When I look at the room I'm sitting in, I am consciously aware of it as existing outside my body and head. So, for example, I can walk towards the opposite wall and I appear to get closer to it until I reach out and touch it. Now I understand that light is being reflected off a wall, travelling across a room, entering my eyes and this process creates nervous impulses. (In fact a physics would correctly point out that the photons that hit my retina are not even the same as the photons 'reflected' by any object). I understand that these impulses are processed in various parts of my brain, some unconsciously but eventually a mental "schema" representing the room is created. I also understand that there are other processes going on in my brain that create my awareness of different types of "self"s, that continually shift my awareness and that attempt to always produce a self-consistent view of myself and the world. However, my question is not about these (well not directly!). My question is simply how does the representation of the room that my brain is creating, not appear within me but instead outside? I look forward to some interesting answers.

I don't have a good answer for you, but I can point you to a very readable book that discusses this issue among many others:

O'Regan, J. Kevin (2011), Why Red Doesn't Sound Like a Bell: Understanding the Feel of Consciousness (Oxford: Oxford University Press).

The book's supplementary website has an answer to your question at Other Twisted Issues, and there's an article-length version of the book in:

O'Regan, J. Kevin (2012), "How to Build a Robot that Is Conscious and Feels", Minds and Machines 22(2) (Summer): 117-136,

as well as a video and a transcript of the author's talk.

I don't agree with everything O'Regan says, but he fully understands the issues and has interesting things to say.

Your answer may be in the question: "how does the representation of the room that my brain is creating, not appear within me but instead outside?" The representation itself is in your brain. But what it represents is the room outside your head, and that representational content is how the representation presents things to to you, how it makes things appear to you.

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