Use a calculator, not your heart, to assess risk3 min read . Updated: 06 Dec 2017, 04:50 PM IST
Understanding risk is critical to managing money. So when you think about risk, it's better to use a calculator instead of your heart
It has taken millions of years for humans to evolve into the species we are today. But it’s been only a few decades of living with rapid technological and economic development. We have lived among and survived snakes, spiders and other species that could have led to our extinction. That’s probably why our brain has developed parts like the amygdala, which acts as an alarm system, generating fast emotions like fear when we notice anything that’s out of place or scary. The amygdala that induces the fear reflex has helped our ancestors survive and it continues to remain a vital tool in today’s daily life. When we see a face that’s scared, we take cues and act instantly; or, if we smell smoke, the amygdala floods the body with fear signals even before we are consciously aware of being afraid.