Tag: Survival

Settling accounts with the losses

Why do we get so confused while selecting the best smartphone model and end up selecting high-costing ones? Why do people still fall for easy money schemes, Ponzi schemes, Pyramid schemes even though they are well informed about similar fraud cases? Why most of the people are ready to buy a million-dollar lottery ticket costing few pennies even when they know that the chances are very low? Why do people fall in the spiral of gambling even when they have hit the rock bottom of debts? Why retail investors are continuously losing huge amount of money in stock market when they know that it is a loss-making venture? What convinces them to continue further? Why people always lookout for complete cover while selecting insurance policies even when they know that chances of those problems are really low? Prospect theory has answers to these questions.
Daniel Kahneman and Amos Tversky’s Prospect theory shows certain behavioral effects called certainty effect, reflection effect and isolation effect while making economics related decisions. Prospect theory explains why people love certain but smaller gains and also why same people will turn into complete gamblers in a crisis situation.

Daniel Kahneman and Amos Tversky’s Prospect theory in economics

Prospect theory is one of the most important ideas of behavioral economics. It shows how people make choices when times are highly uncertain. Rationally, any person would go with the choices having the best probable outcomes in uncertain times but in real scenarios that is not the case. Real people are emotional and always have mindset of survival. That is exactly why in uncertain times, people choose anything that has complete surety, certainty of gain instead of gambling for higher gains however highly probable they may be. And when probable gains are very high than average gains people will choose higher gains even when they have very less probability. This irrational, non-economical behavior may make human decision seem illogical, inconsistent. This illogical behavior is an important part of our evolution as species which Nobel Laureate Daniel Kahneman’s Prospect theory highlights. We will throw more light on prospect theory hereon.       

Expected Utility Theory

“The agent of economic theory is rational, selfish, and his tastes do not change.”

Expected utility theory lies at the foundations of economics. It allows economists to model the scenarios to understand the dynamics between the resources, their perceived value and the risks/ uncertainties involved in any transaction.

The basic idea behind expected utility theory is that for any given set of uncertain events, a rational agent considers the weighted average of all gains based on the probabilities. The rational agent makes decision based on overall gains rather than being biased towards certain high value gains or certain highly probable gains.

For those who want more details, I have written in depth on the expected utility theory.  

Prospect Theory

Although expected utility is one of the fundamental concepts of economics, the assumptions on which it stands have their own limitations. So, expected utility theory is not a complete and absolute theory to understand and predict the behavior of agents in economics. The moment we are injecting the word “behavior” we must understand that humans are not a purely mechanical or mathematical thinkers – decision makers. Also, as per the expected utility theory, there can be different perception of the value for given same resource for different agents. What expected utility immediately does is to fully attach the perception of value of given gain only with the bulk of resource that agent already has and the value addition it would do to this already existing bunch of resource. There is no psychological element in this discussion which is a larger predictor of the behavior of the agents in economics.

So, you can call prospect theory as an augmentation of expected utility theory. Prospect theory is not meant to falsify the expected utility theory rather it helps EUT to evolve where its own assumptions fail to explain the behavioral decision of the agents.

Modern economists are making more efforts to incorporate the psychological aspects of decision making into the machine-like purely mathematical models of economics. This makes the predictions more realistic when human decision making is involved. Daniel Kahneman and Amos Tversky published their world-famous paper called ‘Prospect theory: An analysis of decision under risk’ in ‘Econometrica’ in 1979. This paper is one of the most cited papers in economics. Prospect theory thus became the cornerstone of behavioral economics.

Kahneman and Tversky pointed out one “theoretical blindness” imparted due to the EUT. We will see those details in depth. They pointed out certain effects based on the decision making of the subjects under different decision-making events. Collection of these effects makes the prospect theory important. The important point to keep in mind is that everyone is risk averse in reality. Nobody wants to choose the transaction where there expected utility is reduced. So, the utility function of agents is concave. 

Certainty effect

People overweight outcomes that are considered certain, relative to outcomes which are merely probable.

According to EUT, people will weigh out the outcomes based on their probabilities, but Kahneman-Tversky found out that people love certainty of gains. People don’t want to get involved into gambles when they know that there another way to gain something “closely valuable” for sure.

Kahneman-Tversky presented an interesting observation in their paper, here are the exact scenarios:

Choose between

A:            Gain of 2500 with probability 0.33

                Gain of 2400 with probability 0.66

                Gain of 0 with probability 0.01

OR

B:            Gain of 2400 with certainty

According to the EUT the utility equivalent of A can be calculated as

U(A) = (2500 x 0.33) + (2400 x 0.66) + (0 x 0.01) = 2409

And utility equivalent of B

U(B) = (2400 x 1) =2400

So, according to EUT the utility of A is higher than B. But you already have your answer ready in your mind. Same was observed by Kahneman- Tversky; 82% of the people choose event B where the gain was certain.

Does this mean that the more probable the gain the more preferred it will be?

The answer is complicated.

Kahneman- Tversky further posed a modified event,

Choose between

C:            Gain of 2500 with probability 0.33

                Gain of 0 with probability 0.67

OR

D:            Gain of 2400 with probability 0.34

                Gain of 0 with probability 0.66

They observed that 83% of the people chose event C over event D. This was surprising because event D is mathematically more significant (probability of 0.34 in D over 0.33 in C). This shows that it’s not just about the higher certainty which drives the preferences. The moment given options are uncertain people rarely notice the extent of the uncertainty (numerical value of probability) to choose between.

Take one more example given by Kahneman-Tversky

A:            Gain of 4000 with probability 0.80

OR

B:            Gain of 3000 for sure

Here 80% of people chose B.

But when presented following:

C:            Gain of 4000 with probability 0.20

OR

D:            Gain of 3000 with probability 0.25

Here 65% people chose C.

What exactly is happening here?

People love sure gains over any uncertain gains. But when both or all of the presented gains are uncertain, people will choose to gamble with those giving higher gain, whatever may be the possibility. This goes against EUT which says rational people would consider both the gain and the probability while making a decision. In reality when people are uncertain, they choose to go with the uncertain but higher chances of gaining.

You will now start to notice that EUT creates an objectivity in the choices by mathematically connecting the gains with their probability. But Kahneman-Tversky observed that real people will not follow EUT, they will make decisions based on the prospects they are presented. People never look at the scenarios in economics as distinct events, they look at the current trade-offs, current prospects they a have at their disposal to choose. The choice is always relative to the prospects presented and not absolute like EUT asks for in a mathematical form. That is exactly why Prospect Theory becomes important. It’s neither about the certainty nor the value, its more about what type of options – prospects you are providing to the people.

This is one important idea in marketing. We will see that in detail as the discussion evolves.

There is an interesting observation by Kahneman-Tversky when we are observing relativity of the prospects:

Choose between

A:            Gain of 6000 with probability of 0.45

OR

B:            Gain of 3000 with probability of 0.90

86% of the people chose prospect B.

If you use EUT, both prospects have same utility equivalent = (6000 x 0.45) = (3000 x 0.9) = 2700.

But people refuse to be indifferent to these prospects and choose the most certain prospect.

Now, one more – same gains but totally different probabilities,

Choose between

A:            Gain of 6000 with probability of 0.001

OR

B:            Gain of 3000 with probability of 0.002

Here, 73% of the people chose prospect A.

Again, both have same utility equivalent = (6000 x 0.001) = (3000 x 0.002) = 6. According to EUT people should be indifferent to both prospects.

And interestingly they didn’t go with the one which is more certain than other. They went the one with larger gain. This is because both prospects have very slim chances of gains.

Now it should be pretty clear that people compare prospects based on what is presented to them. Even when they are risk aversive, they would prefer bigger gambles when they realize that the chances of winning are really low and there is pretty much nothing to lose.

Reflection Effect

The risk aversion in the positive domain is accompanied by risk seeking in the negative domain

Certainty increases the aversiveness of losses as well as desirability of gains.

We saw how people choose when they have information of higher certainty or higher gains. What would happen if we inform them about lower certainty or lower gains/ higher losses?

We already saw one observation from Kahneman-Tversky:

A:            Gain of 4000 with probability 0.80

OR

B:            Gain of 3000 for sure

80% of people chose B because they preferred surety of gain.

