moneyFYI
Financial Freedom Is Merely Organized Common Sense
Stress And Responses To It
Decision making under stress is a losing activity so avoid re-organizing your financial affairs when you are stressed. The decision is important and can affect a long time. Stress puts too much emphasis on immediate factors.
Giora Keinan in a 1987 article (Journal of Personality and Social Psychology 1987, Vol. 52, No. 3,639-644) on stress and decision making studied the proposition that, “Deficient decision making under stress is due, to a significant extent, to the individual’s failure to fulfill adequately an elementary requirement of the decision making process, that is, the systematic consideration of all relevant alternatives”
He found that those under stress showed “a significantly stronger tendency to a) offer solutions before all available alternatives had been considered, and b) to scan their alternatives in a non-systematic fashion”
Earlier studies had shown that stress causes “people to fail to weigh the utility and probability of all possible alternatives.” People tend to grab the first solution that promises immediate relief from the stress and that solution tends to be hasty, disorganized and incomplete.
Jumping to conclusions indicates stress.
We know the results of stress. Chemical reactions cause you to focus on the stress, and if the stress is large enough, to focus to the exclusion of all else. While that is good if you are being pursued by a tiger, the effect is physically the same if your favorite stock tanks.
In the stock situation fight or flight is not an appropriate response, but your body chemistry won’t know that.
Tigers in the bushes are uncommon today. In our modern world, the more common stresses are:
- Inadequate rest
- Noise
- Conflicting deadlines
- Other people’s deadlines
- Ambiguity
- Loss of control of essential variables
- Mistrust of institutions
- Hunger
- Health problems
- Aging
- Change, especially change in the way formerly stable things work
- Confusion and resulting helplessness
There are many more and the serious ones result from combinations of these. In work situations, tasks poorly delegated provide several sources of stress. Ambiguity, loss of control, no control of essential variables, inadequate rest, and other people’s deadlines. Stressed people provide weak results. These become the source of stress for others in the group.
Unlike the tiger in the bush situation, we have not fully evolved a solution to modern stresses. Fight or flight responses don’t work because the problems are too abstract. Unfortunately for us, the hormone response takes away higher brain functions first. The brain and body go on automatic pilot and that is a poor response in a complex world.
You can build processes to deal with abstract stresses once you know they exist. Some symptoms of too much stress include
- Easily distracted
- Single source problems
- Single solution applied to all problems
- Inability to prioritize
- Diminished short term memory
- Hyper-vigilance
- Inability to notice new facts or situations in conflict with older beliefs.
- Numbing behavior (Things you do to take your mind off stressful things -TV, games, almost anything that does not deal with opportunities or problems)
What to do?
I don’t know what works for others, but I do know what works for me.
- Avoid letting small things accumulate. Jordan Peterson, a psychologist at University of Toronto, claims that stress is frequently the accumulation of small undone tasks. Keep a separate to-do list of the trivia and eliminate the pieces purposefully. Knowing that they are on the list helps to avoid the stress if you normally look after the list. Make time to do them; don’t wait for convenience
- Get enough rest. In the army, a tactical concern is making sure the soldiers are properly rested. When the troops are tired important higher brain functions, situational awareness for example, are the first to go. The army marches 50 minutes in the hour.
Do you think those all-nighters are going to work for you? By the last hour, a first week intern could likely outperform you.
Students need a rest break during an exam. Learn to take it. - Exercise. Your body is going to create those fight or flight hormones whether you need them or not. Exercise will burn them off and prevent them from shutting down other important systems.
- Music soothes. It amazes me how some days, Joe Cocker works and on another it could be April Wine, The Who, Eva Cassidy, Neil Young, Joe Bonamasso, Mozart or Cee Lo Green. I think we were born with a music circuit and we need to use it for energy.
- Notice numbing, then use the exercise, music, rest, or solving tiny problems to get refocused. Identify the source of the stress. Undefined or multifaceted stresses seem to be the ones that induce numbing as a response.
Do some research. A bigger and deeper survey of possible solutions. Involve others. Look for the opposite opinion to your first impression. Contrary thinking frequently opens new avenues.
In abstract stress situations, narrow focus and short times dramatically reduce effectiveness. Eventually the weak decision will be corrected but at the cost of lost time and resources. Better to avoid the problem.
For financial stresses a competent adviser can be helpful. “Talking you in off the ledge” should be part of their job description. Maybe we should develop airborne Valium and a dispenser that squirts it into the room at regular intervals. Sort of like the ones that dispense insecticide.
Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. don.s@protectorsgroup.com
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