DAN ARIELY

Updates

Recent Interview – Motivated Employees and Company Value

September 17, 2022 BY Dan Ariely

I recently spoke with Observer about the impact motivated employees can have on a company’s value. We discussed some of the background laboratory and industry research, looking in the data for signals that predict returns in the stock market, and what our findings mean for very large companies. We wrapped up with some thoughts about whether working from home is helping employees in the long-term.

Economist Dan Ariely Is Attempting to Unlock the Hidden Investment Value of Motivated Employees

From the interview:

Observer: Let’s start with discussing how you came to found Irrational Capital

Ariely began by explaining the trajectory of his career, which began with testing motivation in laboratory settings, then working directly with companies to design systems to better motivate their employees.

“And the third stage, which is the stage we’re talking about now is saying, what about all the other companies out there? It started from an academic question of, could I find signals that could predict excess return in the stock to the stock market. The first exercise was to go and get data. So I spent years trying to collect data and my data has some private data and some public data. It’s a mix of the two but essentially you can think of it as a combination of satisfaction surveys and what’s on LinkedIn and what’s on Glassdoor and, and so on, 

And then the question from all of this data, is what would predict returns from the stock market? What would not? And I didn’t start it like a black box approach because I already had the academic knowledge of what seems to be working from other studies and from my own studies. So for example, do companies that pay higher salaries have higher returns? The answer is no. But it turns out that the perception of fairness of salary matters a lot. So the absolute level of salary doesn’t matter so much. The relative salary matters a lot.”

Read the original article on the Observer website here.

Ask Ariely: On Keepsake Conundrums and Proxy Practicality

July 23, 2022 BY Dan Ariely

Here’s my Q&A column from the WSJ this week  and if you have any questions for me, you can tweet them to @danariely with the hashtag #askariely, post a comment on my Ask Ariely Facebook page, or email them to AskAriely@wsj.com.

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Dear Dan,

I’m planning a family reunion where relatives will be asked to bring photos and keepsakes. One side of the family, however, hasn’t been able to hold on to many physical memories, and I’m concerned that the lack of memorabilia will bring down the mood of the event. What’s the best way to handle this situation?

—Selena

Memories make us happier than we expect, even sad or seemingly mundane memories—and even memories that aren’t our own.

One study asked college students to write their favorite college memories on notecards. A month later the students read either their own memories or those of another student. Both groups reported boosts in happiness after writing and reading memories, even when the memories were about things that could be considered sad. The study was replicated in nursing homes in New Jersey: The residents who read memories, even ones that weren’t their own, reported feeling less lonely, more connected and happier.

These findings suggest that everyone at the reunion will be better off after looking at photos and scrapbooks. The reunion is also a great opportunity for family members to write down memories and stories that aren’t otherwise recorded, which could be a good start for enjoying memories at the next reunion.

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Dear Dan,

I recently divorced after many years of marriage. Splitting our assets and accounts was a long and difficult process. Now I’ve discovered that my advance medical directive still has my ex-wife listed as my healthcare proxy. Should the situation arise, she can decide whether to keep me alive or disconnect me from life support. Should I find somebody else to take over this role or wait a bit, so as not to ruffle already hurt feelings or cause further practical headaches? What if I die in the meantime?

—Alec

You should certainly keep your ex-wife as your healthcare proxy, and not simply out of convenience or a desire to avoid giving offense.

As the doctor and medical writer Jerome Groopman has observed in one of his New Yorker Columns “Sometimes, however, a doctor’s impulse to protect a patient he likes or admires can adversely affect his judgment.” Dr Groopman then continues to describe one of his own cases: “I was furious with myself. Because I liked Brad, I hadn’t wanted to add to his discomfort and had cut the examination short. Perhaps I hoped unconsciously that the cause of his fever was trivial and that I would not find evidence of an infection on his body. This tendency to make decisions based on what we wish were true is what Croskerry calls an “affective error.” In medicine, this type of error can have potentially fatal consequences.”

My interpretation of Groopman’s observation is that it is often better for doctors not to have special feelings for their patients. Why? Because as lots of research has shown that it is difficult to be objective in making decisions for people we are attached to. We make more judicious decisions regarding people we care about less.

