In Fashion But Out of Financial Fitness

Louis L. Constan

Physician's Money Digest, November 2007, Volume 14, Issue 11

While attending a fashion show in Chicago (my wife dragged me), I was surprised to see my old University of Chicago friend Dr. Joe Mallovski. After the show, Joe and I met in the hotel bar for drinks and to reminisce about old times.

Dr. Constan: Joe, you're pretty famous as the inventor of the combined functional MRI/PET scanner. The research you're doing now is a far cry from the low-tech digging around we did in Neuroanatomy 201.

Dr. Mallovski: It sure is. You'd be interested in my latest research. I'm using my machine to study what goes on in the heads of people who spend thousands of dollars on something as ephemeral as fashion. You might be interested that it's similar to what goes on in the heads of investors when they decide how to invest their money.

Dr. Constan: Interesting, but why would you, a respected researcher, spend time in such mundane subject areas?

Dr. Mallovski: Really Lou, you're so naive. You should have paid attention in Economics 101. You go where the money is. Who do you think funds the millions of dollars I spend on my research? National Institutes of Health? Get real. The fashion and financial services industries have tons of money, and they are keenly interested in giving it to someone who can tell them how to read the minds of their clients.

Dr. Constan: Really! Okay, but still it's hard to see how such diverse industries can have anything in common.

Dr. Mallovski: You'd be surprised. The neural firing patterns between the amygdala and the hippocampus are strikingly similar when you look at a patron of a fashion show and when you look at a patron of one of those financial planning seminars. Both events initially trigger what we used to call the "herding instinct" (Biology 203). As the events unfold, they also trigger certain pleasure centers in the occipital/parietal area of the cortex, adjacent to the motor centers, facilitating the compulsion to write a large check.

Dr. Constan: Interesting, go on.

Dr. Mallovski: I’ve gotten similar results when comparing subjects looking at the models on fashion magazine covers with subjects looking at the happy couples in front of their boats on the covers of financial management magazines. Or comparing subjects looking at the glitterati in their gorgeous gowns at the Academy Awards with subjects watching Bogle, Baranke, and Buffett talking about P/E ratios or the new spring lineup of mutual funds.

Dr. Constan: I remember in Sociology 301 we talked about primitive human drives for sex, food, and power. Is that related to what you're doing?

Dr. Mallovski: Now you're catching on, Lou. Every brain activity starts in the primitive brain centers, where emotions such as fear, love, and greed are formed. These are the motivation centers, and they’re essential for the survival of the organism. Then these ideas and feelings get shunted up to the higher brain centers for action, often without much additional neural processing.

Dr. Constan: So, in a sense, both the fashion industries and the financial services industries are "moving the herd around" to the latest "style" of clothing or investing. Last year it was earth tone colors and real estate investment trusts, this year it's "bling" and emerging market mutual funds. So, Joe, do you have any practical advice for me to avoid all that manipulation of my neural psyche? I'm just talking about finances here, not fashion…look at me!

Dr. Mallovski: It's pretty simple. Just don't let yourself get hooked by reading those magazines or watching those financial shows. Pick a financial plan when you're away from all that manipulation and stick to it no matter what happens on CNN. That's Sound Investing 101!

Louis L. Constan, a family practice physician in Saginaw, Michigan, is the editor of the Saginaw County Medical Society Bulletin and Michigan Family Practice. He welcomes questions or comments at 3350 Shattuck Road, Saginaw, MI 48603, 989-792-1895, or louisconstan@hotmail.com.