Buying a House on Gut Feeling

We define intelligence as “the ability to learn or understand” or “the ability to apply knowledge”; yet 95% of brain activities are unconscious and driven by gut feelings and intuitions without formal logic.

Our mind often relies on strong judgments whose origin we can’t immediately explain. One reason it needs to do so is because there is only so much information we can digest at one time.

Think of intuition as an unconscious associative process. We learn from experience and experience is encoded in our brains as a web of fact and feeling. When a new experience calls up a similar pattern, it doesn’t unleash just stored knowledge but also an emotional state of mind and a predisposition to respond in a certain way, says PsychologyToday.

Intuition is best used as the first step in solving a problem or deciding what to do. Gerd Gigerenzer of the Max Planck Institute for Human Development in Berlin, and author of Gut Feelings, calls it the less-is-more effect. In his book he give an example of a child that is asked whether Spain or Portugal has a bigger population. He guesses Spain, simply because he’s never even heard of Portugal. And he is right; there is a reason he isn’t yet aware of Spain’s less powerful and less populous neighbour; There is “wisdom” in his lack of knowledge.

Intuition is a reliable source of purchasing decisions, at least for big-ticket items: you want products to bring some ease, comfort, or happiness. So when it comes to complex acquisitions such as homes, consumer satisfaction is greater among buyers who decide with their gut. The experience of living in a house is ultimately an emotional and unpredictable one; so throw away your spreadsheet and rely on your “gut brain” to assess whether or not you’ll get more pleasure than pain out of the purchase.

The more experience you have in a particular domain (e.g. what you want out of your home), the more reliable your intuitions, because they arise out of the richest array of collected patterns of experience. Turn your rational brain back on later to discuss financial planning.

Emotional intuitions and reasoning go hand in hand. The battle between gut and mind is over.