This is fascinating! Many in-the-know political commentators were confused and surprised that COVID-19 kept coming up in pre-election focus groups and why people felt the economy was terrible despite evidence to the contrary. I thought it made perfect sense, and it's good to know why this happens and how pandemics affect not only personal financial decisions but also political decisions.
Fear messes with investing decisions because it disrupts critical thinking. Fear triggers the "fight or flight" response, which hijacks the brain's ability to think clearly by disrupting the area responsible for rational thought and judgment. It is very difficult to accurately assess what's going on and make sound decisions--and not just when it comes to investing. (Think cell phone bans.) When fear overrides rational thought, we get "tunnel vision" and are consumed with the perceived threat at the cost of the big picture. The result? We react impulsively and make hasty decisions without considering the consequences--and then look for someone to blame. This makes us vulnerable to fear-mongering rhetoric and "othering," perpetuating the cycle.
This is fascinating! Many in-the-know political commentators were confused and surprised that COVID-19 kept coming up in pre-election focus groups and why people felt the economy was terrible despite evidence to the contrary. I thought it made perfect sense, and it's good to know why this happens and how pandemics affect not only personal financial decisions but also political decisions.
Fear messes with investing decisions because it disrupts critical thinking. Fear triggers the "fight or flight" response, which hijacks the brain's ability to think clearly by disrupting the area responsible for rational thought and judgment. It is very difficult to accurately assess what's going on and make sound decisions--and not just when it comes to investing. (Think cell phone bans.) When fear overrides rational thought, we get "tunnel vision" and are consumed with the perceived threat at the cost of the big picture. The result? We react impulsively and make hasty decisions without considering the consequences--and then look for someone to blame. This makes us vulnerable to fear-mongering rhetoric and "othering," perpetuating the cycle.