Kahneman-Tversky posed exact negative of this prospect which looks like

A:            Loss of 4000 with probability 0.80

OR

B:            Loss of 3000 for sure

Now, 92% of the people chose option A. They don’t want a prospect where loss is certain.

Kahneman-Tversky observed that when prospects are negated people switched sides. The risk aversion in positive prospects changed to risk seeking which goes against EUT. They called it the reflection effect.

See this already discussed prospect:

Choose between

A:            Gain of 6000 with probability of 0.001

OR

B:            Gain of 3000 with probability of  

73% of the people chose prospect A.

The negative of this would be:

Choose between

A:            Loss of 6000 with probability of 0.001

OR

B:            Loss of 3000 with probability of 0.002

Kahneman-Tversky observed that 70% of the people chose prospect B.

When it came to losses, people chose prospect with more certainty of lower loss.

This is very interesting observation. If you still cannot wrap your mind around this, the simplification looks like this: People rarely care about the combined effect of gains/losses with the probabilities as the expected utility theory rationally establishes. People care about what current choices they have and choose those which guarantee highly certain gains even when they are low and choose lower losses when they are highly certain.

“…it appears that certainty increases the aversiveness of losses as well as the desirability of gains”   

Isolation effect

In order to simplify the choices between alternatives, people often disregard components that the alternatives share, and focus on the components that distinguish them.

The core of this idea is that people don’t like complexity or our brain is always trying to take shortcuts. This is one important idea and observation on human nature which Kahneman-Tversky pointed out.

What they did is creating a two-stage game:

 1st Stage-

P:            Gain of 0 with probability of 0.75

OR

Q:           Move to 2nd stage of the game with probability of 0.25

2nd Stage-

R:            Gain of 4000 with probability of 0.8

OR

S:            Gain of 3000 for certainty

The condition here is that choices must be made before the game is played i.e., before the actual outcome becomes apparent.

  Before we go to what Kahneman-Tversky observed. Let us see what EUT would prefer, what a rational person would prefer:

U(R) = The equivalent utility of gaining 4000 at the end of the game = 4000 x (probability of reaching 2nd stage from 1st stage) x (probability of gain of 4000) = 4000 x 0.25 x 0.8 = 800

U(S) = The equivalent utility of gaining 3000 at the end of the game = 3000 x (probability of reaching 2nd stage from 1st stage) x (probability of gain of 3000) = 3000 x 0.25 x 1 = 750

So, U(R) > U(S). Thus, any rational person would choose prospect R in any situation as per the EUT goes.

Pay attention here,

The added complexity due to multiple stages –

When people were presented with the above mentioned two stage scenarios, 78% of the people chose the prospect giving certain gain i.e., gain of 3000 for sure. But, according to EUT you will see that this chosen prospect has lover equivalent utility. People actually ignored (or didn’t account for) the effect of the first stage of probability which would allow them to enter the actual stage 2.

Kahneman-Tversky called this an Isolation effect where people isolate or don’t care the commonalities between presented scenarios to make the decision-making process less complicated.

Now, this 2-stage game can be reduced to single stage game as follows:

Choose between

A:            Coming to current stage with 0.25 chance where there is 0.8 chance to gain 4000

                (0.25 x 0.8) chance to gain 4000

Gain of 4000 with probability of 0.20

OR

B:            Coming to current stage with 0.25 chance where there is certainty to gain 3000

                (0.25 x 1) chance to gain 3000

Gain of 3000 with probability of 0.25

This is a reduced form of the prospect.

If EUT is applied here

U(A) = 4000 x 0.20 = 800 and U(B) = 3000 x 0.25 = 750.

The 2-stage game and its reduced form obviously will have exactly same equivalent utilities because the reduced form just combines the chances of two stages into one resultant number. So, even though these two scenarios have same outcomes of equivalent utilities, Kahneman- Tversky observed that the ways in which these scenarios are presented affect the choices of the people.

Kahneman-Tversky had already observed that when there is significantly less difference in the amounts of gains or the probability of those respective gains in two prospects, people mostly prefer the one with higher gains. So, if we present this above mentioned 2-stage scenario to its reduced single stage scenario the results are interesting. 

We have already seen what Kahneman-Tversky observed for this reduced scenario. Majority of people chose higher gain prospect even though it was relatively less probable.

Conclusion

What Kahneman-Tversky did concretely in prospect theory is to formulate the value function to mathematically explain this behavior.

The value function in prospect theory is given as follows:

The simplified idea of this value function is:

The pain of losing certain amount hurts us more that the joy of gaining the same amount.   

You just like winning and dislike losing – and you almost certainly dislike losing more than you like winning.

The importance of prospect theory is that it shows what it means to be a human. Once you start collecting the pieces of certainty effect, reflection effect and isolation effect the picture that is revealed is profound insight about our tendencies to ensure survival in any case.

Certainty effect shows that people will choose certain gains even if their size is low. They just want to be at peace with increasing their existing surplus if it is sure.

This is how the coupon codes, vouchers, discount codes, discount days work in online shopping. The provider lures you into buying something you really don’t want by giving you guarantee, surety that you surely are making profit out of this deal. One smart thing that happens here is that the sense of urgency. You might have realized that these coupons are expiring immediately like virtually now. This creates an urgency to materialize the profit.

When people are in profit making environment, they will always prefer sure profit over uncertain profits and that is exactly how scammers lure people. They create this sense of surety to attract people to invest in their schemes.

No wonder why people love easy money. Once you inject the surety of gains in any venture people will literally pile up and that is how Ponzi schemes, Pyramid schemes work.     

The moment this surety of gain is lost and when people realize that it is only the losses that they will have to face then immediately this same population craves for uncertainty in the losses. When people see that they anyways have to digest the losses they avoid certain losses over uncertain ones, even if the actual effect of certain losses was pretty low. This is reflection effect.

The stock market is the best example to explain the reflection effect. In the crisis times – bearish markets, history has evidences that people have gone with insanely foolish bets where chances of gains are slim to none. People end up in the cycles of betting, gambling even when the realistic indicators of market are pointing to inevitable crisis.

The important thing to appreciate from prospect theory is to know when and where to stop in crisis situations.

“…people become risk seeking when all their options are bad”

If you have lost this game in poker or any gamble, you always feel that I will play the next game and definitely (somehow) will recover my losses (even when I know that James Bond is sitting on my table).

You will be more relaxed if you were told in advance that you will make less money of $10000 and you will be more stressed, feel pain if you make $12000 and government cuts $2000 for some taxation at the last moment. The gain is same but the “prospects” are different.

People can be confused to choose the loss-making options even when they are completely informed. When decision making is multi-stage so that there are some common things between them, people usually neglect those shared attributes even if they are significant and move on to the differences to finalize the choice even if these differences are not significant. This is isolation effect.

Many electronics companies while creating their pricing strategies intentionally create shared features and smartly just add one low-cost additional feature in the top model to sell it at foolishly, unjustifiably higher cost. People are ready to pay higher prices for that low cost (for the manufacturer/ marketeer) because it makes that model better. (You know who I am talking about.)

For me, the isolation effect has a huge philosophical implication.

Kahneman-Tversky have attributed the behaviors pointed out by Prospect theory to the tendency for survival. If you want to survive and are living in an already good situation then you would not want to disturb the current resources you have, that is why you don’t prefer uncertain gains, you are more than happy if the gains are certain even if they are small in size because they are not disturbing the already materialized gains.

In same way when conditions to survive are hostile you would take that every chance to increase your resources, however slim the chances may be. This is some kind of indication of hope. Important thing about Prospect theory is that Kahneman-Tversky pointed out that this exact risk-taking tendency in negative environment can push people into the spiral of continuous losses.    

We are naturally evolved in this way. 

The isolation effect outlines our tendency to eliminate common/ shared attributes of given resource to make a choice. The key thing to appreciate here is that while neglecting these commonalities we are never conscious of how significant they are in our life. You must appreciate that when I am writing this, sharing this, when you are reading this, we have more than enough resources to sustain a basic life. We are living better life than most of the world population but still we are not satisfied because we have already isolated that which we have with us. The isolation effect thus points out to our tendency to lose the feeling of gratitude for everything we have right now.

We rarely appreciate things which we already have or things we are sure that we would never loose. Many times, people realize the worth of things as really significant – as truly valuable when they are lost. 

