The Hour between Dog and Wolf: Risk Taking, Gut Feelings, and the Biology of Boom and Bust. By John Coates. New York, New York: Penguin Press, 2012. 339 pages. $15.07 (paper). Reviewed by Adam Karaoguz
“The hour between dog and wolf, that is, dusk, when the two can’t be distinguished from each other, suggests a lot of other things besides the time of day…The hour in which…every being becomes his own shadow, and thus something other than himself. The hour of metamorphoses, when people half hope, half fear that a dog will become a wolf. The hour that comes down to us from at least as far back as the early Middle Ages, when country people believed that transformation might happen at any moment.”
― Jean Genet, Prisoner of Love
Is there a relationship between the biological processes of the human body and decision-making ability? According to John Coates, the answer is an emphatic yes. Coates, a former derivatives trading desk head turned neuroscientist, uses a fictionalized vignette of a Wall Street trading house to highlight the drastic changes in body chemistry humans undergo during stressful events (page 10), in particular decision-making under conditions of uncertainty. The vignette reveals how corporate cultural incentives blend with the biological stew circulating inside the average twenty to forty year old male trader. This creates the ideal condition for irrational exuberance during market upswings and “excessive pessimism” during downticks. Coates refers to the latter condition as “learned helplessness,” a state in which the traders feel they have no control over their lives—exuberance is replaced with withdrawal and depression.
Coates traces the tendrils of thought about man’s behavior back to Aristotle, whom he bestows the title of “first biologist”(page 35). According to Coates, Aristotle did not draw such a stark mind/body distinction as philosophers who came after— he viewed human beings as holistic systems in which perfect reason was impossible to attain due to the nature of emotion. Today, scientists are learning more about the role that the chemicals in the body play both in how humans perceive reality and make decisions, and are slowing warming up to the holistic approach.
Coates cites research indicating that three situational factors cause a spike in cortisol (The hormone associated with stress) in the human body—novelty, uncertainty, and uncontrollability (page 217). The presence of one or more of these elements has a marked effect on decision-making. With the spike in cortisol comes a lowered appetite for risk. He highlights advances in sports psychology that reveal that it is possible to train to adapt to these factors in much the same manner as muscles are conditioned by physical exertion (page 240). This has interesting implications for the military and law enforcement, and efforts to create more resilience in their personnel—sometimes termed “stress inoculation.” Advances in our understanding of mind and body can be leveraged into training scenarios to improve both performance and resilience. Coates also showcases the toxic effects of chronic stress on the human body, and cutting-edge attempts to mitigate it.
In another fascinating passage, he points to the presence of a “testosterone feedback loop” in primates as a contributing factor to irrational exuberance in market performance (page 180). Coates emphasizes research that shows that the bodies of two competing primates surge testosterone into their system prior to conflict, in order to assist in the struggle to come. The winner of the contest receives an additional spike in the hormone, while the loser’s quickly dwindles away. This is also known as the “winner effect”, a well-documented outcome of perceived victory in some sort of competitive endeavor—the winner gets increased testosterone, the loser increased cortisol. As male Wall Street traders execute profitable trades, their confidence and aggression are heightened by the flush of additional chemicals triggered by success. In an organizational construct that rewards short-term profits and bold action, this is a recipe for disaster.
The main point is a warning about the dangers of overconfidence, and how the biological processes within the human body can facilitate overconfidence. This has concrete applications to the Special Operations world. Many times, SOF leaders are faced with the decision to launch an operation— a raid based on minimal intelligence, or conducting an operation at the edge of environmental limitations for a given mobility platform. Perhaps while on target, an assault force receives intelligence from a family member that the targeted individual is several city blocks away, but about to depart the area. Immediate pursuit would require stringing the force out in an indefensible manner. Excessive aggression or overconfidence in these situations can lead to mission failure, as many have learned the hard way.
