By Neal Van Zutphen

I am fascinated by the human mind and our emotions, particularly as they engage money.  This blog is based on my financial planning practice, my current research and attempts to understand them.

Let me share my own bias.  My fundamental belief system is humanistic in nature.  Accordingly, I tend to seek empirical data that embraces the concept of free will or the power of choice.  That is my worldview.  Generally, it serves me well in both my personal life and my professional services.

The antithesis of free will is the behaviorist model. The behaviorist model germinates from B.F. Skinner. (For purposes of this discussion, I will refer to this as “the Skinnerian view.”  You can probably tell that I am not a fan.)

Let me first provide a snapshot of the Skinnerian view. Fundamentally, it holds that man is animal and, like animals, we are subject to a very simple motivational formula, much like Pavlov’s dog.

There is Stimulus → and there is → response

The Skinnerian view suggests that as human beings, our behaviors are determined by our life experiences and conditioning. So far so good.  Of course, life experiences and enculturation matter and contribute to the formulation of our personal worldview. However, the Skinnerian view is that our motivations and emotions are a result of various conditionings and experiences. Essentially, we are incapable of being self-motivated; we are incapable of self-directed personal growth and change.  In other words, we have no free will.

This has many implications.  For example, organizational psychologists and behaviorists use this worldview to structure environments and dialogues in order to manipulate human behavior. Accordingly, their research into human behavior and motivations are biased in favor of “the dark side of human nature.” In other words, studying what is wrong with something. Sharon Begley writes in Train Your Mind, Change Your Brain: How a New Science Reveals Our Extraordinary Potential to Transform Ourselves

If you were to curl up with almost any issue of a journal that publishes studies in social psychology, you   would not get a very pretty picture of humanity. Racism. Aggression. Mindless conformity. …Prejudice against anyone who doesn’t belong to your ethnic, religious, or socio-economic group….Making only the rarest of appearance are qualities such as compassion, sympathy, tolerance, kindness and accurate perceptions of yourself and others.

Darkening this picture even further is that social psychologists, who study how people behave and interact with one another, are remarkably adept at spinning explanations of why these less-than-noble traits are natural to the point of near inevitability and universality. (p. 183)

Confirming this view is Philip Shaver, of the University of California-Davis, one of the leaders in the field of psychology called “attachment theory”  He suggests that the generalization of social psychology applies more accurately to insecure than to secure people. (Begley, p 194) This helps explain why extrinsic motivators prove successful as manipulative tools since they are used on that portion of the population that exhibits insecure tendencies. Or, for those with advance sales training, tools to create a sense of fear or greed.  If you came to financial planning through either insurance or securities, can you remember your initial sales training?

Mr. Bill Abernathy, an organizational psychologist, states: “These authors’ [speaking of humanistic psychology] arguments are logical within their own construction, but start from a flawed premise. This premise is that people are ‘self-motivated.’ This view of employee motivation still dominates our schools of management and is loosely based on ‘self-actualization’ and the ‘hierarchy of needs’ as expressed by the clinical psychologist Abraham Maslow in his book Motivation and Personality” (Abernathy, 1996, pgs. 68-69). This book was written in 1954, by the way (Maslow, 1954). Now, let’s consider a humanistic refutation of the Skinnerian view. Let us assume that Viktor Frankl’s experiences in Auschwitz were far more dramatic and instructive than Mr. Abernathy’s life experiences. As Frankl writes in Man’s Search for Ultimate Meaning:

As an interlude, let us imagine what help could have been offered to the physician whose wife had died if a rigidly orthodox behavior therapist had had to tackle the situation. Let us see what behavior modifiers suggests “when death or some other irrevocable happening deprives one of something cherished….A schedule should be devised by which the individual’s efforts are systematically rewarded, sometimes starting with such minor accomplishments as making a telephone call, mowing the lawn, or washing dishes. These behaviors are praised and otherwise rewarded by the therapist, and after a time come to give the patient a sense of satisfaction quite directly. Let us hope.” (Frankl, p. 133)

Clearly, the insight of one crazed survivor of Auschwitz offers very little empirical evidence that humans possess the power of choice. However, consider for a moment if you were the recipient of the behaviorist’s treatment plan after the sudden death of a loved one.

In contrast, the humanistic view suggests that human beings possess the ability and power of choice or free will. Here is the cognitive sequence from animal to spiritual beings having a human experience…

Stimulus → Response (Pavlovian view)

Stimulus → Emotional Interpretation → Response (Pavlovian-Skinnerian view)

Stimulus → Emotional Interpretation → Cognitive Interpretation→ Response (Pavlovian, Skinnerian, Emotional Intelligence View)

The Self-Actualized-Self-Motivated view would look like this:

Preferred Future Outcome of Response (a self-motivated, self-actualizing individual exercises the power of choice and is the stimulus to the stimulus) → Stimulus → Emotional Interpretation→ Cognitive Interpretation→ Pro-active designed Response, which results in a Stimulus to the external world→ which results in a → desired preferred future outcome of response. It is choosing the ideal outcome and working toward this end result.

The Skinnerian view suggests that our brains are hard-wired, conditioned, and incapable of change. The fact of the matter is that neuroscience has proven that the human mind, our own thoughts, can physically alter the genetic make-up of our brains. In fact, it can create neuronal growth and stimulate gene expression. (Begley, 2007) This is very exciting. Imagine the genius within just waiting for the opportunity to express and actualize.

Behaviorists beware.  You are quickly losing ground to the power of choice and the ultimate source of energy.  Soon the illusory comfort of predictability will give way to a far more creative and powerful force that begins with a very simple premise that man is far more than what can be mechanistically measured.

“I believe that neuroplasticity will reshape psychology in the coming years…much of psychology had accepted the idea of a fixed program unfolding in the brain, one that strongly shapes behavior, personality, and emotional states. That view is just shattered by the discoveries of neuroplasticity. Neuroplasticity will be the counterweight to the deterministic view [that genes have behavior on a short leash]. The message I take form my own work is that I have a choice in how I react, that who I am depends on the choices I make, and that who I am is therefore my responsibility.” (Richard Davidson quoted in Begley, p. 242)

Why is this important for the financial advisor? The self-motivated individual is intrinsically motivated to achieve and transcend. An individual’s intrinsic motivations are part of what we refer to as “Interior Finance.” Individuals are also motivated by extrinsic motivations. These are more than just “Exterior Finance” issues and this is where the value of cognitive behavioral skills and behavioral finance integrate with humanistic psychology. The financial advisor must recognize, appreciate and fully utilize both humanistic and behavioral understandings in order to facilitate and honor the possibilities of those seeking our care, skill and judgment.

Next time we will discuss “scarcity.”

Thanks
Neal Van Zutphen, CFP®

© Neal Van Zutphen 2008

All materials herein are copyright and may not be reproduced without full and appropriate credit to the author.

Begley, Sharon. Train Your Mind, Change Your Brain. New York: Ballantine Books, Random House, Inc., 2007

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