DAN ARIELY

Updates

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.

August 27, 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 aunt gave me some money for my birthday. Since she wasn’t sure about my likes and dislikes, she said to spend it on something that would make me happy. Do you have any advice on how to choose?

—Katy

While I’m sure there are many items that would make you happy, spending the money on someone else could make you even happier. In an experiment, researchers gave participants either $5 or $20. They then randomly asked the participants to go about their day and spend that money either on themselves or on someone else. Later, the researchers asked them about their happiness. Those who had spent the money on someone else, regardless of the amount, reported feeling happier throughout the day.

But what to buy these other people in order to get both the glow from gift-giving and something that they will like? A different set of researchers asked people to name the last gift that they had received and say how happy they were with it.

Though gift recipients were happy with items that they had wanted, on average they were even happier with unexpected and surprising gifts. These made them appreciate the thought from the sender and got them to experience something new. Hopefully your aunt will also appreciate how you choose to spend her gift money.

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Dear Dan,

My sister is one of my closest friends, and she’s usually one of the first people I call when I need solid advice or someone to talk to. Our lives, however, are pretty different, and they are starting to differ more. Sometimes I hesitate to open up and ask for her advice because I’m not sure she can relate to what I’m going through. What should I do? Should I look for someone else to get feedback and advice from?

—Ingrid

It’s reasonable to think that it is best for someone to have “been there” in order to understand you and give you good advice. Indeed, a recent survey found that people predicted that a shared experience would lead to greater insights. But is that true?

In one experiment, participants listened to a short video describing a negative emotional experience. They were asked to analyze how the storyteller was feeling about the experience and also indicate if they had a similar story from their own past. The results showed that listeners who had a negative experience in common with a storyteller were much less accurate at describing how the storyteller felt.

It may be that people were more likely to focus on their own similar experience if they had one, which shifted their focus away from how the storyteller was feeling. These results suggest that even though someone has “been there,” they might not understand how you’re feeling in the moment you most need support.

So while your sister might not be going through the same things as you, that doesn’t mean she can’t empathize. In fact, her distance from your exact situation—but closeness with you—might give her a perspective nobody else can offer. Stick with your sister.

August 19, 2022 BY danariely

Hello to all,
After a lot of work, there is now a small but hopefully useful website for each of my books.

Hopefully, you will find these useful:

Predictably Irrational

The Upside of Irrationality

The Truth About Dishonesty

Irrationally Yours

Dollars and Sense

Payoff

Amazing Decisions

 

August 6, 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 daughter took off a semester of college so that she could pursue her ambition to hike the 2,190 miles of the Appalachian Trail. Due to weather and injury, she wasn’t able to complete the final 280-mile leg of the trail, including the steep and storied Mt. Katahdin. I’m concerned that having come so close, she’ll feel disappointed and will struggle to re-engage with hiking as well as with her studies.

–Edie

I would not worry too much about her motivation. It is true that repeated failure can wear people down and lead to learned helplessness and depression. But occasional failure can actually have a positive effect. In fact, coming really close to a goal—but falling just short—can increase overall motivation, even for unrelated tasks.

In one study, researchers had people play games where they won (found 8 out of 8 diamonds in a puzzle), clearly lost (found only one diamond) or nearly won (found 7 out of 8 diamonds). After the game, those who almost won outperformed the other two groups on unrelated tasks, such as card-sorting.

The idea of your daughter’s returning to school and hiking after her impressive yet unsuccessful endeavor might seem daunting to you, but it is possible that this experience will only improve her engagement with her studies and the outdoors.

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Dear Dan,

I’m considering becoming either vegetarian or a vegan and haven’t yet decided which one. I’m sure it will be easier to eat as a vegetarian, as well as simpler to go out for dinner with friends. But I think a vegan diet is morally preferable, healthier and more sustainable for the planet. Any advice?

–Vlad

You are weighing a great many considerations, including convenience, morality, health and the environment. I have some idea how I’d rank these concerns, but I don’t know enough about you to tell you how to rank them for yourself. I can, however, add one more factor: the social element.

You mentioned the ease of going out with friends for dinner, with regard to how hard it might be to find appropriate foods in restaurants. But you should also consider how much fun you’ll be for others when you go out. Why? Research that we carried out at my lab at Duke showed that people perceive vegans, particularly in settings where they get to express their food preferences, as judgmental and morally superior. As a consequence they tend not to like them as much as non-vegans.

From that perspective I would recommend that you go with vegetarian. And if you do decide to go vegan, make sure that you tell the people around you that you’re doing it for health reasons, as this will diffuse the potential air of moral superiority and help with your social relationships.

See the original article in the Wall Street Journal here.

August 3, 2022 BY danariely

In my last column, I mentioned the writing of Dr Groopman, but trying to save space, I did not make his main point clear.  I am sorry for that and below is a more detailed account on what Dr Groopman wrote and how I interpreted it.  Of course, any error of interpretation is mine.

 

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.

August 1, 2022 BY Dan Ariely

Hello Hello,

I am trying to understand how people perceive different potential solutions to the problem of global warming. This is not academic research, this is just for my personal interest. 

Please answer as many of the following questions as you can. 

Click here to take the survey: 

https://duke.qualtrics.com/jfe/form/SV_0fdoxd1AyLZCp0N

 

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.

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.

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.

June 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 lead a team of designers, and I want to foster an environment where everyone feels comfortable speaking up when they have concerns or new product ideas. I thought about holding a weekly “coffee chat,” where I invite employees to share input on a topic of the week. Do you think that’s a good idea?

—Hansen

The key word is here is “everyone”: Getting your whole team to participate will be difficult. And most managers will tend to overvalue such participation, rewarding and promoting the employees who exhibit it over the ones who don’t.

This finding comes from a study of employees and their managers at a large technology company. Managers were asked to rate the degree to which each employee spoke up to suggest new ideas or offer solutions. The researchers found that employees who were seen as proactive in this regard tended to be rewarded with promotions and salary increases. An employee’s level of day-to-day productivity, on the other hand, was not rewarded to the same degree.

We don’t really want to reward people more for one kind of contribution than for another that is at least as valuable. But managers tend to notice the proactive employees and thus to favor them. So if you want a free flow of ideas but don’t want to fall prey to this bias, you should ask the people working with you to have such meetings over coffee, but you yourself should be absent, and you should ask your employees to share with you the ideas from the group as a whole without noting who contributed which ideas.

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Dear Dan,

My teenage daughter is looking at colleges and she’s stressing out about where she should apply. I’m happy to offer her guidance, but most of the time my input isn’t welcome. In fact, sometimes she does the exact opposite of what I advise. How should I proceed? 

—Tina 

I also have teenagers. The good news is that they grow out of this in 10-20 years.

In the meantime, consider that your teenager may be exhibiting something that is known as “psychological reactance”: People tend to double down on asserting their freedom when they feel that it is being threatened. This behavior is a psychological counter-measure to a perceived restriction of agency and not a sign of disrespect. It explains why people sometimes do the exact opposite of what is suggested to them.

You are most likely dealing with some reactance. The question is how you can reduce its power.

A recent study suggests one approach. Students were assigned an activity that made them feel either certain or uncertain about their understanding of education. Afterward they were presented with a policy giving the school the responsibility to select their classes. Students who had been made to feel uncertain were much less threatened by the prospect of giving up their freedom than those who had been made to feel certain.

With this in mind, I recommend that you start by shaking your daughter’s belief that she has all the answers. Once you get her to hold a more realistic view of her own knowledge, she can begin to accept your advice.

See the original article in the Wall Street Journal here.