Being alive and having the ability to experience – to appreciate this life is what common to all of us, this is precious than anything else in this world, rest is just the bonus. We should not let the practice of comparison isolate this preciousness.

References and further reading:

  1. Kahneman, Daniel., and Amos Tversky. “Prospect theory: An analysis of decision under risk.” Econometrica 47.2 (1979): 363-391
  2. Thinking fast and slow – Daniel Kahneman
  3. Risk and Rationality in Uncertainty – On Expected Utility Theory
  4. Connecting money with sentiments – Behavioral Economics

A Hindsight For Better Future

Morgan Housel – the famous author of ‘The Psychology of Money’ has another important book called “Same as Ever” which gives insight into things which have never changed over the course of time. Same as Ever drives the motto of objective flexibility and subjective awareness of every event happening around us and with us. It also highlights that our mind is the first and the easiest one to fool, which leads to false sense of superiority over others and creates biases. Once we accept that nothing is perfect, no one is perfect – it injects humility and forgiveness. It also makes us to be grateful for what we possess today. The ability to see every event at the same level is a superpower any one of us can have.

An important book from Morgan Housel called “Same as Ever”

Somebody, make me a time machine

Life would be easy if we had a way to accurately predict the consequences of the events/ actions.

Scenario 1 – what would be your reaction if some random person hands you a $1,000,000 lottery ticket and, in few moments, you realize that you just won that lottery?

Scenario 2 – what would happen if an ambitious project that you worked on tirelessly for many years while sacrificing your other priorities – ends into a big failure because of a seemingly impossible and insignificant event/ error?

For most of us these two scenarios are practically impossible but the odds are still non-zero. They can happen in reality.

How can we be sure that they selectively happen to certain person? Scenario 1 for ourselves and Scenario 2 for our enemies especially… (Just kidding)

If you closely observe the lives we are living right now, you will see that we are always oscillating between such events which demand certainty of outcomes even before the are realized. We have this innate urge to remain ready for such events; it is what we are always striving for.

Now, one question – are we living in a matrix? Is universe a simulation?

If the answer is ‘YES’, then it means that every outcome should be predetermined. If everything is predetermined then why things don’t happen the way we ‘want’? Does that mean that we lack the computational capabilities to precisely calculate the outcome? OR is what is destined to happen different from what we ‘want’?

If the answer is ‘NO’, then everything explodes into meaninglessness. The answers are nihilistic.

Looking at the both outcomes of this question we see that we need a baseline to make our decision making effective. Is there a formula to systematically put all the things happening around? What are somethings in nature whose knowledge will ensure our satisfactory existence. (I am being very optimistic while writing ‘satisfactory’ word here.)

In simple words, what is the formula to live a good life? whether it is predictable or not.

 Morgan Housel the famous author of the Psychology of Money wrote one important book called Same as Ever which tries to answer this same question. Same as Ever drives the motto of objective flexibility and subjective awareness of every event happening around us and with us.

This is a deep dive into Morgan Housel’s book “Same as Ever”.

I will try to keep this short. Here are some instructions:

Those who have read this book – each idea in this book is numbered in the sequence Morgan explains in the flow of the book. So, #1 is Hanging by a Thread as mentioned in book and #23 is Wounds heal, Scars last

Those who haven’t read the book – I have given short summary of what Morgan discusses in each of the 23 ideas. That should help you to wrap you head around my distilled down version of this book.

(I apologize for putting that part in the end and spoiling the conclusion/ discussion on this book.)

I would say this book has been one of the most important books I have come across. (I am an average book reader by the way. So, not sure if same would be the case for other people.) While going through each idea, you will realize that something keeps on repeating; and even though it repeats, it brings new perspective into that specific discussion. My attempt to summarize this book focuses on picking what is common but connected to all the facts mentioned in the book and also their connection to the reality we live in.

Discussions

The discussion is in 3 steps, so adjusting our understanding to previous step is key to understand the next step. The illustrative images in each step of the discussion connects the ideas from the book to a common central idea. It will be handy if you read this with the book in your hand or you can jump to the point-to-point summary (the part after conclusion) in a neighboring tab of your web browser.

Step 1 discussion:
Figure 1. Finite and recurring cycle of compounding processes

You will see in the figure 1 that reality is ever changing process of infinite real events. The key to understand what is happening is to see every event containing same potential at first. Keep in mind – same potential – neither good nor bad. Once you assign every event with equal potential you will see that compounding accounts for that single event to build on and create the next event. Sometimes two big events will compound together to create an enormous event.

Now comes the fun part – the enormity of every compounded event will always be in favor of someone and against the favor of the complementary population. This makes that event good or bad for people. Some will suffer some will rejoice.

A person who knows how the world, nature or universe works will not have preferences, favor-ability towards such events. The answer lies in the cyclical nature of such events. Keeping a single event sustained for long duration demands to go many things to work in supporting ways and as every event has same potency in the infinite possibilities, it surely will lead to the downfall of that process. It’s just matter of time.

Talking about matter of time – the game of life is not about winning, rather it is about remaining in the game longer as the compounding pays off and decomposes into new start.

Our limited life span intuitively doesn’t allow us to wait till the compounding pays off. That is exactly where we make mistake. That is exactly why we are devastated by a single seeming insignificant event causing destruction of our favorite things.

Step 2 discussion:
Figure 2. Reality is far from perfect

Our urge to predict everything to ensure survival demands perfection in every entity considered for precision and accuracy of prediction. As reality is made up of many real possibilities, this count of possibilities and the errors associated with their measurements require huge resources which render the prediction process impractical for the possible outcomes.

(Keep in mind right now that we are only talking about those variables, events which we can understand; we haven’t even entered into those variables, events we don’t even understand or know in first place.)

The moment we introduce poorly known, immeasurable but significant variable – the whole game of predictability crumbles down.

That is exactly why instead of striving for better predictability, it is a smart choice to be prepared for everything. Knowing that this too shall end soon should comfort us to prepare for such things/ events. The rejection of the urge for perfection, absoluteness and full efficiency will immediately prepare us for everything that reality unfolds.     

Step 3 discussion:
Figure 3. In the end, we are only human.

Now that we know how every event is potent and can immediately contribute to a cyclical process of compounding, it is important to understand how we comprehend that compounding. As everything that we do is directly linked to our survival we are by default born with preferences. These preferences get eliminated or amplified based on the life experiences we have. Even though our urge for predictability demands objectivity we often forge the subjective parts of every narrative. The subjectivity is important, because the reasons to survive are different for different people.

Conclusion – Human behavior and laws of nature

Our mind rarely understands anything as a flow of entities. Almost all of the fundamental entities existing in nature are flow – continuum entities. But in order to understand them study them we break them into pieces which makes is practical to quantify and predict. For time as an example – we have past – present – future; we need this separation to comprehend the flow of time. This slight arrangement of separation of events just for the convenience of communication and comprehension for our minds has now become such a second nature of our realities that we could hardly come out of the idea of past and future. Past keeps on haunting and future creates anxiety due to the uncertainty. Nostalgia from past brings us joy and what advancements future will present inspires us to work harder today. We rarely notice that this works both ways.

It is really difficult and impractical for our mind to let go of this past-present-future mentality. This convenience of separation for the sake of improving our decision making and survival has imparted a sense of time being a set of discrete isolated events, independent events. This steals the feature of hyper-connectivity in our understanding of reality.

Once we come out of the discretization of time as past-present-future we will see that every event is equally important and highly interconnected and multidimensional (in the sense that it creates multiple real effects on multiple entities) Our mind being biased for survival and in energy optimization mode, it always focuses on what is required to remain alive. This sense of remaining alive now has evolved into intellectual survival – as in what things we define as our life. So, even though from objective point of view all events remain exactly the same, on our personal level certain events are highly important because they change the things we are attached to in a drastic way – in most cases our life. We are now scared to die intellectually – a mental death – the death of our truths – our identity. And trust me, this happens frequently.

Morgan in this book very beautifully noted down the factual version of the reality we live in; it is beautiful because it shows how our human nature is always affecting the seemingly objective reality of the most of the things.

This is my ultimate distilled down version of the book “Same as Ever” by Morgan Housel.  

