The one thing you need to know before making your next big decision

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The Star Trek franchise could never have reached orbit without the interplay between Mr. Spock, shaking his head and warning against faulty logic, and Captain Kirk insisting he had a hunch, a gut feeling.

Kirk’s hunches were always right. Fans loved to see sassy human instinct out-think the calculating Vulcan and save the Enterprise.

These stories played out against a real-world backdrop of the rise of the computer in society. “Thinking” machines were becoming a major part of daily life. It was a time that could be threatening, when it seemed our human brains would never again keep up.

So we were thrilled, too, when Luke Skywalker turned off his ship’s computer and let the mysterious Force guide him.

It turns out those writers were on to something. The science fiction of its day has become the hard science of 2016 because “gut instinct” is now the stuff of physiology, a thing that can be measured, mapped in the body and analyzed chemically.

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Do you make your decisions impulsively, like Kirk, or logically, like Spock?


Recent findings show that instincts based in feelings from within our bodies are powerful and useful influences on the way our minds make decisions. The old divide between a thinking brain and an unthinking body is blurring. And despite the word “gut,” that useful instinct goes far beyond our stomach and includes the feelings from our heartbeat, our lungs, muscles and even our immune system, whether we are conscious of it or not.

Much of the recent evidence comes from an Ottawa native who came to neuroscience the long way around. He calls gut feeling “the dialogue between brain and body.”

John Coates began his career in finance. He was a Wall Street derivatives trader with Goldman Sachs and later ran a trading desk for Deutsche Bank. But after 13 years in this world, he set out in a fresh direction — the physiology of our nervous system, leading in time to a research fellowship at the University of Cambridge.

At the same time, he didn’t abandon the world of finance. Coates found a way to tie the two together. He studies the physiology of risk-taking — in other words, the physical mechanisms that allow our bodies to influence our brains when we confront and deal with risk. It’s something traders — and people in many other professions — do on a large scale every day.

So he studied traders, combining his experience on Wall Street with his new ability to experiment. He began to link biology with risk-taking, and with financial successes and crashes.

One of his early findings was that traders who take risks and are successful get a burst of testosterone, which encourages them to go on and take even bigger risks.


If they ride a winning streak, their bodies keep pumping them up with testosterone and their risk-taking grows. This can lead to bigger returns for the trader, but in some cases it can lead to euphoria and delusional, wild risk-taking. Coates has called it “this feeling of consummate power, a feeling that you’re dominating the world.” A drug-like high, he believes, like an addiction.

The flip side was a bad streak or a market crash, pushing up levels of stress-related hormones and causing an irrational aversion to risk.

He publicized this analysis in a book that is written for the public, not just for academics: The Hour Between Dog And Wolf: How Risk Taking Transforms Us, Body and Mind. This fresh biological analysis of what makes people take (or avoid) risks caught on broadly; it was named book of the month in the magazine of the British Army, Soldier. It was shortlisted for the 2012 Financial Times and Goldman Sachs Business Book of the Year Award and for the Wellcome Trust Book Prize.

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John Coates is a neuroscientist who studies how our minds receive and use signals from the body — a gut reaction — in making decisions. Wayne Cuddington/ Postmedia


Coates was tapping into a broader emerging theme in neuroscience: the exploration of how all humans use the signals that operate at what he calls the fringe of our consciousness, and even beyond consciousness — that gut feeling we can’t quite put into words.

His latest study, published in September, found a funny thing: While financial traders make a conscious analysis of risk during high-risk situations of market volatility, their bodies often respond very differently than their conscious thoughts.

And he found that the body’s response to risk — the basis of a so-called gut reaction — often fits the situation more accurately than the conscious analysis.

Our physiology, he concluded, is “a good risk manager.” In short, signals from our bodies are helping us to take care of ourselves.

Here’s how it works.

“I set up this study to answer a simple question — are gut feelings merely the stuff of trading mythology? Or are they real physiological signals?” Coates said. “I suspected from my days of trading that hunches were real and valuable, that when I scrolled through the range of possible futures (in the market) one just ‘felt right.'”

He found a way to measure this, using a hormone that we produce in moments of stress, called cortisol. Scientists often measure cortisol to measure how stressed people are.

Coates’s traders were consciously aware of risk levels in the market. But their cortisol levels rose and fell during the trading day in a pattern that reflected actual market risks more accurately than their conscious assessments. Their bodies were somehow more aware of risk than their consciousness.

So, he wondered next, how useful is this mysterious connection, really? For instance, does this gut instinct give the traders in the study a useful edge?

A London hedge fund opened its doors, giving him access to 18 male traders who deal in futures contracts.

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A specialist works on the floor of the New York Stock Exchange.


