INVESTED: In Markets, in the Future, and in Society.

Are Quants Left Brained or Right Brained?

To be a successful systematic investor, should you approach modelling by breaking markets down into separable components and understanding each piece in isolation? Or should you instead think about the market as a complete and heuristic whole: a zeitgeist which is more than the sum of its parts? The former corresponds to a left-brain method of attention, while the latter is more indicative of right-brain processing. At first blush, it seems left-brain skills are the driving force for success in quantitative fields. After all, isn’t “breaking down and analyzing markets” the job description of most analysts? However, several concepts from neuroscience challenge the idea that it’s all about the left brain. 

In his magnum opus, “The Master and His Emissary,” Iain McGilchrist takes us on a tour through the neuroscientific evidence for how our brain structure – specifically the division of labour across the hemispheres – shapes the way we process information about the world. There is in fact a left brain/right brain divide, though it’s not the popularized “math vs creative skills” split. This divide is better characterized by different mechanisms of attention. The left hemisphere of the brain is inward focused; it is the model builder, the game player. It is focused on the components of the world it has constructed within one’s mind. The right hemisphere, in contrast, is focused outward. It recognizes oneself as a single piece within the context of a much larger puzzle, and it understands various concepts as unique and irreducible “wholes”.

Iain argues that the outward-focused right hemisphere does a better job of understanding the context of the world, and is our primary connection to the true, external reality, while the left brain is our “emissary.” It breaks wholes into parts, analyzes, abstracts, and returns the results to the right brain to be integrated into our lived experience. 

It is clear which hemisphere Iain would label as the “master” when it comes to investing in markets: he would unequivocally choose the right hemisphere, which is outwardly focused and is capable of understanding concepts and ideas within a greater context. I would agree. Quantitative techniques are our “emissary;” the tools we use to analyze and categorize. Our holistic, principles-based understanding of markets comes from our right hemisphere. The right hemisphere understands the whole within a greater context and remains flexible to changing conditions. It recognizes the big picture and directs the left hemisphere to work out the details. 

Left-brain skills are table stakes for quantitative investment professionals. They are a necessary but insufficient condition for success. Any quant will have strong left-brain skills – but great quants balance left brain skills with equally powerful right-brain skills.