One point summary of ‘Same as Ever’ by Morgan Housel

 It also highlights that our mind is the first and the easiest one to fool, which leads to false sense of superiority over others and creates biases. Once we accept that nothing is perfect, no one is perfect – it injects humility and forgiveness. It also makes us grateful for what we possess today. What else could be more important than this to be justified as a human being?

These points ask for detachment from predictions and end results. A sense of responsibility for the actions could be the best version of any person – this exactly is invoked when we are trying to prepare for the future instead of striving to predict it.

I think we need more ideas like this when we are fighting for survival for such unimportant things where we already know the real, practical answers but have decided to ignore them.

The ability to see every event at the same level is a superpower any one of us can have.

For those who haven’t read the book here is the point-to-point summary of the book “Same as Ever”:  

#1. If you know where we’ve been you realize, we have no idea where we’re going.

Here, Morgan gives many real-life events where a single decision led to catastrophic events causing loss of many lives and valuable resources.

When we study history even when we know what exactly happened, it is tricky to pinpoint the trigger for that event. There will be why and how behind every small-small event and when we will reach to its origin it becomes really difficult to wrap your mind around that petty thing which had led to such a big and historic event.

The absurdity of past connections should humble your confidence in predicting future ones.

#2. We are very good at predicting the future, except for the surprises – which tend to be all that matter

In very simple words, Morgan highlights the extents of our imagination and thinking. Even though they are infinite, the nature in which we are existing is equally or rather infinite in bigger and greater sense. That is exactly why even when we think we are prepared for everything, nature will always have something new in its pocket to reveal and not being ready for that exact new thing makes that event overwhelming for us because we were not ready for that exact new reveal.

It’s impossible to plan for what you can’t imagine, and the more you think you’ve imagined everything the more shocked you’ll be when something happens that you hadn’t considered.

This itself should humble us. That is why preparation is more important than forecasting.

Invest in preparedness, not in prediction

#3. The first rule of happiness is low expectations.

The most important observation Morgan puts here is in the ways we gauge our resourcefulness – it is always relative – material or immaterial – objects or emotions. We always have a baseline which is created by comparing ourselves with those around us. That is exactly why we rarely appreciate what we have at our hands.

We always crave for what ‘they’ seem to have instead of appreciating what we already and really have in our hands. Even when we are unsure about whether others actually have those things, still we crave those things for us, which is tragic!

Morgan expresses that almost all of the truly precious things in our life don’t come with a price tag that is why we never care to evaluate their importance – like good health, freedom. Same is the case with expectations.

When Morgan is asking for low expectations, it is not omission of the motivation to improve ourselves. Low expectations ask for realistic expectations. One must always be observant of the gap between what we wanted and what happened in reality.

#4. People who think about the world in unique ways you like also think about the world in unique ways you won’t like.

Here, Morgan talks about the role models, heroes, leaders we consider the best of us all. It is very important to understand that they are the best among us all because they did something in very exceptional manner which made them stand out of the well-defined ‘boring’ and ‘average’ structure of the society. If they would have followed the same paths that other followed, they would have been just like others.

In order to stand out of the masses they did something different.

Now be cautious! This different could be seen as good or bad as per the average crowd level. And keep in mind this specialty in that person is because others don’t have it in them. So, in order to create and develop something special out of the same average crowd one has to overcome a resistance of the masses where a trade-off is done with other aspects of their personality. Sometimes the exceptional conditions create exceptional personalities which many people fail to recognize.

Of course they [successful people] have abnormal characteristics. That’s why they’re successful! And there is no world in which we should assume that all those abnormal characteristics are positive, polite, endearing, or appealing.

Simple words, there is always some trade off to achieve something truly exceptional.

You gotta challenge all the assumptions. If you don’t, what is doctrine on day one becomes dogma forever after

#5. People don’t want accuracy. They want certainty.

A common trait of human behavior is the burning desire for certainty despite living in an uncertain and probabilistic world.

Morgan discusses how we are always trying to alleviate the bad results, pain in all life scenarios. The urge to survive supersedes everything. Our brain always wants a confirmed trigger on whether to fight or flight for given problem. It is always in energy optimization mode and in the uncertain world filled of infinite possibilities it wants something to act on immediately. Otherwise, brain knows that it won’t survive. The urge for certainty – that clarity of whether to fight or flight is the most important information than how precisely we are assessing the reality. It’s like brain takes a shortcut to ensure survival. That is exactly why huge load of information especially numbers overwhelm us.

The core is that people think they want an accurate view of the future but what they really crave is certainty.

#6. Stories are always more powerful than statistics.

If we continue the train of thoughts from previous point, soon we will appreciate how dearly we appreciate stories instead of boring numbers. Even when stories would tell a lie and numbers would tell the real, pure truth we would always choose a fake story over realistic numbers. Our brain doesn’t want to overwork itself to ensure survival.

Good stories tend to do that [evoking emotions and connecting the dots in millions of people’s heads]. They have extraordinary ability to inspire and evoke positive emotions, bringing insights and attention to topics that people tend to ignore when they’ve previously been presented with nothing but facts.

Stories create an emotional, empathic bridge between people which our brain already knows since the childhood. The very first think a baby does to start breathing is crying not counting. (I know the analogy is lame but it works here) we are implicitly trained to actively process emotions first and then numbers. Stories enhance this ability on next level.

That is exactly why emotional-ity will always be preferred over rationality.

We live in a world where people are bored, impatient, emotional, and need complicated things distilled into easy-to grasp scenes.

#7. The world is driven by forces that cannot be measured.

Morgan brings here more clarity on the objective nature of the numbers even when they are showing the truth, the reality. The point that our reality is made up of the infinite possibility itself shows that the sheer limitation of our computation capability will create a partial picture of the bigger reality. This happens because many of the factors which influence our reality are beyond quantification.  That is exactly why whenever we are making any decision based on objective and true data (like truest of true numbers) we should bear in mind that these numbers are not accounting for those unmeasured factors which also affect the reality we are trying to understand.

Some things are immeasurably important. They’re either impossible, or too elusive, to quantify. But they can make all the difference in the world, often because their lack of quantification causes people to discount their relevance or even their existence.

In simple words, our story loving brain is driven by intuition and safe/ familiar information which is unquantifiable most of the times.

#8 Crazy doesn’t mean broken. Crazy is normal; beyond the point of crazy is normal.

Morgan is trying to point out how we understand what is means to be at the top. He established that most of the tops we experience in life are to because we have experienced falling down from them and we would have never understood that we were at top unless we have had fall down from them.

The only way to discover the limits of what’s possible is to venture a little way past those limits.

We never appreciate summit of something unless we start climbing from down or fall down from that summit. That is exactly why what made you feel at the top will make you safe and that attachment to safety will lead to your fall, the pain of fall will motivate you to climb new heights and again the cycle will go on.

#9. A good idea on steroids quickly becomes a terrible idea.

Morgan here explains how evolution created the species around us. There was always some trade-off while evolving because of the forces of nature. In nature nothing has absolute competitive advantage otherwise a single species will take over everything that single species alone will lead to its downfall and destruction due to the lack of diversity.

Most things have a natural size and speed and backfire quickly when you push them beyond that.

In simple words, anything that is burns bright, goes out fast. Resources behind every process are limited and even if they would be available in surplus, extent of their utilization affects the outcome and overall integrity of that process.    

#10. Stress focuses your attention in ways that good times can’t.

The urge to survive makes our brain to push to its untested limits. These limits are there just for the optimum behavior so that our brain could actually use the reserve energy when it is the question of life and death. When it come down to do or die – people have always delivered in surprising and shocking ways.

The circumstances that tend to produce the biggest innovations are those that cause people to be worried, scared, and eager to move quickly because their future depends on it.

Morgan points out here that this stress should be healthy because there is always a natural size of everything as explained in point #9.

There is a delicate balance between helpful stress and crippling disaster.

#11. Good news comes from compounding, which always takes time, but bad news comes from a loss in confidence or a catastrophic error that can occur in a blink of an eye.

Growth always fights against competition that slows its rise.

Morgan here shows how things that exist today as our reality have gone through multiple iterations. They have already failed many times and started again long ago; its just that the compounding imparted grandeur and power to fight against the adversities of the life which made their realisation possible here in front of us. There will again be some simple, seemingly insignificant event which will destroy this creation and things will start again.