In your case, your ex-wife doesn’t care much about you these days. And because of that, should you sustain a serious injury or illness, the odds are in your favor that she will make more rational decisions on your behalf than she would have done during the days when she loved you deeply. Even if you do end up getting remarried, keep her as your healthcare proxy. There is no substitute for the rational coldness that comes from having your ex-wife make decisions for you.

This being said, don’t tempt her too much: Make sure she is not one of the beneficiaries of your will or life insurance.

See the original article in the Wall Street Journal here.

Ask Ariely: On Getting Ghosted and Tough Topics

July 9, 2022 BY Dan Ariely

Here’s my Q&A column from the WSJ this week  and if you have any questions for me, you can tweet them to @danariely with the hashtag #askariely, post a comment on my Ask Ariely Facebook page, or email them to AskAriely@wsj.com.

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Dear Dan,

Several weeks ago, I went through four rounds of interviews at a company I really want to work for. Since then I’ve heard nothing, and all my emails inquiring about the status of my application have gone unanswered. Am I such an unqualified candidate that I don’t even deserve a response?

—Vanessa 

Sounds like you’ve been ghosted. Most people have heard this term in connection with social situations and online dating. Unfortunately, it is an ever-growing trend in the business world as well.

According to research, 73% of employers admit to having willfully ignored job candidates. This behavior has negative consequences not only for candidates but also for employers: A job seeker suffering from feelings of social rejection—and who likely missed opportunities to interview for other positions while waiting to hear back from a particularly desired employer—may turn to social media to complain publicly. The result is reputational damage to the company that can have a real negative impact on its ability to recruit down the line.

Ghosting is hurtful and unprofessional, but you may be able to put your negative experience to use. What if this is one way for the company to show you its real face? The company may have done you a favor, as you likely won’t be happy in a place that signals arrogance and little desire for long-term affiliation.

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Dear Dan,

I just joined an adult soccer league, and we often go out for drinks together after playing. Sometimes the conversation tends toward politics, and my sense is that I’m a little more conservative than most of the people in my group. My inclination is just to stay out of those discussions. What do you think? 

—Perry 

It is understandable that you might want to stay out of potentially loaded conversations where you have an opposing view. However, recent research suggests that trying to remain neutral can backfire.
Studies have shown that when you don’t take sides, people tend to assume you hold the opposite views of the group. Research also shows that people tend not to like or trust people who remain neutral on controversial topics—particularly when withholding an opinion appears to be strategic, such as when a conservative politician deliberately avoids taking sides on an issue in front of a liberal audience.

In fact, claiming to have no opinion is sometimes worse than having an unpopular opinion. Participants in one study preferred to play a cooperative game with a partner who opposed their views on gun control compared with playing with a partner who had a neutral view. In a different study, participants played a game more cooperatively when paired with someone who disagreed with them rather than with someone who had a neutral stance.

The next time politics comes up, I suggest that you respectfully share your views. It might feel uncomfortable at first, but the trust you build will improve your relationships with the other players on and off the soccer field.

See the original article in the Wall Street Journal here.

Ask Ariely: On Limiting Loneliness and Fundraiser Formulations

June 18, 2022 BY Dan Ariely

Here’s my Q&A column from the WSJ this week  and if you have any questions for me, you can tweet them to @danariely with the hashtag #askariely, post a comment on my Ask Ariely Facebook page, or email them to AskAriely@wsj.com.

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Dear Dan,

I just won a free group session at an outdoor laser tag arena. The package is for 10 people, but I don’t have that many close friends. It got me thinking: Do other people have that many close friends? Is there an optimal number of friends to have? 

—Kate 

Friendships are important for our health and well-being. Their absence—loneliness—not only makes us sad but harms us physically, about as much as smoking 15 cigarettes a day. Research suggests that having even one close friend can alleviate the negative effects of loneliness on health and well-being. But the ideal number of close friends is apparently somewhere between three and six. Beyond that inner circle, we also have casual friendships, and a wealth of these further increases our feelings of life satisfaction.

If you are looking to fill your laser tag party, you could ask each of your close friends to invite another close friend of their own. Not only will the game be more fun with a larger group of people, but you might also learn something new about your friends from their friends. You also might expand your circle: Since you like your close friends a lot, there is a chance that you will like their friends, too.

