How Our Brains Make Us Debtors

Panos Mourdoukoutas, a contributor to Forbes.com, took a look at the question, “Why do we accumulate bad personal debt?” Using a book by frequent RadioLab contributor (one of the best programs carried on public radio) Jonah Lehrer, How We Decide, Mourdoukoutas thinks he’s got an answer.

As collectors or agency owners, it may not often occur to you to consider how the consumer on the other end of the line got into the position he’s currently in. One doesn’t spend a lot of time, either, in wondering about the origin of the nail that punctures one’s tire. But Mourdoukoutas, via Lehrer, has a pretty interesting hypothesis:

Our brains are flawed.

“While the emotional brain is capable of astonishing wisdom,” Lehrer write, “it is also vulnerable to certain innate flaws. These are the situations that cause the horses in the human mind to run wild, so that people gamble on slot machines and pick the wrong stocks and run up excessive credit card bills.”

The brain is actually really bad at a lot of things — which can cause a terror-spiral if you think too long about it because it’s the thing in charge of you as a human being. The brain wants certain sensations and chemicals, and it’ll let you keep doing things to get a fix.

Another point: paying for things with plastic subverts the pain/reward response. Usually one works towards something, and the accumulation of that hard work leads to the achievement of a goal. (Work with me here; I know that it doesn’t always work that way because guess who’s still not the World’s #1 Breakdancer? This writer.) However, when we use credit, we get the reward first without any of the work that goes into it. We confuse our brains, and set ourselves up for destructive loops of bad spending.

This only gets worse when the economy improves. There are fewer barriers to credit when we’re all making money.

Both Mourdoukoutas and Jonah Lehrer are worth checking out.