To enjoy peace, we need almost everyone to make good choices. By contrast, a poor choice by just one side can lead to war.

#12. When little things compound into extraordinary things.

Here Morgan points out from the examples of history how in order to avoid a big calamity people ignored some small incidents which led to even bigger calamities. It is ingrained in our mind to overlook big events because the smaller events which lead to their realization are “small and insignificant”.

Small risks weren’t the alternative to big risks; they were the trigger.

#13. Progress requires optimism and pessimism to coexist.

Morgan here talks about how our preferences for each and everything have stolen away the realism in our lives. Instead of favoring one side, life is more about appreciation of the spectrum. It was never about who wins or who loses because both are short lived. It is always about who survived and stayed in the game longer. (Simon Sinek calls it the infinite game as explained in Game theory.)

The trick in any field – from finance to careers to relationships – is being able to survive the short-run problems so you can stick around long enough to enjoy the long-term growth.

Whoever lives to see the end wins but that victory is just over those who couldn’t survive. There will always be some room at the top because conditions never remain the same.

#14. There is a huge advantage to being a little imperfect.

The more perfect you try to become, the more vulnerable you generally are

The idea of perfection immediately steals the flexibility from any given system. Because of the perfection the system is bound to certain thriving conditions and exactly when you expose this system to the reality of infinite possibilities there will always be some ‘seemingly’ trivial event which will take down that whole system.

A little imperfection makes the system to bend thereby giving place to perform in unimagined conditions and as we have already learnt that the reality is full of unimaginable but real events.

Morgan beautifully explains the ways in which natural evolution has worked out.

A species that evolves to become very good at one thing tends to become vulnerable at another.

…species rarely evolve to become perfect at anything, because perfecting one skill comes at the expense of another skill that will eventually be critical to survival.

Nature’s answer is a lot of good enough, below-potential traits across all species.

#15. Everything worth pursuing comes with a little pain. The trick is not minding that it hurts.

The really important and actually valuable things in life don’t come with a price tag and that is exactly why we are not ready to pay any price. This makes our minds to wish for such things because of the false sense of entitlement. This same entitlement blinds us from the real actions which can lead us to this achievement and we keep on whining about not achieving these things. A wishful thinking!

A unique skill, an underrated skill, is identifying the optimal amount of hassle and nonsense you should put up with to get ahead while getting along.

#16. Most competitive advantages eventually die.

A we have now already understood that even a small event can lead to collapse of any grand creation and how easy it is to undermine any event we must now accept that nothing big will stay as it is now. Same goes for any competitive advantage. As things keep changing the advantages which made their impact big will become irrelevant with the changing things. One has to keep on reinventing in order to remain relevant and effective with the changing times.

Evolution is ruthless and unforgiving – it doesn’t teach by showing you what works but by destroying what doesn’t.

#17. It always feels like we’re falling behind, and it’s easy to discount the potential of new technology.

Morgan highlights how the innovations which we consider ground-breaking, world-changing were result of multiple small-small events creating synergy to coexist.

It’s so easy to underestimate how two small things can compound into an enormous thing.

#18. The grass is greener on the side that’s fertilized with bullshit.

You never know what struggles people are hiding.

As we have already seen our urge to compare our conditions with the conditions of others and always consider ours to be the worst most of the times, it is evident that we are experts in judging everything in its entirety based on very little information. Our biases and basic mentality feed this tendency furthermore. But reality is always like the iceberg.

Most of the things are harder than they look and not as fun as they seem.

#19. When the incentives are crazy, the behavior is crazy. People can be led to justify and defend nearly anything.

Morgan here shows that beyond envy people are driven by incentives. You can make people do almost anything, make them believe them in almost any thing if their interests are aligned in that. This is strong when people are helpless and when it is about their survival.

One of the strongest pulls of incentives is the desire for the people to hear only what they want to hear and see only what they want to see.

The beauty that Morgan points out is that this can also be used to bring good out of people.

It’s easy to underestimate how much good people can do, how talented they can become, and what they can accomplish when they operate in a world where their incentives are aligned towards progress.

#20. Nothing is more persuasive than what you’ve experienced first-hand.

As we have emotional beings and we have already seen that we will always prefer emotional clarity of falsehood over the numerical, arithmetic truth it shows that every part of our understanding of life is tied to our own individual experiences. We rarely appreciate the foretold truth. But we will appreciate all those things which we experience on our own.

That is also why there are certain truths which very few people have experienced but are not generally accepted by the masses because there is no part to connect personally. We can only connect personally only when we have passed through those experiences.

That is exactly why it is difficult to convince people of something really exceptional and extraordinary personal experience, that also why it is also easy to fool people.

The next generation never learns anything from the previous one until it’s brought home with a hammer… I’ve wondered why the nest generation can’t profit from the generation before, but they never do until they get knocked in the head by experience.

#21. Saying “I’m in it for the long run” is a bit like standing at the base of Mount Everest, pointing to the top, and saying, “That’s where I’m heading.” Well, that’s nice. Now comes the test.

In simple words, Morgan shows us that we rarely will ever know what we have signed up for. Most of the times our simulative experiences and thoughts will be broken down by the unimaginable possibilities of the reality. Instead of craving for that summit one must try to stand strong while they have started this journey and remain faithful to this step they are taking ahead. This attitude has to be kept with every step which very few people maintain.

Long term is less about time horizon and more about flexibility.

#22. There are no points awarded for difficulty.

Almost all of the times people appreciate certain things, certain people because they couldn’t not have or become like them. This crates a mysticism. We are always attracted to mystical things because the urge to know better (to improve chances of survival against unknown) is our hidden trait.

Complexity creates this mysticism instantly. That is why we most of the time reject truths which are so obvious and in front of our eyes and accept that intellectually stimulating complicated lie. The complexity makes our brain to actively engage in that thing which creates an attachment just because our brain was invested in it.

Complexity gives a comforting impression of control while simplicity is hard to distinguish from cluelessness.

#23. What have you experienced that I haven’t that makes you believe what you do? And would I think about the world like you do if I experienced what you have?

Morgan points out that our lives even though we have common experiences, we associate ourselves to certain groups, certain ideologies on deeper levels and at core we are totally different and individual.

Many debates are not actual disagreements; they’re people with different experiences talking over each other.

References:

  1. Morgan Housel’s book “Same a s Ever”.
  2. Morgan Housel

Anxiety – Ugly (But Precious) Gift From Evolution

Anxiety serves to prepare a person for threats. Anxiety just like pain is one uncomfortable but effective way to cope up with the adversities in life, that’s how we build strength, resistance and deeper understanding of the surrounding for better and more precisely predictable future.
The remarkable concepts like smoke detector principal and optimal threshold in signal detection theory developed by modern psychologists/ psychiatrists help us to draw a line between a healthy anxiety (adaptive function) and unhealthy anxiety (pathology) and show ways to handle/treat them effectively.

Anxiety’s like a rocking chair. It gives you something to do, but it doesn’t get you very far

Jodi Picoult

Survival, Fear, and Anxiety

Every living thing if not have any goal in their lifetime would at least have sole goal of existing, surviving. Nobody wants to die and all of us always yearn to live forever but we know our limitations and hence are always on the quest of justifying the finite existence granted to us. Even if we are certain of the end closing in, our instincts are evolved in such way that many of the times, we bear the ability to cheat death. Humans have further extended cheating the death using science and technology.  Technology augmented our lives, reduced the risks of death, created a safe environment to grow, increased our chances of survival.

The fear of death and uncertainty of future is the key driver in our improved survival instincts and excessive use of technology to achieve it. We plan for things in advance, create backup plans if something would go wrong, have risk assessments before the execution, understand and decide according to the cost benefit analysis. That is what makes us humans and also separates from other species (although rest of the surviving species are also smart in their own ways to increase their chances of survival like viruses – but hopefully humans have other ways to overcome them)      

So, fear in a way triggers the actions to ensure survival. Anxiety – a sophisticated form of fear which prepares us in advance even before the fear causing scenario is supposed to happen. Simply put anxiety is an anticipatory type of fear to increase the chances of survival.