“This niche of the financial markets is particularly unforgiving, and selection acts quickly: While successful traders may earn in excess of £10 million per year, unprofitable ones do not survive for long,” says his paper, published in the journal Nature Scientific Reports. “We monitored these traders during a particularly volatile period (the tail end of the European sovereign debt crisis) so the performance of each trader reflected his ability to make money during periods of extreme uncertainty.”

Coates measured heartbeat awareness — the ability to count one’s own heartbeat accurately. It’s just one element of a branch of the sensory system that monitors our internal conditions, and for Coates it was a key way for the mind to read signals from the body.

He found three things among the hedge fund traders. First, they had measurably greater heartbeat awareness than the general public, meaning that “traders may be relatively more sensitive to bodily signals” than most of us.

Second, those traders with a higher level of this bodily awareness generally made larger profits.

Third, and Coates calls this the “most stunning” finding, those who were most aware of this signal from their bodies were the ones who survived longest in the business. Put differently, “the markets selected for good gut instincts.”

“What is extraordinary is that nobody — and I mean nobody — is aware of this driver of profitability and survival,” he said. “Academic economics and finance is so focused on conscious reasoning that they completely miss the real action, which is taking place in the dialogue between brain and body. They have studied the tips of the flame rather than the base.”

It doesn’t mean that heartbeat awareness alone equals instinct. Coates and others in the field are looking at a whole range of internal signals called “interoception,” ranging from awareness of our body temperature, to breathing, to obscure changes in body chemistry.

“Most signals are having their effects without us being conscious of them, like alterations in glucose or potassium in our blood. But some signals inhabit the fringes of awareness, like muscle tension or breathing or heartbeat. The interoceptive apparatus is vast, (with) receptors and monitors throughout our body,” he said.

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Quick, which way?


And he believes this is what sets us apart from the machines, or from Mr. Spock. Yes, computers recognize trends and calculate what’s happening far faster than a human brain. But they don’t feel.

Meanwhile, it seems the human body and brain operate as one system, collecting signals in conscious and unconscious ways at once like a satellite dish, focusing them all together.

Recognize this, he argues, and “we will also recognize how exquisitely we are constructed for rapid pattern recognition. Humans can indeed compete against the machines.”

And he feels that all of us — not just high-end financial traders — may benefit from this little-known signalling system, that it evolved in all humans along with the better-understood aspects of our intelligence.

“This is just the way we are built. I think everybody uses them (these signals.) It wouldn’t surprise me if Einstein used them when he was working through general relativity — that he just had this crazy hunch that this is what was going on in the universe.”

One caveat, however: His paper suggests that if we over-focus on trying to read our bodies’ signals it may backfire, like being too self-conscious about a tennis stroke.

• • •​

Mapping and measuring our instincts didn’t start with Coates.

At the University of Arizona, a neurobiologist named Bud Craig took up an interest in a small part of the brain that no one else had bothered to study. It sits off by itself, and is therefore called the insula (Latin for island.) It is surrounded by folds of other brain areas that make it hard to reach. It wasn’t known for doing much, except for helping to control heartbeat, breathing, sneezing, coughing and a few other non-glamorous internal workings, so it was not studied by people who wanted to understand thinking, memory and other important brainwork. The insula got no love.

And then Craig started finding evidence that it does much more. For one thing, it’s involved in feeling sensations from inside our body such as pain, and tingling, and temperature.

But he also linked it to feelings beyond the physical such as emotions and trust (or distrust). For the trusting part he showed people photos of Barack Obama and George W. Bush, and different areas of the insula became active on brain scans depending on whether subjects were looking at the candidate they trusted or the other guy.

In 2011, Craig wrote that the insula may be “the source of all human feelings and even awareness.”

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That’s a big step forward for what used to be a sneeze-control centre.

Craig has set about mapping the parts of the central nervous system that govern interoception, or how the brain gathers information from inside the body. This is the physical structure, the circuitry diagram, for the sensations that Coates is studying, linking sensation from many parts of the body to the insula.

In a lecture in Sweden entitled How Do You Feel, Craig told a hall full of brain researchers: “How you are feeling right now will affect everything about you: How you think, what emotions you are having, and how your body behaves.”

He argued that French philosopher and scientist René Descartes “left our brains off in this metaphysical space,” as if they were isolated reasoning machines. “But they really belong in our bodies because that’s what we are. We are biological organisms. And our bodies are what our brains are designed to take care of.”

The internal signals have evolved because they are useful, Coates says. And humans aren’t the only ones with them, though we seem to have the most elaborate system, with other primates a little behind us.

There is a parallel found in an experiment done with small rodents back in the 1970s. Rodents don’t like to be exposed in wide open spaces, where a predator might pounce on them. Stuck in the open, they freeze in fear, they defecate and their levels of cortisol shoot up. But if they are exposed day after day, they start to behave in a more relaxed way. There’s just one thing that doesn’t change: They still get high cortisol levels. That one system of their body still realizes that a mouse won’t live long in an open field, and it’s flashing out a warning.

