"Fear is hugely more important than euphoria," according to Alan Greenspan, former Federal Reserve chairman who served for nearly 19 years. Optimism builds gradually, but fear is highly contagious and takes financial markets by storm. Studies on human behavior say that fear of losing money is far more powerful than the potential for profit.
What is fear? Take a dose of attachment or greed, then add a pinch of uncertainty. If there is something we want but might not get, or have and might lose, the potential for fear arises. This principle holds for money, jobs, relationships and freedom. It also holds for the inverse. Think of something you hope never happens but could, such as a tsunami, global warming, war on American soil or an audit by the Internal Revenue Service.
The many faces of fear make up a burgeoning industry. Consider the insurance and safety sectors. Insurance is highly complex and includes a list of products as long as your arm. Insurance can be purchased for health care with drug, vision or dental riders. There is also insurance that covers wages for short-term disability and another for long-term disability. There is business overhead insurance and policies for business interruption. Don’t forget about long-term care insurance, which picks up where general health insurance usually leaves off, and pays for a nursing home. There is also separate health insurance for injured workers and another for those injured in an auto accident. Liability insurance is designed to protect assets, while comprehensive insurance covers damage to property. Finally, there are a multitude of products that pay out when people die. Oddly enough, this is called "life insurance" and includes mind-boggling options with names like "variable," "universal," "whole life," "level term" and — get this — "accidental death and dismemberment." Dismemberment is not when you get kicked out of your favorite club.
The point is that insurance is profitable only because a vast majority of customers pay far more in premiums than they ever receive from the policy. Insurance agents, the people who sell the policies, call this "peace of mind." Others call it "feeding on fear." Of course, it makes sense to pool risk so that those who suffer an untoward event receive essential compensation, but like the stock market, when people ponder insurance, statistics and emotions are hard to separate.
Safety first! Yes, safety is essential, but, like insurance, there is an inherent tendency to leverage fear to optimize revenues. The Food and Drug Administration has an important role to ensure that pharmaceuticals are safe and effective. But does it have to be so expensive to bring a drug to market that many excellent cures never become accessible to patients because it is simply not worth it to do the research? Medical technology, cars and planes, water, food, children’s toys, commercial buildings and public transportation must all be safe for public consumption. Yet safety must be a means to an end and not simply a means to earning a profit.
Human beings are descendants of people whose vigilance and sense of caution supported survival but not of those whose unbound fear blinded rational judgment. Dangers must be identified and, when possible, managed. To make sound choices, risks should be responsibly considered and evaluated. Insurance and safety are examples of industries that have the potential to contribute to society. Yet, feeding fear for profit distracts the human spirit from its higher potential for wisdom, compassion, creativity and freedom.
———
Ira Zunin, M.D., M.P.H., M.B.A., is medical director of Manakai o Malama Integrative Healthcare Group and Rehabilitation Center and CEO of Global Advisory Services Inc. Please submit your questions to info@manakaiomalama.com.
