Tag Archives: David DeSteno

Gratitude Increases Financial Patience, Investment Earnings

Jennifer Lerner

Jennifer Lerner

Emotions affect personal financial decision-making, and negative emotions like anger and fear can lead people to make either risky or conservative financial choices, according to Harvard’s Jennifer Lerner.

David DeSteno

David DeSteno

With Northeastern University’s David DeSteno, Leah Dickens, University of California Riverside’s Ye Li, Lerner and Columbia University colleague Elke Weber noted that sadness increases impatience and leads to “myopic misery” – focus on immediate gain instead of more profitable longer-term options.

Leah Dickens

Leah Dickens

Lerner and team analyzed participants’ payoff choices when they were in an induced sad state or a neutral emotional condition compared with disgust as a control state.

Ye Li

Ye Li

On average, sad-state participants accepted between 13% and 34% less money to receive a payoff immediately (“present bias”) instead of waiting 90 days for a larger payment, confirming that induced sad feeling led to preference for immediate reward and less patience for a better but more distant payoff.

Elke Weber

Elke Weber

However, these sad volunteers were not more impatient in other generalized areas, suggesting that this effect focuses on impatience for rewards.
In contrast, the negative emotion of disgust did not result in greater impatience, pointing to the specific impact of sad feelings on payoff choices.

Cynthia Cryder

Cynthia Cryder

In a related study, Lerner and team evaluated the impact of induced positive emotions: Happiness and gratitude.
Again, participants could select a smaller, immediate payoff or larger payout later.

Induced gratitude enabled most volunteers to negotiate larger immediate rewards in exchange for giving up a larger, but more distant payment: “…the mean grateful participant required $63 immediately to forgo receiving $85 in three months, whereas the mean neutral or happy participant required only $55 immediately.

James Gross

James Gross

This trend was replicated in other studies by Lerner, Li, and Weber, who reported that average sad-mood participant was willing to accept $4 today instead of $100 in a year, whereas the average neutral-mood volunteer required more than four times as much$19 today to forego $100 in a year.
Another study estimated that sad volunteers accepted between 35% and 79% less money immediately instead of waiting for a future payoff.

Ronald Dahl

Ronald Dahl

This ”misery is not miserly” effect is influenced by the degree of “self-focus” or attention to personal impact in  an observed situation.
When volunteers were primed to focus on their personal reactions while experiencing induced sadness, they gave up more money to acquire a commodity compared with people who had neutral emotions or neutral self-focus, according to Lerner with Washington University’s Cynthia E. Cryder, James J. Gross of Stanford, and University of Pittsburgh’s Ronald E. Dahl.

Gratitude moderates “economic impatience” and suggests that affect-based interventions can help investors enhance financial decision making.

-*How do you manager the impact of transient emotional states on financial decision-making and risk-taking?

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“Nudging” Compassion, Resilience to Reduce Conflict, Stress

David DeSteno

David DeSteno, directs Northeastern University’s Social Emotions Lab, where he investigates cognitive and neurological mechanism related to social behavior.
In Out of Character: Surprising Truths About the Liar, Cheat, Sinner (and Saint) Lurking in All of Us , and at his PopTech talk, he shared how he investigated whether evoked compassion and empathy is associated with reduced aggression.

He described experiments in which volunteers solve math problems for money.
In some conditions, one of DeSteno’s associates posed as another volunteer and noticeably cheated to earn more money than the real volunteer.
In other conditions, the confederate abided by the rules.

For some experiments, the cheating confederate, a professional actor, evoked empathy and compassion by saying that she was  worried about her brother, who was just diagnosed with a terminal illness.

In these situations, the volunteers were less likely to intentionally inflict discomfort on her in the following study of “taste perception,” a measure of aggression.

In this experimental trial, the volunteer measured a discretionary amount of extra-hot sauce into a cup for the cheating or non-cheating confederates to taste.

Volunteers poured five times more hot sauce for cheating confederates than non-cheating confederates, but they treated cheaters who evoked empathy the same as non-cheaters.

DeSteno noted most people are willing to help others who have some similarity to them, such as a shared identity of sharing a religious faith or hometown, or even are moving together as in conga lines, military drills.

He suggested that movement “synchrony causes separate identities to merge into one,” and demonstrated this trend in a music perception study, where volunteers in the same room tapped their hands on sensors when they heard tones.

In some conditions, the tones were synchronized so the volunteers were tapping at the same time as other volunteers, and in other conditions, the tones were independent.
De Steno found that 50% of volunteers who tapped at the same time were willing to help other volunteers, whereas 20% of those who tapped at different times helped others.
He concluded that volunteers felt more similar by tapping together, so felt more compassion, and were more likely to help others.

DeSteno is investigating social media like Facebook as a platform for sharing similarities to reduce aggression in conflict, cyber-bullying, victims of distant natural disasters.

He  said uses Cass Sunstein’s and Richard Thaler’s idea that small behavioral and organizational changes can “nudge” people to healthier, safer, more productive, and prosperous habits outlined in Nudge: Improving Decisions About Health, Wealth, and Happiness 

Their practical recommendations for designing effective “choice architecture” are consistent with DeSteno’s research-based findings:

* Align incentives with desired outcomes
* Identify possible alternative outcomes in familiar terms
* Provide default options that favor desired outcome behaviors
* Offer prompt, relevant feedback about choices and outcomes.
* Expect deviation from the targeted outcome, and build in ways to prevent, detect, and minimize this variance.
* Structure complex choices to reduce the difficulty of decisions-making

-*How have you seen “similarity” affect workplace collaboration and support?

-*Where have you seen organizations implement “choice architecture” to encourage employee behaviors toward positive goals?

BJ Fogg

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