Of course, this being laser tag, you could try a more competitive approach. Invite 4 good friends and 5 people you don’t like so much, then pit the two groups against each other in laser tag. You probably won’t make new friends this way, but fighting together will draw your circle of close friends even closer.

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Dear Dan,

I’m just starting to organize the 10th annual fundraising gala for the charity I work for. This is a special event where I hope to raise more money than ever before. How do you recommend I make this year’s gala extraordinary?

—Monsoor

It is impressive that your organization has held this gala every year for 10 years, and it might be tempting to emphasize the fact. But be careful to do so in a way that stresses what is special about this year’s event—not what is recurring.

Research shows that people are more generous with their charitable giving when they believe they are doing something out of the ordinary—“just this once,” as you would tell yourself in making an exception from your diet or budget—as opposed to something routine. In one experiment involving online banner ads, more people clicked on an ad asking for support for a charity walk held “once a year” than for one held “every year.” Obviously, both formulations imply the same frequency, but “once a year” makes the event seem special, while “every year” stresses that it repeats.

To signal that your event is extraordinary, you could use the language of the experiment and advertise the gala as happening only once a year. Alternatively, you could promote this year’s gala as a once-in-a-decade event celebrating a special anniversary.

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See the original article in the Wall Street Journal here.

Ask Ariely: On Seeking Scares and Creating Connections

May 21, 2022 BY Dan Ariely

Here’s my Q&A column from the WSJ this week  and if you have any questions for me, you can tweet them to @danariely with the hashtag #askariely, post a comment on my Ask Ariely Facebook page, or email them to AskAriely@wsj.com.

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Dear Dan,

My co-workers and I were discussing how we were going to spend our time off once a really stressful project wraps up. I was planning on going to a spa for a few days for some rest and relaxation, so I was surprised to learn that one of my colleagues was going on an adventurous rock climbing trip. Why would she want to engage in another stressful, albeit exciting, activity after so much work stress? Doesn’t she value relaxation?

—Mina 

Your intuition about which activities relax us—and which don’t—seems logical, but it might not be that accurate. Research has shown that voluntary stressful situations, such as rock-climbing, can actually reduce stress rather than increase it.

In order to better understand stress, researchers teamed up with an extra scary haunted house that specialized in such frights as locking people in coffins, administering electric shocks and confronting people with malevolent clowns. People who had purchased tickets for this haunted house were asked to report how they felt just before they went into it and again once they came out.

The results showed that on average, people felt better after experiencing the haunted house. Moreover, this improvement was particularly pronounced for the people who entered the experience the most stressed, tired or bored.

So it is possible not only that your colleague has chosen the more relaxing option, but that an adventurous trip would be the best thing for you as well. Of course, you could just watch a horror movie between massages and see if that minor stress improves your well-being.

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Dear Dan,

I’m the owner of a small advertising agency. We’ve been working from home for the past two years, and most of my employees strongly prefer to continue to do so. Since this model has worked well for us, is there any reason to require more time in-person?

—Joe 

Yes, you should require more time in-person. This advice is particularly important for companies that need their employees to be creative—which I suspect is the case for yours. Recent research has demonstrated that teams generate fewer creative ideas when they meet by videoconferencing as opposed to interacting in person.

As part of an ideation workshop, engineers at a company were randomly assigned into pairs and asked to generate new product ideas for one hour. Some pairs were assigned to do so in-person, others by videoconferencing. After generating ideas, each pair had to select one idea to submit as a future product innovation for the company. The pairs that worked together virtually not only generated fewer ideas, but the ideas were also rated as less creative.

The researchers found that these effects were determined less by the positive effects of social connection and eye contact among the in-person pairs than by the negative effects of focusing on a screen among the videoconferencing pairs.

If your team can’t manage more in-person interactions, you might at least consider arranging in-person days expressly for pursuing collaborative and idea-generating tasks.

See the original article in the Wall Street Journal.

Ask Ariely: On Including Identities and Managing Meetings

May 7, 2022 BY Dan Ariely

Here’s my Q&A column from the WSJ this week  and if you have any questions for me, you can tweet them to @danariely with the hashtag #askariely, post a comment on my Ask Ariely Facebook page, or email them to AskAriely@wsj.com.

