Why does our brain often lead us to make poor long-term decisions in both health and finance.
While health and wealth may seem like different domains, the way humans make decisions in both areas is strikingly similar. This similarity can be traced back to how the brain processes risk, reward, and time. The direct consequence is that the approaches to optimize the return on both domains are similar.
In this blog, we will explore a few key biases you may have heard of and how they can lead to suboptimal outcomes in both health and financial decisions.
Temporal Discounting: The Struggle to Prioritize Long-Term Benefits
One of the key challenges people face in long-term planning is that our neurobiological systems are designed to undervalue rewards and outcomes that are set in the future whether financial or health-related.
From an evolutionary standpoint, our ancestors faced significant survival challenges, where uncertainty about tomorrow made it advantageous to prioritize immediate resource consumption. This survival strategy, ingrained over millions of years, made sense in environments where scarcity was common. However, with the advent of large-scale agriculture only 10,000 years ago—a blink of an eye in evolutionary terms—this situation shifted dramatically. Today, in an era of abundance and long life spans, our biology hasn't entirely caught up to the need for managing resources for decades ahead. This can lead to a constant uphill battle against our own biology.
This conflict can be seen in your brain circuitry. Some studies even suggest that the prefrontal cortex, which is responsible for long-term planning and self-control, competes with more primitive regions like the limbic system, which drives immediate gratification. Like Plato’s famous Chariot Allegory, if you sometimes feel that your mind is controlled by two different horses, this may not be so far from the truth.
Status Quo Bias: Do No Harm
The status quo bias refers to our preference to keep things the way they are rather than making changes. This is a major obstacle in both health and wealth management, where sticking to outdated or suboptimal practices can lead to poor long-term outcomes.
Status quo bias is deeply rooted in human evolution. For our ancestors, maintaining the status quo often equated to survival: if you were alive and had enough resources to sustain yourself, sticking with familiar routines reduced risk. Any change, especially in unpredictable environments, introduced the possibility of serious threats, such as encountering predators or exhausting critical resources. While gains—like securing more food or territory—might have incrementally improved life, losses could be catastrophic, such as injury or death.
From an evolutionary perspective, this asymmetry is critical: losing what you have could be fatal, whereas additional gains tend to enhance survival or comfort. Therefore, the risk associated with change was often not worth the potential reward, leading humans to prioritize the safer, familiar option.
Even in today’s world, where it can be very beneficial to be active in changing our health and financial circumstances, our biology can still pull us towards the status quo.
Confirmation Bias: Seeing What We Want to See
Confirmation bias, the tendency to favor or even seek out information that supports existing beliefs, likely has roots in our evolutionary history. While the exact reasons for this are still heavily debated, the bottom line is that new information that does not align with our preconceived expectations is often discounted. In the financial and health planning domains this can mean missing out on critical opportunities or ignoring warning signs that could lead to long-term problems.
In the context of health, for example, someone who wants to feel good about their current diet or exercise routine may ignore emerging scientific evidence that suggests otherwise, and cherry-pick data that supports their current approach. Similarly, in the financial realm, confirmation bias may cause an investor to seek information that a risky underperforming stock they chose will eventually turn around.
Optimism Bias: I know the numbers, but it won't happen to me
One of our advisory board members Professor Tali Sharot from UCL and MIT conducted a study where they asked newlyweds to rate their own likelihood of divorce. Despite being aware that average divorce rates for their demographic were about 40%, the most common answer was a staggering 0%. This creates a paradox because if everyone rates 0% and the real number is 40% many people must be overoptimistic. Research found that this is not just for divorce rates but people are much less likely to predict bad things will happen to them than average across a large variety of topics including for example the likelihood of getting cancer or suffering from a market crash.
Evolutionarily, this bias may have helped our ancestors by keeping them motivated even in dangerous environments (“If I calculated all the risks outside, I'd never leave the house…”). Optimism bias, therefore, can foster resilience, encouraging persistence in the face of uncertainty.
While optimism bias can help drive ambition and hope, it can also lead to underestimating potential challenges in health and wealth. Acknowledging this bias, while leveraging it wisely, is key to balancing optimism with realism in long-term planning.
Relativity Bias: Why We Measure Success Against Others
Humans have a deep-rooted tendency to evaluate their success not in absolute terms, but relatively to others around them. This relativity bias stems from our evolutionary past, where survival and mating depended not just on having enough, but on having more than others. If a peer had more resources or status, they were more likely to succeed in finding mates or securing the best opportunities. This comparison-driven mindset persists today, making us feel less satisfied even when we’re doing well.
In finance, this bias manifests as tracking error—a dissatisfaction that arises when your investments perform well, but someone else is doing even better. Even with solid returns, seeing others outpace you creates a sense of falling behind, even if your absolute performance is strong. The problem is exasperated because the nature and range of financial investments almost guarantee that someone will be making more at any given time (e.g. statistically some high-risk bets will pay off in the short term).
Similarly, this bias manifests when people compare fitness routines or physical abilities. For example, someone who works out regularly and feels strong might suddenly feel discouraged if they see a peer with better fitness scores or lifting heavier weights. Instead of appreciating their own health gains, they focus on the gap between their progress and others', leading to frustration and changing their effective fitness routine to one less suited for them.
Understanding this bias can help temper the emotional ups and downs that come with relative comparisons and allow for a clearer focus on long-term gains.
Conclusion
Health and wealth management are deeply interconnected, both shaped by the same cognitive biases and neurobiological mechanisms. While these biases served a purpose in our evolutionary past, they can be detrimental in the modern world, where long-term planning is crucial for success. By understanding how our brains are wired, we can take proactive steps to improve decision-making in both domains, securing a healthier, wealthier future.
At Holistify we’re experts in creating long-term plans that mitigate these biases, ensuring that you can make the best decisions for your health and wealth. Whether you’re ready to create and execute your own long-term goals or seek professional guidance, contact our team of experts today.
For tips and tricks to combat these tendencies and biases read our blog “How to Counteract Cognitive Biases”.
Additional reading
Festinger, L. A theory of social comparison processes. Human Relations, 7(2), 117-140.
Garcia, S. M., Tor, A., & Gonzalez, R. Ranks and rivals: A theory of relative position and competition. Psychological Science, 17(10), 948-953.
Krebs, J. R., & Davies, N. B. Behavioral ecology: An evolutionary approach. Blackwell Science.
McClure, S. M., Laibson, D. I., Loewenstein, G., & Cohen, J. D. Separate neural systems value immediate and delayed monetary rewards. Science, 306, 503–507.
Nickerson, R. S. Confirmation bias: A ubiquitous phenomenon in many guises. Review of General Psychology, 2(2), 175-220.
Plous, S. The psychology of judgment and decision making. McGraw-Hill.
Samuelson, W., & Zeckhauser, R. Status quo bias in decision making. Journal of Risk and Uncertainty, 1(1), 7-59.
Sharot, T. The optimism bias. Current Biology, 21(23), R941-R945.
Sharot, T. The optimism bias: A tour of the irrationally positive brain. Pantheon/Random House.
Shepperd, J. A., Klein, W. M., Waters, E. A., & Weinstein, N. D. Taking stock of unrealistic optimism. Perspectives on Psychological Science, 8(4), 395-411.