The experience of losing money is processed by the brain in a similar fashion to pain and fear, according to research that could explain why people dread financial misfortune more deeply than they value gains.

British scientists have discovered that losing money, or even anticipating such a loss, stimulates a part of the brain called the striatum, a circuit involved in processing fear and pain.

The findings, from a team at University College London, suggest that the concept of “financial pain” is a real response to economic loss that has similar neurological roots to physical pain.

It is likely to have evolved by hijacking the brain’s preexisting pain system, so that people learn to avoid risky financial gambles in much the same way as they avoid injury.

The research, which is published in the Journal of Neuro-science,promises to provide important insights into how the brain makes financial decisions, and why some people easily avoid gambling while others find it compulsive. It could eventually lead to new ways of treating gambling addiction.

It also adds to the emerging field of neuro-economics, which is using brain-imaging technology to illuminate how and why biology drives typical human behaviour.

Standard economics and neuro-economics have previously shown that while people always value making money in gambling games, they are far more scared of losing than they are excited about the prospect of winning the same amount.

Experiments have shown, for example, that when offered an even-money gamble between winning £150 and losing £100, most people will refuse the bet. This happens even though the potential reward is far greater than the potential loss, and it generally takes a prize more than twice as large as the forfeit to persuade people that the risk is worth taking.

The new study helps to show why this might be so. The team, led by Ben Seymour, of the Wellcome Trust Centre for Neuroimaging at UCL, scanned the brains of 24 volunteers using functional magnetic resonance imaging (fMRI) as they played a gambling game.

As the subjects got to grips with the game, they learnt accurately to predict whether they were likely to win or to lose in particular situations. This learning, the researchers found, took place in the striatum, a region that deals with reward, pain and fear. The promise of a win or a loss, however, generated different patterns of activity.

When people felt they were likely to lose, the pattern of activity was very similar to that seen in the striatum when people experience physical pain. This, the scientists believe, allows the brain to predict imminent harm and take defensive action, much as it does when avoiding injury.

“This provides a sort of biological justification for the popular concept of ‘financial pain’,” Dr Seymour said.

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