Last week I heard the former head of the Warsaw stock exchange say that 50% of investing decisions are made on pure statistics and 50% are made on emotions. I would expand this theory and say that 90% are made by emotions. This reminds me of a famous investment company founded by 3 Nobel Prize winners (2 in economics) that failed miserably because all their investment decisions were based on pure economics, emotions were removed.
This investment firm used to think about decisions as old, calculated, detached, computations that examine the costs and benefits — only recently have we gained a higher appreciation for the role of emotions in our decisions and for the fundamental ways in which they change us.
One example of this is a fantastic paper by Paul Slovic (http://journal.sjdm.org/jdm7303a.pdf) in which he asks the question of why we care about baby Jessica (the American 8 year old that got stuck in a well 20 years ago and the world watched ) but don’t seem to care as much about genocides such as the one in Darfur (where 800,000 people were murdered in about 100 days, while the world watched and did nothing).
Of course there could be many reasons for the difference but it is rather amazing to realize that baby Jessica got more C.N.N. coverage than Darfur. Why? One of the emerging reasons for this seems to be that we are called into action by emotions — we see a cute toddler in trouble, and our hearts go out to her, but numbers and statistics numb our emotions and reduce our motivation to act.
Joseph Stalin expressed this sentiment when he claimed that “One man’s death is a tragedy. A thousand deaths is a statistic.”
Nobel Prize winning physiologist, Albert Szent-Gyorgi had a related observation: “I am deeply moved if I see one man suffering and would risk my life for him. Then I talk impersonally about the possible pulverization of our big cities, with a hundred million dead. I am unable to multiply one man’s suffering by a hundred million.”
It turns out that we are numbed by numbers much quicker than Stalin and Gyorgi suggested.
For example, it turns out that describing one starving child in Africa creates higher emotional responses than describing two starving children using an equivalent amount of information. The single child creates a higher emotional response and, as a consequence, people donate more money to the one child compared with the two. It also turns out that describing one starving child creates more emotional reactions (and donations) relative to a situation where the same child is described but this time with additional information concerning the magnitude of the hunger problem (3 million kids in Malawi are facing hunger).
Emotions are an integral part of who we are, a part that represents our evolutionary history, a part that is a basic and necessary component of our behavior.
Maybe TV companies need to employ people strong in Emotional Intelligence to deliver the news and stir us into action to make the world a more equitable place to live..