Horizon, Host: Ted Simons

October 27, 2011


Host: Ted Simons

Impact of “Passing Moods” on Economic Decisions


  • A team of ASU researchers is studying how rational economic decisions are influenced by a person’s mood and embedded human impulses. ASU professor Douglas Kenrick and Jessica Li, an ASU doctoral student, talk about their research.
Guests:
  • Douglas Kenrick - ASU Professor
  • Jessica Li - ASU Doctoral Student
Category: Business/Economy   |   Keywords: economy, moods, ASU, ,

View Transcript
Ted Simons: How much are financial decisions impacted by cave man instincts? A lot, according to new research by scientists at ASU. Here to talk about that research is ASU psychology professor Douglas Kenrick and psychology doctoral student Jessica Li. Good to have you here. Thanks for joining us.
Jessica Lee: Thank you
Ted Simons: Passing moods can influence rational economic -- talk to us about this.

Douglas Kenrick: So there's this phenomenon called loss aversion, which economists think is kind of strange, because $100 to an economist is worth $100, whether it's coming or going, whether it's in your wallet or whether it's just spent. But psychologists found out that people have a lot stronger reaction to the loss of $100 than they do of the gain of $100. You're walking down the street, you find $100, you feel good. If you look in your wallet and find you lost it, you feel twice as bad as you would have felt good. That's loss aversion. It was considered a constant in human judgment in decision making, one of the things psychologist contributed. But we thought maybe it doesn't always work that way. We studied how humans think from an evolutionary perspective, and one of the things we found in our lab is that who you pay attention to, how you remember those people, are all sort of dependent upon what we call functionally relevant significant motives.

Ted Simons: I want to get Jessica in here as well. What are we talking about? We're talking about ancestral stuff, aren't we?

Ted Simons: Yeah. So these motives are presumed to be very important for humans across all different cultures, and they would have been very relevant to our ancestors' abilities to survive and reproduce. So some of these motivations include self-protection, our ancestors had to develop a set of behaviors when they faced dangers. Such as a bear. How were they able to survive under those circumstances? Mating motivation another extremely relevant motivation if our ancestors were to successfully reproduce.

Ted Simons: As far as the research is concerned, how did you study this? What was done?

Douglas Kenrick: We brought people into the laboratory, and we put them in a mating frame of mind, or a self-protective frame of mind. Imagine you're on a tropical vacation, you meet some very attractive person, they're attracted to you, you can't stop talking to one another, you find an excuse to spend the evening together, have dinner. Looking into their eyes and it end was this romantic kiss. We have the students imagine themselves with someone they find attractive. Or other students imagine you're alone in the house at night, you hear some noises, it becomes clearer someone has broken into your house, and you reach for the phone, the phone line has been cut. And you hear the door opening. So during these two frames of mind, now they make a standard economic decision. Why don’t you tell them about the decision Lee.

Jessica Lee: So we're trying to look at loss aversion, whether loss aversion will be affected by what state of mind these people are in.

Ted Simons: That $100.

Jessica Lee: Exactly. So we're trying to look at the psychological impact of gaining or losing certain amounts of money, like $100. Right after people read these scenarios, imagining themselves with a person who is attractive, or being scared alone in the house at night, we then have -- then asked them how happy or unhappy they would be if they gained certain amounts of money or if they lost money.

Ted Simons: So what did you find?

Jessica Lee: Well, what we found was exactly what we predicted. For both men and women, when they were worried about protecting themselves from physical danger is when they were in the self-protection mode, they become more loss risk than usual. They were really afraid of what they might lose. It could mean life or limb. Extremely detrimental to our ability to survive. On the other hand, a mating motivation led men, but not women, to not be loss aversion, it was a -- this didn't happen for women. And this is because of some one pulling biological theories such as parental investment.

Ted Simons: Real quickly, didn't happen with women, but how did the women respond to the men who responded differently?

Douglas Kenrick: That's a slightly different question. What we typically find is that women are attracted to men who have resources. Men tend not to care. There's a study that was done where they showed students, a picture of a very attractive person wearing a Burger King outfit or wearing a nice suit of clothing. It turns out for the men, they didn't care what she was wearing, was she beautiful or not? The women paid a lot of attention, the unattractive guy wearing a nice suit was more desirable than the poorer good looking guy. So a lot of research shows that women are attracted to men's status and wealth. From an evolutionary perspective this makes sense, because women's -- women contribute their bodies to the offspring, we're mammals so the women bear the children, they pay an immense cost for the children, you know they have to nurse them afterwards. And men, if they contribute anything, most mammalian men don't contribute anything, it's all like Los Angeles in 1973.
[Laughter]
Douglas Kenrick: Very short-term mating. The male gives his genes, but human beings, the males hang around. And the best ones have resources. So females want -- before a female is willing to mate with a guy, she wants to see, what have you got
Ted Simons: Yeah
Douglas Kenrick: You know, in terms of resources.

Ted Simons: Last question, as far as all this idea of rational economic decisions and everything from comparing this and doing that, not a big deal anymore? We just basically work on impulses we don't even recognize?

Jessica Lee: No, I mean our belief is that every area, every discipline has something to contribute to our understanding of human behavior. Of course rational economics, we can learn a lot from that, a lot from the models they produce about how people ideally under ideal circumstances should behave. But we also believe that these motivations are very powerful. And to get the full understanding of why people make the decisions, the financial decisions that they do, we really have to look at our behavior from a lot of different perspectives.

Ted Simons: All right. And we'll stop it right there. Fascinating stuff. Thanks for joining us. We appreciate it.

Jessica Lee: Thank you.


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