I am talking about fear and anxiety because they are bugging my mind for many days. Recently I watched Inside Out 2 movie and the it really delivers. The narrative has successfully presented how all emotions play a vital role in creating our personality in whole. Anxiety was new and important emotion presented in this movie. Every moment where anxiety came in focus it was fully relatable to me. Once I was done crying in the end the anxiety never left me (figuratively!), I felt a strong urge to understand the anxiety on deeper levels and what the domain experts have to say about anxiety.

The discussion heron is not a movie review rather I have made some attempt to summarize what the real-world scientists have to say about anxiety. I won’t be giving you the tricks, counseling and recommending any medicines to cure anxiety disorders. (Trained professional, experts are the best people to do that – “I AM NO EXPERT”)

My focus of the discussion is to question why anxiety exists in first place when we have an emotion called fear, another question is how to interpret the anxious emotions and what leads to anxiety disorder, where does the root of anxiety lie and is anxiety a bad or negative emotion? If it is so then why? and if not – then why?

While posing such questions and researching articles I came across some beautiful ideas, experiments and theories established by professionals in the field. I will throw light on these ideas in the coming discussion.    

The fear is real! – is it? – Defining anxiety

As I already mentioned that fear of death, the unknown and urge to live long are always fighting with each other. Humans rather every species existing today in nature mastered this battle to some extent and have ridden on chariots of evolution to augment – change themselves to adapt with the surroundings and improve the chances of survival.

A deer completely aware of its surrounding, grazing in the open grass fields can distinguish the rusting of leaves due to winds and rustling due to sudden movements of an apex predator like tiger. When the exams are on top of tomorrow, we are ready to sacrifice the night sleep to crack them (engineers would resonate more with this!) We know that the pain of failing, fear of failing is worse than painfully covering syllabus overnight! The fear is there and the anticipatory response is also there, only the level of sophistication is different.

Why I say sophistication? It is because due to the advancements in our lifestyles humans are rarely exposed to the real life-threatening scenarios like animal do (still today). Our fears are now more anticipatory. I would say most of our fears are now classified as anxiety.

Wikipedia goes like this for anxiety –

“Anxiety is an emotion which is characterized by an unpleasant state of inner turmoil and includes feelings of dread over anticipated events.”

So, the key differentiating aspect between fear and anxiety is the anticipation. Anxiety is a prospective emotion and a forward-looking emotion. Whereas fear is the emotional response to current threat. Fear makes us act immediately; anxiety keeps us ready for future threats. Fear will immediately decide fight or flight whereas anxiety will create plans, strategies for both and also calculate which one is more probable. (now you can appreciate why anxiety is more intense in over-thinkers, the analysis paralysis is one mild example of this.)

Anxiety is also an emotion important from evolutionary perspective as it has helped the current existing species to remain existent. The ability to anticipate future and preparing for it in advance gives competitive edge in survival.  

Why Is Anxiety Good?

While reading about anxiety I came across a very good paper by Dr. Randolph M. Nesse.

Dr. Randolph M. Nesse, UoM

Randolph M. Nesse is a Professor Emeritus of Psychiatry and Psychology in University of Michigan. The ideas and theory he created to understand and identify anxiety and its intensity are very important and interesting.  

Dr. Ness developed the smoke detector principle to control and quantify the medication used to fight with anxiety disorder. (He poses very simple but important question the opening of the paper that “Is he medicating his patients too much? is he harming them?”) The fundamental doubt Dr. Ness had was if the anxiety is evolved during evolution to improve our chances of survival, then why are we forced to reduce its symptoms and effects? Why are we using medications, therapies to reduce these symptoms, effects of anxiety. What if the patient is too anxious for given thing and that thing is too real to happen but the doctor dumbed that emotion down? (Dr. Ness calls it down-regulating the mechanisms causing anxiety)

The core of his thinking is that if we keep on “down-regulating” our anxiety which is an evolutionary gift to us, we might never be able to gauge the future in better way and prepare for it in advance to improve our chances of survival. (this is an exaggeration of the scenario but it proves a point)  

This calls for the quantification of anxiety. Which Dr. Ness did through the smoke detector principle.

The Smoke Detector Principle – How Much Anxiety Is Too Much?

Dr. Ness in another paper talks about the mechanism which is a feed-back system between the animal and its surroundings, which selects the emotional response to improve the chances of survival. The emotions we have today are the result of such evolution to maintain “homeostasis” – the balance among our bodily system to survive and function properly.

According to his ideas, anxiety works like a smoke detector.

The anxiety response is always trying to maximize the chances of survival and escape from a life-threatening situation. When we set a smoke detector it will go off even when the fire is not that extreme or if there is just some smoke which can be a controllable one. The smoke detector is designed to never miss a single fire causing situation. This ensures complete confidence in smoke detector that it will save people from every life taking fire scenario. But, it’s the same mechanism of smoke detector which forces people to evacuate frequently even when the fire or smoke where controllable or life threatening.

The frequent emergency evacuation even when it is not required is the same problem with the extreme intensity cases of anxiety. Always having armor ready for combat may sometimes make the soldier to lose the agility.

The patients with anxiety disorder have lowered sense of real threat. Their system triggers too many false alarms.

Dr. Ness established various techniques to quantify the levels of anxiety. The responses from anxiety include increased heart rate, rise in certain bodily chemicals – stress hormone secretion which can be easily measured as signals using instruments. Thus, the smoke detector principal paved a way to quantify the anxiety and understand what triggers the anxiety disorders in patients. It helps to understand how and why a level of anxiety is healthy in normal person and what level of anxiety is unhealthy and needs drug administration, therapy, how it can be administered by altering the setting within and around the person.

The core reasons why we need not to be intensely anxious about common life threats are as follows as Dr. Ness explains in his papers:

  1. Regulatory mechanisms have tendency to make errors and be extra defensive about situations
  2. We do not need to always be extra defensive to avoid given threat. (A machine gun in a bulletproof enclosure is not required to kill a mosquito.)
  3. Our body and surroundings have multiple layers of defense for almost all common threats. We are evolved and have survived in that way.
  4. Our environment is much safer than it was at the time we evolved

Types of Anxiety Disorders

Now that we have understood what is the nature of anxiety and what is its mechanism. Here are some important anxiety disorders to outline. Huge amount of information is available in literature, internet websites on these:  

  1. Generalized anxiety disorder (GAD) – too much worrying about ordinary things, problems like money, work, health, relations, family, and anything possible or imaginable, it may not exist in reality.
  2. Hypochondriasis – People suffering from this often worry about the health condition when nothing is wrong with their body. The word comes from feeling of stomach pain the person experiences even when everything is alright.
  3. Specific phobia – fear of anything but specific without any reason. It’s the fear for certain thing even when it does not pose threat.
  4. Social anxiety disorder (SAD) – In this scenario people intensely fear the public situations, humiliations, embarrassments, criticisms.
  5. Separation anxiety disorder (SepAD) – People in this case intensely fear the loss of person or a place
  6. Agoraphobia – it is fear of being in situation where there is no exit door, or escape strategy. Fear of using public transportation, being in large crowds are some examples.
  7. Panic disorder – these are outburst of all the collective or intensive fears, they come quickly and last for short time.
  8. Selective mutism (SM) – in this case the person is extremely fearful of initiating a conversation, does not speak to specific people or in specific situations or conditions even when they are forced to talk by humiliation or mocking.  

Post traumatic syndrome disorder (PTSD) and Obsessive-compulsive disorder (OCD) were once classified under anxiety disorders (now not under anxiety disorder in DSM – Diagnostic and Statistical Manual of mental disorders)

Signal Detection Theory For Interpreting ‘Anxiety Like Responses’

One good paper in the Canadian Journal of Psychiatry by Bateson et al. shows how the smoke detector principal can be used to decide the boundaries of different levels of “anxiety like-responses”. This paper talks about signal detection theory and optimal threshold. The beauty of this paper for me is the mathematical model it establishes to explain psychological events. A single formula will help you understand the difference between normal anxiety and anxiety disorder.  

With the smoke detector principal, we can now appreciate that not every common threat needs full armored protection. The signal detection theory in this paper shows where a person draws line when they overestimate or underestimate anxiety.

It talks about “optimal threshold” to show a threat response in given situation. Optimal threshold is a mathematical parameter which is function of probability of the occurrence real event and vulnerability of the individual.