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Dear Dan,

I’m advising a young refugee from Afghanistan who is resettling in the U.S. She has been offered admission to several colleges and is setting up meetings to inquire about financial aid. To what extent should she highlight her identity in requesting these meetings?

—Stephanie 

It is understandable to be reluctant to draw attention to an identity that might be subject to prejudice. In past studies, two groups of employers were shown the exact same resume—but for one group, the resume bore a name associated with a minority. The employers were less likely to respond to the minority candidate. So it is perhaps not surprising that in a recent survey, only 35% of women and members of racial minorities said they were likely to highlight these aspects of their identities when seeking career support.

Recent research has found, however, that making deliberate, explicit mention of one’s identity can be beneficial. In one study, city council representatives were sent emails asking for advice on a career in politics. Some representatives got emails from senders who drew attention to their identities, whereas others got emails from the same senders, but without the identity call-out. Response rates to emails were higher when senders made explicit mention of their identities, and this effect was even stronger for women and members of racial and ethnic minorities.

The researchers concluded that calling attention to your identity reminds people to be aware of their potential biases and to try to counteract them. Assuming that your mentee is seeking financial aid from institutions that view prejudice as negative, she would do well to mention her identity in asking for meetings about financial aid.

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Dear Dan,

Switching between working from the office and working from home, combined with ever-changing Covid guidelines, has increased the number of meetings my employees have each week, and everyone is unhappy about it. What can I do to support my employees?

—Benedict 

Introduce at least one meeting-free day a week. Most meetings are unproductive, and team-building can happen by other means.

Researchers surveyed employees at more than 70 companies across the globe that had instituted meeting-free days. Employees reported feeling more empowered, autonomous, satisfied and productive than they had before the policy. They also felt less stressed and less micromanaged.

The authors concluded that three meeting-free days a week was optimal, reducing stress by 57% and improving productivity by 73% compared with having zero meeting-free days.

For the strategy to work, however, you must make sure that you aren’t just piling up all the meetings you would have held every day on the non-meeting-free days. Having meeting-free days should instead cause everyone to think more carefully about the meetings they set and the number of people they invite to attend them. You might also consider which goals can be achieved using other means of communication.

See the original article in the Wall Street Journal.

Ask Ariely: On Confident Crushes and Feedback Failures

April 23, 2022 BY Dan Ariely

Here’s my Q&A column from the WSJ this week  and if you have any questions for me, you can tweet them to @danariely with the hashtag #askariely, post a comment on my Ask Ariely Facebook page, or email them to AskAriely@wsj.com.

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Dear Dan,

I work at a coffee shop, and every Monday morning a woman comes in to pick up an iced coffee. I have developed quite a crush on her, but I’m worried that she doesn’t share my feelings and might say no if I ask her out. What do you suggest I do?

—Robert 

Every decision we make has the potential to bring positive or negative consequences. Right now, imagining a negative outcome is keeping you from asking for a date, so you might think you could gain the courage to talk to this woman by focusing only on the positive, envisioning her saying yes instead of no.

But a study that involved asking for a promotion points to a different conclusion. Participants were asked to think about what it would be like to ask for a promotion at their workplace. Then they were divided into three groups. One was told to write a list of reasons to make the request, another to list reasons not to make it and a third to list both pros and cons.

All the participants were then asked how likely they were to actually muster the courage to ask for a promotion at their work. Interestingly, the ones who listed both pros and cons were the most willing to ask, while there was no difference in willingness between the groups that considered only pros or only cons. What this suggest for your situation is that you should make a list of all possible positive and negative consequences of asking for a date. By lessening your fear of rejection, this exercise will make you more likely to take action.

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Dear Dan,

I’m a laboratory technician, and I’m responsible for training a new employee to operate some complicated equipment. He just isn’t getting it, and he keeps making the same mistakes instead of learning from them. What else can I do?

—Ayla 

The idea that we can learn from our mistakes is appealing, but it’s not always correct. Researchers have found that people often don’t learn from their mistakes, even when given an immediate opportunity to correct them.

In one set of studies, participants responded to factual questions by selecting one of two possible answers. After each question, feedback was provided. Test-takers in the “success” group were told only when they answered a question correctly, while those in the “failure” group were told only when they answered incorrectly.

