The Hypothesis of the Somatic Marker, by Antonio Damasio, perfectly explains the striking Argentine case
Argentina's addiction to the US dollar, in times of uncertainty in national economic policy, is among the highest in the modern world. And while it is expected the search for stable currencies to invest in times of crisis (the famous flight to quality), the fever that is unleashed in Argentina is huge, causing the exchange rate to overreact remarkably.
Thus, when the price of the US dollar rises in high proportions, instead of causing a fall in its quantity demanded, on the contrary, its quantity continues to rise in Argentina, defying traditional economic theory, and forcing governments to take excessive hard measures to stop these runs: control of changes, excessive increases in the interest rate in national currency, among other highly recessive measures. The answer is in the somatic marker of the Argentine brain: its addiction to the dollar is enormous.
The somatic marker's hypothesis, by the renowned neuroscientist Antonio Damasio, has been very relevant in recent years when understanding the role played by emotion in decision making. The idea is that the consequences of a particular decision produce in the person a certain emotional, subjective reaction, which can be "lived", and which in turn is somatic, that is, it is translated into muscular, neuroendocrine or neurophysiological reactions.
This emotional response in turn can be associated with consequences, whether negative or positive, which are repeated with some consistency over time (the consecutive macro-Argentine crises) and provoke such response (leave in despair to buy US dollars, at any price) .
This mechanism of association is what produces what Damasio calls "somatic marker", and that influences the decisions to be made in the future. In this way, the past emotional reaction influences future decision making, making possible the anticipation of the consequences and guiding the final resolution process ("the one who bets on the dollar wins in Argentina").
The past emotional reaction, in the Argentine case, after decades of monetary and fiscal mismanagement, is reflected in "the one that bets on the dollar wins", somatic marker deeply stored in the psyche of the average Argentine, and that has passed from generation to generation in the Argentine families, making it already very difficult to change.
Finally, the concept of a somatic marker, applied to the Argentine addiction to the dollar, is summarized as follows:
- the somatic marker is "learned" from past experiences, our historical fiscal and monetary mismanagement;
- the somatic marker is noted in situations in which certain current events are associated with past emotions, the current fiscal and monetary mismanagement;
- when the marker is activated, the partial or complete replication of a past emotional state associated with the current situation to be resolved is promoted; before monetary-fiscal mismanagement, people run terrified to buy US dollars, at whatever price;
- the somatic marker, like "memory trace", is recorded in high order cortical circuits, "the one that bets the dollar always wins, in the short or long term".
Author: Sebastian Laza
Sebastián Laza is an argentine economist, specialized in the interrelation between Cognitive Neuroscience and Economics. He has published a book about this field: NEUROECONOMICS, THE DISRUPTIVE PATH
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