The signal detection theory says that the superposition of response signals for given background noise and response signal from real threat give us the quantified judgement of how intensely the anxiety is triggered compared to the practicality of the threat – this quantified judgement is called optimal threshold (λ). Lower the threshold more intensely the anxiety will be triggered for given disturbance – background noise.

Figure 1 : Signal detection problem, how the optimal threshold can be calculated. (Credit: Anxiety: An Evolutionary Approach, 2011, Bateson et al., Canadian Journal of Psychiatry)

Equation 1: optimum threshold (Credit: Anxiety: An Evolutionary Approach, 2011, Bateson et al.,Canadian Journal of Psychiatry)

Here,

 λ = optimal threshold

 pnt= probability that there is no threat

 pt= probability that there is real threat

wfa= cost of false alarm

wmiss = cost of a miss

Once this equation comes in focus the discussion becomes interesting. The ratio of pnt to pt mathematically quantifies how practical the threat is. The ratio of wfa to wmiss mathematically quantifies what will be the cost if the anxiety trigger is accepted or rejected – will the subject live or die. This ratio shows how we trigger anxiety response. If the cost of responding is nothing for even a simple threat scenario, we will choose to trigger that response, same would happen if the cost of losing is ultimately the loss of life, we would trigger any possible anxiety response to avoid it. The authors call this ratio as individual’s vulnerability.

The ratio (pnt/pt) can be seen like this. If the surrounding really is hostile and consists of events which cause many life altering events than the safety ensuring events then the pt (probability of threat) will be way higher than pnt (probability of no threat and safer environment). In war situation where multiple bombings, gun firings are happening around you the probability of threat happening (pt) is way high than it not happening (pnt). The optimal threshold will drop immediately and anxiety triggered will be very high.

The ratio (wfa / wmiss) can be seen like this. If the person is way stronger to handle given threat, then the person will need no effort, investment or cost to trigger any reaction alarm to even a false threat. Consider the example where you are about to be bit by mosquito, you know the efforts to slap many times until the mosquito dies are not worthless, you will try many times to kill it even when you know it will swiftly escape, you are less vulnerable in this scenario. But now when you are about to be killed by John Wick (!?) you know for sure that even a pencil will do the job for him, any environment is hostile for you, you are vulnerable here, the value of losing life (wmiss)is way high than the cost of attempts to save it (wfa). Your optimal threshold will immediately drop down thus triggering intense anxiety.

Once you generate enough data for such optimal frequencies you can easily distinguish the healthy anxiety responses and anxiety disorders. I loved how these two factors (probability of threat and vulnerability of an individual) can predict the levels of anxiety in a person. This equation explains and can also quantify why pregnant women have heightened awareness of their surroundings, why people get insomniac after constant mental stress, why restless people are always in the mode of action and fight, why reclusive people hesitate to visit foreign, unknown places.    

Your Surroundings and Mindset Matter!

Figure 2 : Three levels of vulnerability, here optimal threshold and probability of event can be correlated for difference in the anxiety responses (Credit: Anxiety: An Evolutionary Approach, 2011, Bateson et al., Canadian Journal of Psychiatry)

It is really interesting what the authors have achieved and established in this research. They compared three different levels of vulnerability and explained them using given plot.  The thing to highlight here for anxiety disorders is that they emerge from the environments which always keep on presenting high probabilistic practically threatening scenarios. The anxiety disorders also emerge when the individual feels more vulnerable.

Higher the vulnerability lower will be the optimal threshold and intense will be the anxiety response.

As shown in research, in the uncertain times of Covid-19 people who were locked in their home had no disorders, were not exposed to the virus also felt anxious and faced some anxiety disorders because of the environment they were in.

If the person feels less vulnerable and stronger then even for given strong life-threatening events the optimal threshold will be higher thus the anxiety triggered will be lower.

Are you noticing where this is going?

This is a mathematical model which shows how a healthy, supportive, and safe environment and also a strong mindset and better judgment of reality is important for handling challenging situations.

For a person suffering from anxiety disorder, it becomes very important to make sure that they know that they are in a safer environment and are cared for. It is very important to make them feel safe and understood. Creating a system of critical thinking and reasoning can also help the person to have a sense of strength and high resistance to vulnerability, this also goes for physical strength. The vulnerability is not only mental it is also physical when it comes to reality.

You will now appreciate why teenagers and trauma patients are more exposed to anxiety disorders. Mostly and generally in teenagers it is due to the uncertainty of many new things happening with them simultaneously and in trauma patients it’s the constant bombardment of life-threatening events in hostile environments.

Conclusion

Anxiety serves to prepare a person for threats. The emotion called anxiety is an evolutionary gift to ensure long survival of our species but as it is also related to our primitive instincts, we mostly let anxiety overpower other emotions in seemingly safer scenarios. Strategy and anticipation are the gifts of anxiety but if overused they will end up in imparting unnecessary caution and overprotective attitude which inhibits adaptation to changes there by slowing evolution of our species. Anxiety just like pain is one uncomfortable but effective way to cope up with the adversities in life, that’s how we build strength, resistance and deeper understanding of the surrounding for better and more precisely predictable future.   

The remarkable concepts like smoke detector principal and optimal threshold in signal detection theory developed by modern psychologists/ psychiatrists help us to draw a line between a healthy anxiety (adaptive function) and unhealthy anxiety (pathology) and ways to handle/ treat them effectively.      

These theories show how we can quantify seemingly intangible emotions like anxiety and way to handle them. If you can measure something effectively you can control and predict it effectively. All credit goes to such brilliant minds!

References, Image sources and further reading:

  1. Fear of the unknown: One fear to rule them all?, 2016, R. Nicholas Carleton, Journal of Anxiety Disorders
  2. Natural selection and the regulation of defenses: A signal detection analysis of the smoke detector principle, 2005, Randolph M. Nesse,Evolution and Human Behavior
  3. Natural Selection and the Regulation of Defensive Responses, ANNALS NEW YORK ACADEMY OF SCIENCES, Randolph M. Nesse
  4. Anxiety: An Evolutionary Approach, 2011, Bateson et al., Canadian Journal of Psychiatry
  5. The relationship between perceived stress and emotional distress during the COVID-19 outbreak: Effects of boredom proneness and coping style, 2021, Yan et al., Journal of Anxiety Disorders
  6. Long-term effectiveness of cognitive behavioral therapy for youth with anxiety disorders, 2018, Kodal et al., Journal of Anxiety Disorders
  7. Anxiety, National Library of Medicine, www.medlineplus.gov
  8. Anxiety Disorders, National Institute of Mental Health
  9. What are Anxiety Disorders?, American Psychiatric Association
  10. Anxiety – Wikipedia
  11. Randolph M. Nesse, M.D., Professor Emeritus of Psychiatry, Professor Emeritus of Psychology, Department of Psychiatry, University of Michigan
  12. Everything You Need to Know About Anxiety – www.healthline.com

Biases and Delusions – Steering on the borders of rationalism and insanity

Humans and the longing for eternal existence

There are these moments in many popular stories where our protagonist – the hero is feeling hopeless – depressed, is fed up by the cruelty, hardships, failures and some age-old character, a well-seasoned teacher or ‘that life altering event’ which give him the hope to continue against the antagonist – the villain of the story; obviously our hero wins. There are very common examples not only in pop culture, cinema but also in real human history and literature. It is very important to understanding that the qualities demonstrated in such exceptional times by our characters seems very illogical. (Remember the explanation of “The power of true love” or “the power of Hope” at the climax of your favorite movies, stories) In simple words, the reasons for such events are justified by the realization of something beyond the reality we experience, something supernatural – something which cannot be justified by a rational, logical thought. The explanation in these cases seems more spiritual and less practical or rational. Today we will see how one can differentiate between practical irrationalism (i.e., hope) and impractical irrationalism (i.e., delusion)   

They say that “the death is the ultimate equalizer” which highlights how everyone of us considers their own existence as the most important part of our being. It is the most real and rational part which enables us to experience our life in reality. We are aware that all real and rational things are perishable, end-able and yet we are always making some attempts or at least thinking of prolonging our existence for eternity. This seems very irrational, impractical and still our mind always tries to falsify the thought that our life has an end somewhere. (We plan what we are going to eat/ wear/ do tomorrow, plan that trip, make new year resolutions even after the uncertain nature of our life and with the optimism/ hope that we will live to do those things as planned.)   

