We feel the pain of a loss much more than we feel the pleasure of a gain

Professor KahnemanI recently watched the excellent BBC Horizon documentary on decision making. The programme featured the very interesting work of Professor Daniel Kahneman (pictured, left) from Princeton University and his late colleague Amos Tversky.  They had demonstrated for over 30 years several replicable ways in which human judgements and decisions differ from rational choice theory.

Cognitive and behavioural approaches tend to be overlooked by some circles in my world (by that I mean the transpersonal world of psychotherapy) as they are seen as representing a base level approach to personal transformation but I am always receptive to what they have to say.

Professor Kahneman and Amos Tversky both realised that we actually have two systems of thinking. One is the deliberate, logical part of your mind that is capable of analysing a problem and coming to an answer that is rational. Then there is the other part of your mind which is more intuitive, fast and automatic.

For Kahneman the latter is responsible for the majority of the things that we communicate, as well as what we do and think, even believe. Our brains need to process billions of pieces of information per second so it is probably no surprise that a way is found to make automatic and speedy decisions.Therefore, for the largest part of our days, our fast, intuitive mind stays largely in control. It acts in an efficient manner whilst controlling the many decisions which we make each day.

However, Kahneman and Tversky realised that the problem comes when we allow our fast, intuitive system to make decisions that should be the remit of our slower logical system. There are huge implications for the way our economies are run as his insights has led to a whole new branch of economics – behavioural economics. It is argued that behavioural economics could help prevent the boom and bust cycle by putting in place systems and regulation that take account of the cognitive biases. For example, taking account of the bias of loss aversion can help prevent the kind of reckless risk taking that was so endemic of the financial crisis. It is also apparent with gamblers as this bias forces a doubling up affect.  Kahneman realised that we respond very differently to losses than to gains. We feel the pain of a loss much more than we feel the pleasure of a gain. That is why traders and gamblers double up and chase losses.

How do we mitigate against the powerful implications of our biases? Cognitive Behavioural Modification could be one way and actually CBM might involve talking with a computer rather than with a real person.. Where face to face psychotherapy can be transformative in the long term is to help you to see the impact of your conditioning through relationship and ultimately to make you more conscious about your decision making process.

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