In one section, he alludes to the benefits of “thermal stress” to increasing resilience and toughening in human beings. If true, it would seem that there are added and unforeseen benefits to SOF training, with its emphasis on arduous environmental conditions. He writes (page 252):
“One type of toughening regime is especially intriguing, and that is exposure to cold weather, even to cold water. Scientists have found that rats swimming regularly in cold water develop the capacity to mount a quick and powerful arousal, relying on adrenaline more than cortisol, and to switch it off just as quickly. When subsequently exposed to stressors they are not as prone to learned helplessness. Some tentative research has suggested that much the same thing occurs in humans. People who are regularly exposed to cold weather or who swim in cool water may have undergone an effective toughening regime that has made them more emotionally stable when confronted by prolonged stress. It is surmised by some researchers that the exercise itself, coupled with acute thermal demands, provides these people with an enviable pattern of stress and recovery. Perhaps the same effects could result from the Nordic practice of a sauna followed by a cold plunge.”
Coates asserts that woman and older men (roughly defined as over 50) are not subject to the same fluctuations of testosterone, and he advocates their addition in a well-balanced mix to teams involved in high-risk decision-making (page 275). Men experience a slow decline in testosterone from their mid 20’s onward, the reason that older men are not as susceptible to its influence. This reminds the author of a quote attributed to the ancient Greek thinker Plato, regarding the “passion” of emotions caused by hormones such as testosterone:
“In particular I may mention Sophocles the poet, who was once asked in my presence, How do you feel about love, Sophocles? Are you still capable of it? To which he replied, ‘Hush!’ If you please: to my great delight I have escaped from it, and feel as if I had escaped from a frantic and savage master.’ I though then, as I do now, that he spoke wisely. For unquestionably old age brings us profound repose and freedom from this and other passions.”
Likewise women produce one-tenth the amount of testosterone that a similar aged man does (page 166). He asserts that women and men take varying lengths of time to make decisions—that women are not necessarily risk-averse, it’s just that their time horizon differs. He cites a 2001 study that examined thousands of single male and female traders over a six year time period. The women in the study outperformed the men by 1.4 percent, and some researchers point to the fact that they traded their accounts with much lower frequency than the men. So while women may take longer to make decisions, the women in the study did take risks, and did so in a more long-term, strategic manner than the men.
The idea that the varying biological processes of men, women, and older men can produce different risk evaluation across the groups is a thought-provoking chemical-based take on the concept of “Groupthink”, where a desire for conformity and group cohesion overrides critical analysis. It also has relevance to the current debate regarding the inclusion of women on Special Operations Teams. According to Coates, their presence would be a positive one for decision-making. The inclusion of women and older men would provide a more hormonally balanced team with which to evaluate risk versus gain in an ambiguous environment, and thus prevent a biologically induced groupthink situation from occurring. This is a credible argument, and this author agrees with Coates. However, improved decision-making is only one facet of the inclusion of women to SOF teams. Other aspects, such as unit cohesion and a myriad of second and third order effects remain question marks on this issue.
Missing from Coates’ argument is the effect that the chemicals in the bodies of women—in particular how fluctuations in their chemistry may alter their perceptions and decision-making in a different manner than their male counterparts. He makes the assertion that a more even balance of men and women “could not possibly do any worse than the system we have now” (page 275), and his point is that the inclusion of different types of risk evaluation would create a more stable market. How the nuances of women’s biology will influence their performance in a SOF setting is an area that requires further study and analysis.
In a thought-provoking book, John Coates urges readers to follow the age-old adage to “Know Thyself”, and that an integral part of self-knowledge is an understanding of the chemistry swirling inside the body. This chemistry has a marked impact on perception, resilience, and most importantly, how humans evaluate risk. He advocates a return to the Aristotelian holistic conception of the body and mind, rather than the conventionally held wisdom that separates the two. Finally, Coates recommends diversity of ages and genders on teams to add stability to high-risk decision-making, and temper the pull of body chemistry on reason and rationality.