Christopher Nolan’s Interstellar
The human urge to improvise, do something unconventional at the last moment of life is often epitome of all extreme survival stories. (Not only in movies but also in reality)  

Our basic survival instincts are always aware of the chances and ways in which we can die. A healthy person’s subconscious mind is aware of the death and its consequences. Our immediate involuntary responses to life threatening events are examples of that. (You immediately remove your hand from a very hot thing because you know that it is going to hurt you.)

Interesting is when these such feeling for the longing of survival gets highlighted in some extreme and abnormal conditions. The conditions which are not generally faced by normal human beings.

Victor Frankl and The Delusion of Reprieve

Victor Frankl an Austrian neurologist and psychiatrist in his days in Auschwitz observed a very extreme and irrational behavior amongst the victims including himself. When the newly admitted Jewish prisoners were torn off of their own identities, the only thing they were left with was their hope for surviving through the tortures wishing that they have some things to finish, some purpose of life to fulfill after living through that real-life hell. Frankl in his book “Man’s Search for Meaning” creates a lively and horrifying picture of what a living hell looks like. Not even the greatest empath in the humanity can relate with the pain that these prisoners went through.

Frankl in this book explained the whole process when the Jewish prisoners were admitted to the concentration camp. At first, the prisoners went through the shock that they were being taken to Auschwitz – a place infamous for ruthless deaths of Jewish people. Then the hostility of a deserted, dry, barren land maintained by people with similar dried emotions amplifies that shock.

In this exact moment, Frankl noticed a group of people who looked much healthier and with some wit/ humor which highlighted the sanity of their minds even in such hostile environments; maintaining that snobby “attitude” even in this deserted, unfriendly environment was one relief for him.

With this observation, Frankl concluded that he too will be able to match with these people in order to survive through this hell with relatively lesser pain. One has to understand that this urge to have a lesser painful life in Auschwitz was not even closer to the reality, even the word “exception” would fall short for this. And still, even after knowing the fact that there is no escape from this hell, even after knowing that almost all of the people in Auschwitz die from inhumane mental and physical tortures, hard labor, starvation, diseases, internal disputes, favor-ism, unfairness, Frankl thought that there is a chance that he can climb up this ladder and become part of this “snob party”. One has to understand that the thoughts Frankl is having here are totally irrational. Frankl was already aware of the consequences of being sent to Auschwitz but even after that his mind chooses an irrational idea of facing less pain in Auschwitz. Frankl justifies this irrationalism by the “inborn optimism in him” and calls this condition in psychiatry as “delusion of reprieve”. He explains this in following words:

“The condemned man, immediately before his execution, gets the illusion that he might be reprieved at the very last minute. We, too, clung to shreds of hope and believed to the last moment that it would not be so bad.”

This “delusion” of being “pardoned” at the very last moment becomes the very first stage in the psychosis (a mental disorder of getting detached from the reality) of the people exposed to extreme ruthless environments of Auschwitz. This is totally different from the stories of conventional heroes and villains. Here, the person has completely lost the sense of what is a real possibility and what is an unrealistic demand. The conscience – ‘mere rational’ of the person gets broken in the hope that there is still something good and some chance of survival through this.  

Biases, Delusions and Apathy

In psychology the biases and delusions are closely connected and highlight the tipping point from where the psychosis starts. First of all, it is very important to know that we all have biases. Biases are our favored, prejudiced opinions for someone or something. Biases are some sort of mental shortcuts to avoid the energy loss for processing huge amount of information. Here are some examples of cognitive biases (a systematic pattern of deviation from norm or rationality in judgment):  

Availability Heuristic Bias – People do not make decisions based on the data and statistics but on the stories and the stuff they hear from other people. You would want to easily trust what news show than to actually check and cross check fact with real data.

Choice Supportive Bias – People defend themselves because it was their choice. Because, if they made the choice, it must be right. You could be never wrong because you feel so is common scenario. Remember the time when you don’t even care to google what you just assume to be right because you think so.

Confirmation Bias – We tend to listen to information that confirms what we already know. Even after knowing that you were wrong you support and believe only that information that proves your thinking. Remember the flat earth conspiracy?

Ostrich Bias – Subconscious decision to ignore the negative information. Remember (again) the flat earth controversy?

Placebo Bias – Belief will help you recover. Loosely speaking, it can be explained by the idea of fake it until you make it. Your mind will make decisions based on the illusion that you are rich thereby ultimately making you rich. Placebo drug therapy is also the best example (but repeated words won’t explain the meaning)

There are many types of cognitive biases which actually throw light on our belief systems. (This could be a good discussion for some other times). The point is that when such biases start having a strong hold on a person’s mind, the person becomes delusional, leading to delusional disorders. This is triggered by some abnormal and unexpected situations. Victor Frankl actually observed and even went through such experiences where he establishes the “emotional death” of a person.

Due to constant shocks and bombardment of unconventional cruel treatments, the mind of person becomes numb to the extremities of the experiences and their response to such cruel, extreme and abnormal things no longer remains reactive as if these are normal situations for them. This is the “emotional death” Frankl is referring to. They became detached from the reality and thereby the humane emotions and responses to the cruelty around them – they became apathetic. Neither positive nor negative emotions.

Fine line between biases and delusions

Carrying the hope of having some moments of escape is also one example of the biased thinking the prisoners carried. Even after knowing, seeing and experiencing the cruelty in Auschwitz, their minds were not ready to accept the reality that it is close to impossible to escape this hell. Frankl’s well explained ‘delusional behavior among prisoners’ is one important part of Humanistic Psychology and Cognitive Behavioral Therapy.

Delusion disorder are classified as Bizarre (realistically impossible) and non-bizarre (possible but wrong in nature). Jumping to conclusion bias is one of the most researched bias connecting to delusional disorders.

Jumping to Conclusion Bias (JTC Bias) – A bias where something is assumed to be true without collecting all the information/ data. It is also known as inference-observation confusion.

You can find in Frankl’s description of their admission in Auschwitz where he explained “those” healthier group of people. The optimistic urge of Frankl to be in level with them is an example of jumping to conclusion bias. With very little information and an unrealistic urge to survive Frankl unknowingly became victim to the delusion. (Although his profession helped him to distinguish such behaviors and work over them leading to strengthening and establishment of Logotherapy) There are some studies which have also highlighted that jumping to conclusion is one of the biases closely related to delusions and psychosis but it not the only reason, rather it is very unclear that how delusions form. Studies show that there are two possible reasons to why JTC Bias and delusions are closely related. One is “the intolerance of uncertainty” and second is the “impaired working memory”. In simple words, firstly – the fear of unknown, ambiguity in the outcomes of the things makes the mind to take shortcut and create a simple conclusion to settle the chaos of the data (which already is limited) thereby making an unrealistic expectation from the event and secondly the incapability of one’s memory to handle the routine tasks makes it impossible to derive conclusions from complete data thereby restricting the flow of information as minimum as possible to make the conclusion which then become unrealistic. These two reasons possibly indicate the connection between JTC and delusions. Please note that JTC is not the only bias which can cause delusions.

Although delusions are very extreme part of human psyche, it is very interesting to understand their link with the biases almost every human being has. Given that such types of biases are always there within us representing some short-lived illusions from truth or I would say “quasi-delusions”, it becomes very important to notice such patterns and immediately work over them. Being mindful, being aware of the thoughts we are having and the coherence of the conclusion we are drawing from them is one of the most important way to remain free from the biases and delusions.

The Metacognition therapy, the logotherapy thus are the important branches in humanistic psychology which contributed in this field. The psychology of hope is also one important aspect of delusions related to survival; especially in the cases resembling to Viktor Frankl’s experiences.

References and Further Reading:

  1. Man’s Search for Meaning by Viktor Frankl
  2. Delusion formation and reasoning biases in those at clinical high risk for psychosis, The British Journal of Psychiatry
  3. Thinking biases and their role in persecutory delusions: A systematic review, Early Intervention in Psychiatry
  4. Delusional disorder – Khan Academy
  5. The tendency to stop collecting information is linked to illusions of causality, Scientific Reports by nature.com