“Its physiology is still registering that (danger) even though its conscious brain isn’t. And we found the identical thing in the traders,” Coates said.

He believes that on some level, gut instinct is less easy to distract or fool than our rational, calculating brain cells.

“Your brain is at its least deluded when sending messages to your body. And that raises the possibility that there are these signals, risk-management signals in our physiology that are far more accurate than anything we do when we start mucking around consciously with the data. Because then we succumb to all the biases that the behavioural finance people have exposed.”

That led him to ask whether people who are well-attuned to their body’s signals are tapping into this and using it to guide their management of risk. “And the data — I almost fell off my chair when I saw it.”

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Traders gather on the floor of the New York Stock Exchange.


His traders were male because that’s what hedge fund traders mostly are, but he says the limited information on women suggests they share the same systems.

It fascinates Coates to think that as we evolved larger minds we didn’t leave our body-based instincts discarded in the dust, but rather built them into a more complex thinking system as well.

Still, most of us aren’t trading billions of dollars, and we aren’t soldiers making battlefield decisions. The world of high risk isn’t where we live. Why should we care?

There’s still a connection to our lives. One benefit of understanding this, one way we can potentially profit from this field, is that it has the ability to re-shape our approach to training people in all kinds of ways.

Coates throws out a colourful analogy: “If we have been trained and taught to believe that we are designed to be a boat, but in fact we are designed to be a car, then when we go in the water, the water comes in and we sink and we tend to feel bad about ourselves. But if we realize we are designed to be a car, then we can make a better car (and) go on land, on roads where we can perform better.”

Boat? Car?

Right. We traditionally believe that we understand the world through our eyes, ears and brains. But accepting the reality — the contribution of our inner systems — will help anyone who wants to train better workers, better athletes, better soldiers for top performance.

Reaction to Coates’s work is split sharply.

“It depends whether it’s within academia or out. In business schools and economics departments they truly, madly, deeply hate this stuff,” he said.

“But things change when you go to medicine. I’ve never met a medical researcher or a clinician (one who treats patients) who doesn’t look at this and say: ‘This is so obvious. Why hasn’t someone done this before?'”

He likes working with the medical people: “Theory plays no role in their life. They never look at a hypothesis and say we can’t do that because it’s not consistent with current theory.” They just test it. “They also understand human beings better than your average social scientist.”

This whole direction makes great sense also to Anne Pitman, who both teaches yoga and works for the Ottawa Integrative Cancer Clinic. The connection between body and mind has been central to yoga for thousands of years, she says, but our society tends to divorce the rational mind from the body.

“We now have this dominance of brain in our world, as though we are just a bunch of brains walking around,” she said, echoing Bud Craig’s comments on Descartes. “But yoga really depends on everything: It depends on the body, and the mind and the spirit… There’s a nervous system that is about the world, and being in the world, and a nervous system that is more about you, and being contained in you and how to nurture yourself.

“Modern medicine is catching up to the wisdom of what we know about the whole body… Thinking is a great intelligence, but it’s not the only intelligence in the body.”

• • •​

Coates has spent the late summer swimming in the Gatineau Hills, right into October. The slow immersion (he doesn’t plunge) in 15-degree water chills the body and conditions the mind, a theme that should sound familiar by now. His family has a cottage on 31-Mile Lake, and a house near Old Chelsea.​

“That is where we were supposed to be living and bringing up our children. When I left Wall Street, I put together this research proposal.”

“I circulated it around Britain and I just had no takers. People in finance and economics and psychology looked at it and turned up their noses. So I said to my wife, ‘Well, OK, I guess we’re moving back to Canada,’ and we put in an offer on a house in Quebec.”

The offer was accepted. The house was theirs — and the same week, Cambridge accepted his research proposal.

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John Coates is a neuroscientist who studies how our minds receive and use signals from the body — a gut reaction — in making decisions. Wayne Cuddington/ Postmedia


“So we have the ideal life waiting for us in Canada but we’re in London living in a small rental apartment.

“I try to spend as much time as I can there because I write really well when I’m up in the Gatineau.” He is an unusually clear and simple writer for a scientist, using plain English because he knows that when a paper blends medicine and finance, few people will understand the technical jargon.

“It was a true labour of love to walk away from a managing directorship on Wall Street, to do this,” he said.

“Trading is very enjoyable. You’ve got your finger on the pulse. There’s no one, not even the CIA, (who) has access to the information that you do when you’re on a trading floor. Every piece of news in the world is flowing in there and you’ve got your finger on that pulse. Trading is a rush.”

Coates is no longer a research fellow at Cambridge. He has stayed in the UK as a consultant to hedge funds, managers and others interested in risk management.

We asked whether he misses trading.

“Every day,” he said. But “experimental science and trading are very similar. I am getting a dopamine rush every time we discover something new.”

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