Why losing money may be more painful than you think

2 May 2007

Losing money may be intrinsically linked with fear and pain in the brain, scientists have discovered. In a Wellcome Trust study published this week in the 'Journal of Neuroscience', researchers have shown that during a gambling task, losing money activated an area of the brain involved in responding to fear and pain.

"Many everyday financial decisions, such as playing the lottery or investing money, are gambles in some form or another, and most of these gambles involve the chances of both gaining and losing money," says Dr Ben Seymour from the Wellcome Trust Centre for Neuroimaging at UCL (University College London), who led the study. "Although we already know an impressive amount about how the brain learns to predict financial gains, until now, we have known little about how we deal with losing money."

The researchers studied 24 healthy subjects as they played a gambling game to win money, and recorded the activity in the brain throughout the game 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 a region located deep within the brain, called the striatum.

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', whereby the brain learns to make predictions based on previous mistakes. The researchers have shown that there appears to be a separate response when the prediction results in a financial loss, as opposed to a financial gain.

The researchers found surprising similarities between the response to financial losses and a system that 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 wants to lose money in the same way that none of us wants to experience pain," says Dr Seymour. "It would make sense that the way that we learn to predict and hence avoid both of them should be linked."

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 the interaction between the brain systems for learning to predict financial losses and gains may provide important insights into why some people gamble more than others, and why some become addicted to it, Dr Seymour added.

Contact

Craig Brierley
Media Officer
Wellcome Trust
T +44 (0)20 7611 7329
E c.brierley@wellcome.ac.uk

Notes for editors

1. Seymour B et al. Differential encoding of losses and gains in the human striatum. J Neurosci 2007.

2. The Wellcome Trust is the largest charity in the UK. It funds innovative biomedical research, in the UK and internationally, spending around £500 million each year to support the brightest scientists with the best ideas. The Wellcome Trust supports public debate about biomedical research and its impact on health and wellbeing.

3. University College London
Founded in 1826, UCL was the first English university established after Oxford and Cambridge, the first to admit students regardless of race, class, religion or gender, and the first to provide systematic teaching of law, architecture and medicine. In the Government's most recent Research Assessment Exercise, 59 UCL departments achieved top ratings of 5* and 5, indicating research quality of international excellence.

UCL is the fourth-ranked UK university in the 2006 league table of the top 500 world universities produced by the Shanghai Jiao Tong University. UCL alumni include Mahatma Gandhi (laws 1889, Indian political and spiritual leader); Jonathan Dimbleby (philosophy 1969, writer and television presenter); Junichiro Koizumi (economics 1969, Prime Minister of Japan); Lord Woolf (laws 1954 - Lord Chief Justice of England and Wales); Alexander Graham Bell (phonetics 1860s - inventor of the telephone); and members of the band Coldplay.