Jennifer Lerner on Emotion, Judgment and Public Policy

Human judgment and decision-making is a little like an iceberg — a lot of it lies far below the surface. Harvard Kennedy School Professor Jennifer Lerner, who directs the new Laboratory for Decision Science, draws upon psychology, economics, and neuroscience to better understand the social and emotional influences on judgment and decision making that tend to escape our conscious awareness. Her latest research paper, “Misery is not miserly: Sad and self-focused individuals spend more,” is scheduled for publication in Psychological Science.

Q: You’ve written a great deal about how an individual’s emotional and psychological state can affect judgment and decision-making. Please discuss your most significant findings.

Lerner: For a while now, we’ve worked to understand the effects of fear and anger on risk perception. We started with an idea from the existing research literature: If you’re in a bad mood, that bad mood might carry over to subsequent judgments and decisions and create an overall pessimistic outlook. We had a feeling that prediction was too simplistic, though—namely, that it failed to account for variations in the way different negative emotions, such as fear and anger, might affect judgment. We hypothesized that fear and anger would actually have opposing effects on people’s risk perceptions. In particular, we predicted that fear would lead to a pessimistic outlook, while anger would lead to an optimistic outlook when it came to risk perception.

In our early laboratory studies, we found that experimentally induced fear and anger did indeed have these opposite effects on risk perception. However, this lab research was not a sufficient test of our hypothesis, since the feelings we induced in our participants were not particularly strong and because participants didn’t have a lot of information about the judgments they were making.

In the aftermath of September 11th, we realized that, tragically, we were presented with an opportunity to find out whether our lab research could predict how the country as a whole would react to the attacks and how U.S. citizens would perceive future risks of terrorism. We did a nationwide field experiment, the first of its kind. As opposed to the participants in our lab studies, the participants in our nationwide field study did have strong feelings about the issues at stake—September 11th and possible future attacks—and they also had a lot of information about these issues as well. We wondered whether the same emotional carryover that we found in our lab studies would occur—whether fear and anger would still have opposing effects.

In pilot tests, we identified some media coverage of the attacks (video clips) that triggered a sense of fear, and some coverage that triggered a sense of anger. We randomly assigned participants from around the country to be exposed to one of those two conditions—media reports that were known to trigger fear or reports that were known to trigger anger. Next, we asked participants to predict how much risk, if any, they perceived in a variety of different events. For example, they were asked to predict the likelihood of another terrorist attack on the United States within the following 12 months and whether they themselves expected to be victims of potential future attacks. They made many other risk judgments about themselves, the country, and the world as a whole. They also rated their policy preferences.

The results mirrored those of our lab studies. Specifically, people who saw the anger-inducing video clip were subsequently more optimistic on a whole series of judgments about the future—their own future, the country’s future, and the future of the world. In contrast, the people who saw the fear-inducing video clip were less optimistic about their own future, the country’s future, and the world’s future. Policy preferences also differed as a function of exposure to the different media/emotion conditions.  Participants who saw the fear-inducing clip subsequently endorsed less aggressive and more conciliatory policies than did participants who saw the anger-inducing clip, even though the clip was only a few minutes long and participants had had weeks to form their own policy opinions regarding responses to terrorism.

In sum, findings from our lab, which arose by testing a theory of how the mind works, went on to usefully predict how the United States as a whole receives and responds to information. As a consequence, I’ve had the opportunity to present this work around the world and in some important policy venues, including NATO headquarters. It’s gratifying to be able to show policy-makers scientific evidence that might correct false intuitions about how people’s different emotions influence risk perceptions. In the near future, I’ll be teaching these lessons to a group of public-health officials who are on the front lines when disasters strike. 

Q: Your most recent research paper demonstrates how self-focus can play a large role in economic decision making. Please discuss.

Lerner: A few years ago, my research colleagues and I tested the hypothesis that when people are sad, they pay more to buy things. Our results supported the hypothesis. The findings intrigued us, because they contradict major theories in our field, which say that if you’re in a negative mood, you’ll have a negative outlook that leads you to devalue things. By contrast, we found that when you’re sad—and sadness, of course, is a negative emotion—you value items more highly if you have the opportunity to obtain them. In this sense, sadness is distinct from other negative emotions.

