Both demonetization, as well as the US elections have shown that during times of crisis, we do not act in the best or rational ways. We may make choices that we may regret later. Or, we may start acting on a plan of action, without thinking it through. Our panic looms so large in front of us, that we forget to think rationally and act in the best way.

Why does this happen in the face of crisis?

There is a part of the brain which is responsible for our survival. This part has evolved over centuries to keep us safe from sudden attacks and helped our ancestors to stay safe when they lived in dangerous environments like jungles. So, taking decisions quick was important. When faced with a rival tribe or a charging lion, they could not wait to decide what would be the right option. They just had to decide, and fast.

The part of the brain which takes decisions rationally and logically has developed only recently. Further, when anything is perceived as a threat, the brain does not wait for the logical part to weigh all the aspects of the situation and make decisions.  So, whenever we see something as a crisis, or threat, our “fight or flight” part of the brain kicks in and makes us take certain types of decisions.

For example, voters chose Donald Trump as president because he regularly spoke of providing jobs to the locals. For the many people struggling with unemployment, he represented the golden chance of finally having a livelihood. Therefore, due to the economic crisis in their life, they chose the quickest option who would resolve that. They, unfortunately, could not factor in other things that they rationally would have because their primitive mind kicked in.

Similarly, due to demonetization in India, people jumped on the bandwagon and formed long queues outside banks and ATMs. There were many who could have made by with online transactions for a few days. However, their survival brain kicked in and they saw cash as their basic need, so they did whatever to get it. Of course, small merchants and sellers who depend entirely on cash had a good reason to panic, but not everyone.

How should we react?

The problem in acting this way is that most of our crisis these days are not the same as those of our ancestors. There is no hungry lion after our lives and most of these crises are not life threatening (of course, disasters are exceptions to this). Therefore, it then comes down to how we perceive an event.

Chances are, any stressful event that causes wide-spread panic, will be perceived as a threat by us. However, it is up to us to fix our perception and make sure we don’t react rashly. How do we do that? That will be covered in the next blog.

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