A conversation with Lionel Naccache: from the mysteries of the brain to investment bias

    A conversation with Lionel Naccache: from the mysteries of the brain to investment bias

    On the sidelines of an event in Paris where he was speaking as part of our LO Femmes* series, we were lucky enough to have a fruitful exchange with Lionel Naccache, to get his scientific view on all the things that are involved in building our world view, our outlook on gender and our capacity to look ahead and invest. These are all subjects that have an influence on our investment biases. 

    The central subjects studied by this eminent neurologist concern consciousness and subjectivity. He has recently received two prestigious awards for his work. Lionel Naccache thus sheds some light on the fundamental question: why do I perceive the world this way?

    Passionate about the study of our brain, he is just as passionate about sharing and popularising his findings, so that everyone can learn a little more about this organ, which is as misunderstood as it is essential, and even mysterious.


    As a specialist in cognitive neuroscience, do you think that there are gender biases inherent in the structure of our brain?

    I have not noticed very different results in terms of gender in the studies we are conducting. These negative results do not rule out their existence, but they do allow us to assess their small scale on a cognitive and cerebral level. The architecture of the brain is the same for both genders, so I would not be able to distinguish between the brain of a man or a woman by looking at an MRI! Of course, we all have cognitive biases but they are much more evident on psychological and cultural levels than in the structure of the brain. These social-cultural biases are often internalised by individuals, and this has been verified by empirical tests.


    Do you have an example in mind?

    There was a well-known test that was conducted on schoolboys and schoolgirls, based on a simple exercise. Scientists showed them the Rey-Osterrieth complex figure – a collection of squares, circles, triangles and other geometric figures – and asked them to reproduce it from memory. When children are told that it is a geometry exercise, girls do less well than boys. But if scientists say that it is a drawing exercise, the girls do better than the boys, even though the test is exactly the same! So simply by changing the object of the exercise, we can see that certain gender biases are already evident in children. The most harmful and strongest biases are those that individuals have constructed for themselves, ones that shape their perception.

    The most harmful and strongest biases are those that individuals have constructed for themselves, ones that shape their perception

    In your latest work, Le cinéma intérieur (The Inner Cinema), you explain how we all build our own perception, both of the world around us and of ourselves. What are the key factors that shape this perception? Personal experience, education, society or even the times in which we are living?

    We are obviously influenced by a multitude of factors, most of which operate without our knowledge in an unconscious way. All of them have an impact on our interpretation of reality and of ourselves. In all these situations, our brain is constantly producing subjective meanings. This is what I refer to as “fictions” in my essay Le Nouvel Inconscient (The New Unconscious), published in 2006. I do not call them fictions to assert that they are necessarily incorrect or inaccurate, but rather to emphasise that they allow people to “make sense” of the world around them. In this regard, we are indeed creatures of fiction. This fundamental idea has become commonplace today when we think of the fictions that we hold most dear (emotional life, politics, spirituality, etc.). But it’s actually a very basic need of our brain, which is constantly searching for meaning, even when the only thing it sees is a simple object. All this operates subconsciously, producing our own interpretation of the world. In other words, this inner cinema is running within us all the time, even during the most trivial actions of our everyday lives, and knowing this allows us to get back to the sources of our complex fictions.


    So where should we start if we want to “change films” and modify our inner cinema?

    The first step is obviously to realise that we are the ones who build our own stories. We must therefore get to know ourselves better, to distance ourselves a bit. Indeed, if we lack objectivity, we will only see what we are looking for and what fits our interpretations, and miss out on all the rest. Once we become aware of this, we must also be careful not to fall into a kind of “integral relativism” trap, telling ourselves that everything is just an interpretation. Because we must not make any mistakes here: our personal interpretation of the world is not only an individual matter, it is also a part of the world, and it engages us because it will guide our actions. And we know very well that in the name of an interpretation or a conviction, human beings are capable of being at their best and their worst.

    Read also: Women breaking barriers: deconstructing unconscious gender bias in wealth management

    What is your take on investing from a scientific viewpoint, given that investing is above all about anticipating the future?

    We must first understand that we are all in a kind of “space-time prison”, namely the present – this moment now when we are speaking to each other in this interview, or the present moment of the person reading these sentences. But our mind and our brain have the capacity to extract themselves from this present moment. Our brain system allows us to make several “journeys”. Moreover, what is surprising to many people is that the system that allows you to project yourself into the past is the same as the one that allows you to project yourself into the future. Thus, our ability to look into the past shapes our ability to project into the future. We also know that our way of seeing the past or the future is not neutral: we are influenced by what we are living in the present. This is why our memories can evolve, and our ability to project ourselves into the future is also shaped by what we are experiencing today, here and now. Thus, investing for the future is affected by our relationship with the past as well as our current state of mind.

    Our ability to look into the past shapes our ability to project into the future

    Behavioural finance explores the psychological biases that shape our investment decisions. For example, investors who look at their portfolios too often are much more likely to experience losses or underperform. This stems from the illusion of being in control of a situation. What are your thoughts on this?

    This immediately brings to mind the work of Daniel Kahneman, one of the founders of behavioural finance, and his book Thinking, Fast and Slow. The book summarises the main areas of research of this Nobel Prize winner in economics, whose work focuses in particular on cognitive biases. The central thesis of the book is the dichotomy between two modes of thinking: System 1 (fast, instinctive and emotional) and System 2 (slower, more thoughtful and more logical), each of which has its strengths and weaknesses. In this simple conceptual framework, cognitive biases correspond to the heuristics (fast automatic solutions, inexpensive in mental effort) of System 1, which arise in contexts when we should be taking conscious control with effort and a rational approach (System 2). In particular, Daniel Kahneman speaks of “the illusion of understanding”, because we tend to consider as obvious in retrospect what was not so clear in the past, and create a coherent story for ourselves in hindsight. The illusion is all the stronger as studies show that people can even imagine afterwards that they had foreseen what was going to happen. Again, this quest for meaning!

    We tend to consider as obvious in retrospect what was not so clear in the past, and create a coherent story for ourselves in hindsight

    *About LO Femmes

    Created as an internal initiative at Lombard Odier, our LO Femmes network in Paris aims to make wealth management more accessible to women. Through various themed events, our goal is to promote knowledge-sharing on current topics and to facilitate networking and information exchange. LO Femmes is part of the LO Women's club, which has been active in the Group since 2016. 


    A Few Words on Lionel Naccache

    Lionel Naccache is head of the clinical neurophysiology department at the Pitié-Salpêtrière AP-HP Hospital and professor of neurology at Sorbonne University in Paris. He is co-director of a research team at the Institut du Cerveau and a member of the National Consultative Ethics Committee (Comité Consultatif national d’Ethique – CCNE). In December 2021, he received the Eloi Collery Prize 2021 from the Academy of Medicine and the Grand Prix Claude Bernard from the City of Paris, recognising his work on consciousness.

    As the author of several books, such as Le Nouvel Inconscient (The New Unconscious) or his bestseller Parlez-vous cerveau ? (Do You Speak Brain?), Lionel Naccache continues to build an original body of work, which revolutionises our conception of subjectivity. In his latest book, Le Cinéma intérieur (The Inner Cinema), he offers a completely new approach to how our representation of the world is shaped.

    Important information

    This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

    Read more.


    let's talk.