Saturday, March 29, 2008

The Science Of Addiction

The Science of Golf Addiction by John Paul Newport in The Wall Street Journal shares some information on the what is addiction and its causes. It seems anything that is rewarding can be addictive. What creates addiction is the mechanism of intermittent reinforcement, where rewards are randomly related to the actions taken. As a result, rewards occur unpredictably, creating higher releases of pleasure inducing dopamine in the brain than when rewards occur predictably.

The article informs us that, "The social scientist B.F. Skinner discovered the power of intermittent reinforcement about 75 years ago, using pigeons. He set up a simple system whereby one set of birds was rewarded with food every time they pecked at a bar. Once the food was discontinued, they learned pretty quickly to stop pecking. With a different set of pigeons, the food was dispensed at intermittent intervals in response to the pecks. Those birds hammered away at the bar with extra ardor and, when the food was withdrawn altogether, it took much longer for the pecking to stop."

While I'm not addicted to golf, I wonder sometimes if I am "addicted" to watching the stock market:-) This chart from Crestmont Research shows that the stock market has a slightly higher percentage of up days than down days, recently at about 55% up days to 45% down days. However, I never know in advance which days will be up. Occasionally, big up days or a series of up days occur, which cause me to even watch the market more, especially if I own one of the stocks with an upward trend:-)

Intellectually, I know that I should just invest in low cost diversified equity index funds and accept the overall return of the market. However, I still enjoy buying individual stocks with a small portion of my savings and getting the occasional thrill when the purchased stock goes up significantl in one day or over a year:-)

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

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