Both groups had the same opportunity to learn from the feedback. But when they were retested, the “failure” group was less able to learn from their mistakes than the “success” group, which showed more progress. Why? Subsequent research suggested that failure threatens the ego and causes people to disengage. We find it easier to learn from other people’s failures than from our own.

So the next time you’re working with your new employee, make a point of commenting on everything he’s doing the right way. Instead of drawing attention to his mistakes, talk broadly about mistakes that other people might make when they’re first learning how to use the equipment, including mistakes you might have made. In general, when the ego is put aside, things often improve.

See the original article in the Wall Street Journal.

Ask Ariely: On Remixing Referrals and Editing Expectations

April 9, 2022 BY Dan Ariely

Here’s my Q&A column from the WSJ this week  and if you have any questions for me, you can tweet them to @danariely with the hashtag #askariely, post a comment on my Ask Ariely Facebook page, or email them to AskAriely@wsj.com.

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Dear Dan,

I work for a local newspaper. We’re trying to increase our subscriber base through a customer referral program. Subscribers are awarded a $30 cash bonus for each successful referral they make. Unfortunately, the campaign hasn’t been very successful. Do you have any suggestions?

—Lee 

It takes some effort to recommend a newspaper to someone. But to follow through and subscribe to a new newspaper takes effort, too. Could it be that the new customer—and not the existing subscriber—is the person who needs the incentive?

To investigate this question, a group of researchers teamed up with a videogame subscription company. The company randomly sent each of its customers one of three email requests to refer new customers: The first didn’t include an incentive, the second awarded the current customer a free month for each successful referral, and the third awarded the free month to the new customer.

Not surprisingly, the no-incentive condition was the least effective. Customers in the other two groups made the same number of referrals—but out of all those referrals, the most successful were those that offered the incentive to the new customer rather than the existing customer. The new customer is the one who needs to go to the effort to get signed up, and an incentive can help make jumping through those hoops more attractive.

The referring party, meanwhile, may anticipate rewards other than financial ones—for example, a positive effect on their reputations from suggesting valuable products or services to others. In your newspaper’s case, the right mix might just be a warm glow for the people who are referring their friends and a financial gift to the new customers.

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Dear Dan,

My fiancé is meeting my parents for the first time. Unfortunately, my parents aren’t really the warmest and most welcoming people. I’m hesitant to say too much to my fiancé because that might make him more nervous about an already stressful situation. What’s the best approach to this introduction?

—Felix 

Your hesitation is understandable, but research shows that being surprised by a stressful situation is worse than anticipating one. In a recent study, participants were asked to sit for a job interview that entailed giving a public speech to a group of disinterested scientists. Some participants were warned about the nature of the interview, and others weren’t. The researchers found that the forewarned participants had lower subjective feelings of stress and lower physiological stress as measured by cortisol levels and brain activity.

Many of our experiences are shaped by the gap between expectations and reality. Surprise, excitement and disappointment are all products of this relationship. Presumably you can’t control your parents, so you should try to help manage your fiancé’s expectations for them instead.

Start working on this a week before the meeting. Over multiple days, let your fiancé know what to expect before meeting your parents and continue to do this during your engagement and through your marriage. Alternatively, you could elope—and transfer the surprise and stress from your fiancé to your parents.

See the original article in the Wall Street Journal.

Ask Ariely: On Manipulating Motivation and Stopping Scrolling

March 26, 2022 BY Dan Ariely

Here’s my Q&A column from the WSJ this week  and if you have any questions for me, you can tweet them to @danariely with the hashtag #askariely, post a comment on my Ask Ariely Facebook page, or email them to AskAriely@wsj.com.

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Dear Dan,

I’ve been struggling to get to the gym and posted about my frustration on social media. I was inundated with support and people sharing anecdotes about what worked to keep them motivated. With so many different strategies offered up, how do I figure out which one works the best?

—Joachim

Social scientists also find it hard sometimes to sort through multiple findings on a topic to identify the key results. Researchers at the University of Pennsylvania have confronted this problem by conducting mega-studies, using thousands of participants and testing multiple different ideas for achieving a single result.

