The Optimal Amount of Nervous Energy on Test Day

On test day, it is completely natural to be excited, nervous, worried, anxious, or some combination of these states of mind. For purposes of this blog, I will lump them together as “nervous energy.” The point I want to make is very simple: for top performance, there is an optimal level of nervous energy that is not zero, and maybe not even close to zero. Consider this graph:

If you are near the origin, with very little nervous energy, you either do not understand what is at stake (unlikely) or you are heavily drugged; neither state of mind is likely to generate good performance. Conversely, if you are on the far right on the x-axis, you are a bundle of nerves, and thus also unlikely to perform well. Some positive amount of nervous energy, between the two extremes, will allow you to perform at your highest level.

Really, this is common sense, is it not? It’s the same logic found in the Economics curriculum—the graph above could be Total Revenue or Profit, for example (with different axes, of course). Or you can think of the optimum as the point where the marginal benefit (of nervous energy) curve intersects the marginal cost curve.

But there’s a broader issue here that I have seen in years of teaching in CFA® prep courses, and that is this: people worry about being worried, anxious, or nervous. This can turn into a downward spiral in which you are anxious, you then worry about being anxious, and then worry about worrying about being anxious. Down into a vortex of nerves you spiral.

The solution is simple (but easier said than done, I admit). Recognize that it is natural to have nervous energy and that it can enhance your performance. Do not expect to be relaxed. Frame your nervous energy as “being up” for the exam. (As demonstrated in the psychology literature, the way we frame situations can significantly affect our outlook and decision making.) Become comfortable with experiencing some nervous energy. Of course, the optimal amount of nervous energy will differ from person to person. You need to know yourself. If you have already taken a CFA exam, reflect on the experience—too much nervous energy, not enough, or just enough? Keep telling yourself that it is a natural phenomenon, and might well be working to your advantage.

Finally, I recommend taking realistic practice exams as a way of avoiding a dysfunctional, high level of nervous energy. These will increase your command of the material, as well as your familiarity with the format of the exam. This knowledge will, in turn, make it easier to find your optimal level of nervous energy.

About the Author

John Howe, PhD, CFA, is chair of the Department of Finance at the University of Missouri, where he has taught finance for more than two decades and has received awards for excellence in teaching. His writings on banking, corporate finance, corporate governance, and behavioral finance have been published extensively in major finance and accounting journals. Howe has also taught at the University of Cambridge and has trained investment professionals in Zurich at one of Switzerland’s largest banks. He is a longstanding member of the editorial board of the CFA Digest, the primary publication of CFA Institute. He is also the author of The Foolish Corner: Avoiding Mind Traps in Personal Financial Decisions.