff in his email – about six weeks ago he did a good job on what is and what is not important about the yield curve inversion – so I usually look at it. (And he never has a sales pitch! No "I can make your clients 20% a year", blah, blah, blah)
Anyway last week he had a short piece about a neuro-physiology study at Emory University of people who were either devote Democrats or Republicans. Basically how they will re-arrange reality to fit their mindset. And the fact that we all do that in our lives, to a greater or lesser extent.
I cut and pasted the piece out of his email and If you wish to read it – it take’s about three minutes – just click below.
I remember on numerous occasions I would try to convince my Less-Than-Sainted Dad about a particular subject. He would simply answer, "Don’t confuse me with the facts. My mind is already made up."
It seems that researchers at Emory University did a study and found that Democrats and Republicans are also adept at ignoring facts. I know that will shock some of you. But the interesting part to me is that we actually enjoy ignoring facts. Our pleasure centers in our brain get positive feedback when we ignore certain facts that might contradict cherished beliefs. (The following story is from www.livescience.com, a rather cool web site on science news. The actual story is at http://www.livescience.com/othernews/060124_political_decisions.html)
"Researchers asked staunch party members from both sides to evaluate information that threatened their preferred candidate prior to the 2004 Presidential election. The subjects’ brains were monitored while they pondered.
"’We did not see any increased activation of the parts of the brain normally engaged during reasoning,’ said Drew Westen, director of clinical psychology at Emory University. ‘What we saw instead was a network of emotion circuits lighting up, including circuits hypothesized to be involved in regulating emotion, and circuits known to be involved in resolving conflicts.’
"Test subjects on both sides reached totally biased conclusions by ignoring information that could not rationally be discounted… ‘None of the circuits involved in conscious reasoning were particularly engaged,’ Westen said.
And here is the rather amazing part. "Essentially, it appears as if partisans twirl the cognitive kaleidoscope until they get the conclusions they want, and then they get massively reinforced for it, with the elimination of negative emotional states and activation of positive ones."
We get a positive vibe from ignoring negative information damaging to our strong biases. "Notably absent were any increases in activation of the dorsolateral prefrontal cortex, the part of the brain most associated with reasoning."
"The tests involved pairs of statements by the candidates, President George W. Bush and Senator John Kerry, that clearly contradicted each other. The test subjects were asked to consider and rate the discrepancy. Then they were presented with another statement that might explain away the contradiction. The scenario was repeated several times for each candidate.
"The brain imaging revealed a consistent pattern. Both Republicans and Democrats consistently denied obvious contradictions for their own candidate but detected contradictions in the opposing candidate. ‘The result is that partisan beliefs are calcified, and the person can learn very little from new data,’ Westen said.
In East Texas, back when I was growing up, we had what were called Yellow Dog Democrats. They would only vote for a democrat, even if they put a yellow dog on the ballot. Which shows that things can change over time, as now they are electing republicans even in yellow dog counties. But it was a long time for that change to come. Now, we see some of the opposite patterns. But it is that way all over the world.
That is why you can reliably predict what a "core" vote will be. It is what makes gerrymandering so effective and easy. It is the small group of voters in the middle, whose minds do not get a stimulus from ignoring data where the real political contest is waged. But that study does more than show us about our political problems. It is the human condition. Religion, family, our kids, our favorite weight loss program – we too often come to the table with our biases.
It is only when we are in a crisis of some kind that we seem to look for answers outside our biases.
I keep coming back to psychology time and time again in this weekly letter. It is so important that we understand how our own thought processes can deceive us into acting in ways that are not consistent with good investment practice. Sometimes we believe what we want to believe. If we are confronted with a fact that would not be helpful, we ignore it, explain it away and find some novel new interpretation. Or we look for more facts which favor our position.
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