One of their megastudies addressed your question: The researchers tested 53 different approaches to increasing exercise as measured by the frequency of gym visits among 61,000 people. The approaches ranged from reminders, rewards and pledges to keeping a journal, framing exercise as fun and sharing workouts on social media. About half of these tactics worked to increase gym visits. One of the best-performing approaches was to offer people 9 cents in reward points if they returned to the gym after missing a planned workout. These “micro-rewards” increased gym visits by 16%.

Based on these findings, your best bet would be to combine a few of the successful strategies: Start by setting a reasonable workout schedule. Next, add reminders on your phone. Finally, plan small rewards for yourself for keeping to your schedule and also for going back to the gym if you miss a planned workout.

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Dear Dan,

I have tried to spend less time on my phone and on social media, but every time I intend to check just one new message a friend sent me, I end up going down a social media rabbit hole, scrolling through one post after another. Why does this happen to me?

—Kade 

Social media platforms are designed to maximize the time we spend on them. One reason they do this so effectively is that once we start consuming a certain type of content, our appetite for it increases.

In one study researchers asked participants to watch music videos. Half of the participants watched five different music videos, while the other half watched only one. The participants were then asked whether they would like to watch an additional music video or switch to a different task. You might have guessed that those who had already watched five videos would be tired of doing so and ready to move on to something else, but the researchers found the opposite: The participants who had already watched five videos were more likely to choose to watch more than the participants who had watched only one.

This is a case where the old saying is certainly true: If we don’t make a decision, someone else will make it for us. So if you want to take control of the time you spend on social media, you’ll need to take an active role—for example by setting a timer for 15 minutes, or only starting to look at social media 15 minutes before a meeting, so that you know when you’ll have to stop.

See the original article in the Wall Street Journal.

Ask Ariely: On Career Callings and Extraordinary Experiences

March 12, 2022 BY Dan Ariely

Here’s my Q&A column from the WSJ this week — and if you have any questions for me, you can tweet them to @danariely with the hashtag #askariely, post a comment on my Ask Ariely Facebook page, or email them to AskAriely@wsj.com.

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Dear Dan,

I’m really passionate about the well-being of animals. Unfortunately, the animal shelter I worked at recently closed, and I’m looking for new work that is equally fulfilling. But the search is taking a while, and my partner thinks I should just take a job that pays the bills. I’m really confused about what I’m looking for, not only in my job, but also in my relationship. What should I do?

—Amos 

The meaning of work differs greatly among people. Some attach deep purpose and meaning to their careers, which they see as a calling, while others view work merely as a means to earn a paycheck. Researchers refer to one’s place on this spectrum as a “calling orientation,” and since the time we spend at work is rather substantial, picking a career path that doesn’t match our orientation can have a substantial effect on our quality of life.

How our partner’s calling orientation aligns with our own can influence our job satisfaction. A team of researchers followed job seekers and their partners and found that the more widely calling orientation differed between partners, the more uncertain the job-seeking partners felt, the less energy they had to find work and the less successful they were in actually finding full-time employment after six months. A mismatch in calling orientation hurt the employed partners, too, making them less content with their own jobs than were those who were more aligned.

Talk to your partner and get clarity on your respective calling orientations. Discuss whether your differences in this area could affect your views of each other and your shared future. A mismatch in calling orientation doesn’t necessarily mean that you should break up, but recognizing the disparity may help you understand and respect the ways in which you are different.

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Dear Dan,

On a flight for a recent business trip, a new member of my team was offered a free upgrade. He turned it down. Why in the world would someone pass that up?

—Gus 

Sitting in an upgraded cabin with more legroom and free drinks certainly sounds like the more enjoyable travel experience. But your co-worker might have decided that staying with the team was of greater importance, especially since he’s a new member. And maybe he was correct.

In 2014, researchers published a paper called “The Unforeseen Costs of Extraordinary Experience,” in which they showed that while certain experiences may themselves be amazing, they can also have a downside when they are not shared by everyone in a social group. The researchers found that when people who had amazing experiences recounted them to their social groups, they often suffered negative social consequences and sometimes ended up feeling worse than those who didn’t have the extraordinary experiences at all.

You certainly don’t have to turn down opportunities to have extraordinary experiences. But while traveling with a group of new colleagues, maybe your team-member had reason to be mindful of the trade-off between the lure of an upgrade and the possible social cost.

See the original article in the Wall Street Journal.