An interesting aspect of this phenomenon is that, in our experiment at least, sadness has an effect even when it has nothing to do with the decision at hand. We showed a sadness-inducing video and then asked decision makers in our studies to remember sad events from their personal past. Whether they felt sad about losing something they loved, losing a pet, or reminiscing about a past mentor, sadness carried over and affected the prices they were willing to pay for utilitarian objects such as a water bottle or a highlighter set. In fact, most decision makers in our studies insisted that the sad feelings we triggered did not in any way influence the prices they set to buy something.  Thus, participants assigned to the sad condition end up paying more than participants assigned to the neutral condition, and the sad participants do not recognize that their feelings drive up the price they pay.

In our present paper, we try to understand the mechanisms that explain this phenomenon – to go inside the engine room, so to speak. How does the mind work when people are sad and making economic decisions? We tried a number of different hypotheses that did not receive support. Interestingly, when we went back to the drawing board, the most important theoretical basis for our new understanding of this phenomenon came from the work of William James over a hundred years ago—old ideas that had never been particularly well tested in experiments. Specifically, James’s concept of the “material self” suggests that we try to enhance ourselves with material possessions.

Applying this concept, we found that a focus on the self was key to explaining why people will pay more when they’re sad. It turns out that the combination of feeling sad and being focused on one’s self drives up the price people are willing to pay for an everyday item by a significant degree. In our experiments, participants randomly assigned to the neutral-emotion condition watched a video clip of a nature film and then were asked to write on a neutral topic. Participants randomly assigned to the sadness condition watched a four-minute clip about a boy losing his mentor and then were asked to write about the possibility of losing a mentor. The small differences between conditions impacted the prices participants paid for everyday items, using their own money, by 300 percent.

With further statistical analysis, we’ve discovered that those who paid the highest prices were sad-condition who focused on themselves. By contrast, those in the sad condition who were not at all focused on themselves did not set significantly higher prices. This research gives us a number of leads concerning how to help decision makers avoid this phenomenon.

With effects as large as 300% differences in spending, our research gets to the heart of what drives consumer decision making.  Because consumer spending accounts for as much as 70 percent of the U.S. economy, understanding the psychology of spending is critically important. In the long run, we hope that research will not only allow us to help citizens make better decisions, it will also allow us to create better economic predictions for the country as a whole.

Q:  How do your findings relate to the public-policy arena?

Lerner: I’ve touched on that just now but let me elaborate. We do our research with the primary motivation of understanding how the mind works. It’s our belief that once we know more about how the mind works, and in particular how emotion affects judgment and decision making, we can help leaders to design better public policies.

For example, we’ve begun to use what we’ve learned about how the mind works to prescribe better decision-making environments, so that citizens and public leaders can make better decisions. Changing the environments is the key.  In many cases, it doesn’t much matter what your intelligence level is, or your education level. Many unwanted biases influence decision makers at the highest levels. We’re all susceptible to these biases, but the good news is that we can all be taught how to make better decisions once we know more about them.

For a long time, the field of economics has been the major academic field, allowing predictions for the economy and generally for public behavior in the United States. What we are seeing now is that although economics has some very elegant and useful models, they are often models of how people should behave rather than models of how people actually do behave. And so we bring in the psychology of judgment and decision making in order to find out how people actually do make decisions. And then the goal is to put together models from economics with models for psychology so that we have a descriptively realistic model for predicting human behavior.

Q: Do you have any other thoughts to add?

Lerner: Emotion is a new field of scientific investigation. For most of the 20th century, for a variety of reasons, it was felt that emotion was not something that could be studied scientifically. So it’s a field that hasn’t had the same progress, for example, as cognitive psychology. So there are a lot of fundamental questions about emotion that we do not yet know the answers to. And for that reason we have a lot of basic research to do, understanding how emotion is processed in the brain, before we can apply predictions and prescriptions for public policy. However, we are moving as fast as we can to blend the two.

And one of the things I love about being at the Kennedy School is that the questions that I ask about how emotion and cognition interact in the brain are shaped now by their potential policy relevance. So we’re doing work that will give us a fundamental understanding of how emotion and cognition interact to shape decision making. At the same time, we’re doing work with a special eye for what’s going to help us train the nation’s future leaders, and indeed the world’s future leaders.

Interviewed by Doug Gavel on February 14, 2008.

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Jennifer Lerner

Video still image of Jennifer Lerner.