Book review: The Hour Between the Dog and Wolf

Fight or flight. That pretty much describes this book.

The hour between the dog and wolf: Risk-taking, gut feelings and the biology of boom or bust
John Coates (HarperCollins, 2012) $34.95

book review the hour between the dog and wolfFight or flight. That pretty much describes this book. Okay, so there are a few more words – 310 pages of words in fact. But you wade a long way through those pages to find anything much more insightful.

Coates was a trader on Wall Street and is now a research fellow at the University of Cambridge. He’s clearly a brain, with balls, but not with an in-built edit function. The book is too long.

It doesn’t help that Coates tries to make the neuroscience come alive with a fictitious story of two traders, Logan and Scott and their adventures in bond markets. The anecdote is overdrawn and simply gets in the way of the real stuff, which is the physiology of risk.

What does the science show? That decisions in high risk environments are highly influenced by the physiology of the risk taker. The idea of the objective decision maker is thoroughly trashed, as Coates shows that the brain is constantly interpreting signals to and from the body that influence our sense of safety, enthusiasm, confidence and negativity.

One curious discovery is that testosterone can inflate a bullish outlook, so one way to counter irrational exuberance is to have more women on the trading floor. Another insight is that long hours are not the problem we think they are: tediousness is. Researchers have found that physical fatigue can be treated with a simple change of task – great news for employers!

Conversely, researchers have also found that the highest level of stress is caused by the unknown, be it unexpected such as a death or a divorce, or planned such as a wedding or new job. Advice for handling unknowns is to create touchstones – familiar faces, routines or environments.

One of the best insights comes on page 244 and has more to do with maths than science. The high-risk, high-testosterone job of trading is the preserve of young men. Typically women are shouted down and older men are burnt out. But employment among traders “should be more akin to building a career than elbowing for room at the roulette wheel,” he writes. This is the result of bonus schemes that reward short-term success and punish anyone with a long-term view.

Coates didn’t need a degree in neuroscience to figure that one out.

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