You could be a huge credit card spender. And, without enough money to clear your bills every month, you have been paying the minimum amount only. Now you find yourself in massive credit card debt, and are paying a huge amount as interest.
Or, you may be clearing your home loan, car loan and those expensive purchases you made on installment. Now, you could battling to make all these payments on time.
Or, you've just forgotten a whole wad of cash in the taxi.
Or, you've just been pickpocketed and your wallet/ purse was full of cash.
In each of these situations, there's a reason why you get that sinking feeling in the pit of your stomach. Apparently, when you lose money an area of the brain that is involved in responding to fear or pain is activated.
As part of their study, researchers of the Wellcome Trust Centre For Neuroimaging at University College, London, studied 24 healthy subjects as they gambled to win money. Throughout the game, researchers recorded the activity in their brain using an fMRI brain scanner to look for subtle changes in brain activity.
They found that the subjects were accurately learning to predict when there was a chance of winning or losing money, and that this learning appeared to occur in the striatum, a region located deep within the brain.
Being able to make predictions about rewards and punishments is important, since it allows us to take appropriate action early to avoid punishments or to benefit from rewards. This ability is guided by a 'prediction error', where the brain learns to make predictions based on previous mistakes.
"Many everyday financial decisions, such as playing the lottery or investing money, are gambles in some form or another. Most of these gambles involve the chances of both gaining and losing money," said Dr Ben Seymour, who led the study.
The researchers have shown there appears to be a separate response when the prediction results in a financial loss, as opposed to a financial gain.
To their surprise, they found similarities between the response to financial losses and a system they had previously identified for responding to pain, which they believe allows the brain to predict imminent harm and allow immediate defensive action to be taken.
"Clearly, none of us want to lose money in the same way that none of us want to experience pain. It would make sense that the way that we learn to predict and hence avoid both of them should be linked," said Dr Seymour.
The reward and defensive systems relating to financial loss were very similar to motivational systems previously identified in rats, which suggests they have hijacked an evolutionarily old system connected to avoiding fear and pain.
"This provides a sort of biological justification for the popular concept of 'financial pain'," says Dr Seymour.
Understanding how the brain systems for learning to predict financial losses and gains interact may provide important insights into why some people gamble more than others, and why some become addicted to it, Dr Seymour added.
The findings were published last week in the Journal of Neuroscience.
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