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.
Is there a relationship between the biological processes of the human body and our decision-making ability? According to John Coates, author of The Hour between Dog and Wolf: Risk Taking, Gut Feelings, and the Biology of Boom and Bust, the answer is an emphatic yes. Coates, a former derivatives trader turned neuroscientist, uses a fictionalized vignette of a Wall Street trading house to highlight the drastic changes in body chemistry that humans undergo during stressful events, in particular decision making under conditions of uncertainty.2 The vignette reveals how corporate cultural incentives blend with the biological stew of chemicals and hormones circulating inside the average 20- to 40- year-old male trader to create the ideal conditions 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 that they have no control over their lives, and exuberance is replaced by withdrawal and depression.
Coates traces Western thought about human behavior back to Aristotle, on whom he bestows the title of "first biologist." 3 According to Coates, Aristotle did not draw such a stark mind/body distinction as philosophers who came after him—he viewed human beings as holistic systems in which perfect reason was impossible to attain due to the nature of emotion. Today, scientists are slowly warming up to the holistic approach as they learn more about the role that chemicals in the body play in how humans both perceive reality and make decisions.
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.4 The presence of one or more of these factors has a marked effect on decision making. With the spike in cortisol comes a lowered appetite for risk. Coates highlights advances in sports psychology that reveal that training can make it possible to adapt to these stress factors in much the same manner that muscles are conditioned by physical exertion.5 Advances in our understanding of mind and body can be incorporated into training scenarios to improve both performance and resilience. This has interesting implications for efforts within the military and law enforcement to develop more resilience in their personnel—a process sometimes termed "stress inoculation." Coates also describes the toxic effects of chronic stress on the human body and cutting-edge attempts to mitigate it, in particular a method called "mental toughening." This is a field of inquiry involving physiology, neuroscience, and sports medicine that investigates how humans react to novelty.
In another fascinating passage, Coates points to the presence of a "testosterone feedback loop" in male primates as a contributing factor to irrational exuberance in market performance (a majority of traders are male).6 He describes research that shows that the bodies of two competing males experience a surge of testosterone in preparation for an imminent conflict. The winner of the contest receives an additional spike in the hormone, while the loser's hormone surge quickly dwindles away. This is also known as the "winner effect," a well-documented outcome of perceived victory in some sort of competitive endeavor between male primates: the winner gets increased testosterone, the loser increased cortisol. Likewise, as male Wall Street traders execute profitable trades, their confidence and aggression are heightened by the flush of additional hormones triggered by success. In an organizational construct that rewards short-term profits and bold action, this is a recipe for disaster.
The main point Coates is making is to warn about the dangers of overconfidence and how the biological processes within the human body can foster overconfidence. This observation has concrete applications to the special operations world. SOF leaders regularly face decisions about whether to launch an operation under suboptimal conditions, for instance, with minimal intelligence or at the edge of environmental limitations for a given mobility platform. For example, perhaps an assault force learns from tactical questioning while on target that the targeted individual is several city blocks away but about to depart the area. The ground force commander must quickly weigh many competing variables, such as asset and force availability and conditions on the ground, before deciding whether to move to another location. Excessive aggression or overconfidence in these situations can lead to mission failure, as some have learned the hard way.
In one section, Coates alludes to the benefits of "thermal stress" for increasing resilience and mental toughness in human beings. If true, it would seem to confirm that there are added and unforeseen benefits to SOF training, with its emphasis on arduous environmental conditions. He writes:
One type of toughening [regimen] 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 [regimen] 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.7
Coates points out that women and older men (roughly defined as over 50) are not subject to the same fluctuations of testosterone as young men, and he advocates that such individuals be included in teams that are involved in high-risk decision making.8 Men experience a slow decline in testosterone from their mid-20s onward, and for this reason become gradually less susceptible to its influence. I am reminded of a quote attributed to the ancient Greek philosopher Plato regarding the "passion" of emotions that youth experience (and that we now know are 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 thought then, as I do now, that he spoke wisely. For unquestionably old age brings us profound repose and freedom from this and other passions.9
Women produce one-tenth the amount of testosterone that a man of similar age does and generally take longer than men to make decisions. Women are not necessarily more risk-averse, Coates points out; it's just that their time horizon is different.10 He cites a 2001 study that followed thousands of male and female traders over a six-year 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 less frequency than the men. Thus, while the women in the study may have taken longer to make decisions, they did take risks and did so in a more long-term, strategic manner than the men. Coates asserts that a more even balance of men and women working in financial markets "could not possibly do any worse than the system we have now" and that the inclusion of different types of risk evaluation would create a more stable market.11 Missing from Coates' analysis, however, is the effect of hormones on women—in particular how fluctuations in their chemistry and the aging process may alter their perceptions and decision making in a manner different from their male counterparts.
This finding that the varying biological processes of young men, women, and older men can produce different risk evaluations across the groups is a thought-provoking, hormone-based take on the concept of "groupthink," in which 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 have a positive effect on decision making. The inclusion of women and older men would provide a more hormonally balanced team that would be better able to evaluate risk versus gain in an ambiguous environment and thus prevent biologically induced groupthink from prevailing. This is a credible argument, and I agree with Coates, but improved decision making is only one facet of including women in SOF teams. Other aspects of this issue, such as unit cohesion and a myriad of second- and third-order effects, remain questions to be answered. Also, 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 this thought-provoking book, Coates urges readers to follow the age-old adage to "know thyself" and reminds his readers 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 importantly, how humans evaluate risk. He advocates a return to the Aristotelian holistic conception of the body and mind, rather than conventionally held philosophies that separate the two. Finally, Coates recommends having a 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.