2015-09-25 - Cultivating Your Mind's Sixth Sense is Wise

Nicholas Epley 
University of Chicago  Booth School of Business

John T. Keller Professor of Behavioral Science at the University of Chicago Booth School of Business, Dr. Epley has published over 50 scholarly in his field and written for the New York Times. He has been named a “professor to watch” by the Financial Times, is the winner of the 2008 Theoretical Innovation Prize from the Society for Personality and Social Psychology, and was awarded the 2011 Distinguished Scientific Award for Early Career Contribution to Psychology from the American Psychological Association. He teaches Managing in Organizations in the Booth MBA Program in addition to Ph.D. seminars on Social Psychology and Topics in Behavioral Science.

1. What motivated you to write your recent book Mindwise?

A couple of things motivated me. The big thing is that I have been doing research trying to understand how people understand each other for about the last two decades ever since entering graduate school. I reached a point in my career when I wondered whether there was something bigger I could do with the research that we had been conducting, making it of broader interest to a wider range of people than just the typical academic audience. I thought there was something bigger I could do with it, so I took on that challenge.

The great thing about being an academic is that you can really do the stuff that you want to do. If you one day decide that you want to make your research of broader interest than just to other academics, then you can give that a shot. That was the motivation. It wasn’t anything more pressing than wanting to take on another challenge from my perspective and also thinking that our field of psychology had some research findings that would be helpful to people. Those two factors together motivated me.

Follow-Up Question: Mindwise seems to have received quite a bit of acclaim. Were you surprised by this response?

It’s funny that you ask that question. An author’s perspective, discussed in the book, is very different from an observer’s perspective, as you can probably imagine. As an observer, you might have noticed that the book has been praised by some. I have been very happy with that praise. I have received some nice reviews by serious people who have reviewed it. I have been very happy with that. Of course, as an author, you are also very sensitive to the criticism that you receive. There is a little bit of that, too. I will read through a review that is generally very favorable, but contain one line that is not, and that is the line that I will remember. My experience of the reaction to my book has been a bit more humbling than you might imagine.

2. In your book, you introduce various works on our “sixth sense”—our ability to read people--,

    concluding we are not good at it. What do you think the root causes of this inability are? Why do

    you think increased awareness of our errors in judgment improves our sixth sense?

There are several components to that question. Let me take each one in turn. First, you mention that I think that we are not very good at this, that I make that argument in the book. Part of that is right, but the argument is actually more subtle than that. I would not say that we’re unable to understand each other. To varying degrees, every one of us on this planet has an ability that no other species has as far as we know. That is the ability to think about the minds of others, their intentions, their motives. It is the ability to communicate ideas to other people, to share our minds with others using very sophisticated language.

In general, we do this better than any other species on the planet. This is the reason why we are able to live in these enormous social collectives, where we cooperate and compete. We work together efficiently and smoothly in really complicated social settings. At a base level, we are generally pretty good at this. We are better than zero accuracy. But the main finding of research over and over is that we are far less than perfect, so there is plenty of room to improve our social understanding. Other people are the most complicated thing you will ever encounter in your entire life and you need to understand each other better.

The other finding that comes out of research over and over again is that however good we are at understanding each other, predicting what my wife wants for her birthday, for example, or what’s going on with my kids at school and how they are feeling today, we are not quite as good as we think we are. I think the main problem is not incompetence, not the inability to do this. It’s hubris, a lack of humility, thinking that we understand each other better than we actually do. What’s the root cause of this hubris? I think there are two main sources of error. We will focus on the reasons why we are not perfect. One broad class of errors comes from not engaging this ability when we should. It’s a little bit like any ability: You use it effectively when you try to use it. It’s a little like walking around with your eyes closed. You can see the world with your eyes open, but you can also close your eyes. Then, you do not use that sense.

Our sense about the minds of others works the same. We do not always turn it on when we should. The consequences of that are a little bit like when you close your eyes. You can’t really see what is in front of you. If you don’t engage with the mind of the other person, you can’t see it at all. You might sometimes conclude they do not have one. That is, you think of them as mindless. That creates a phenomenon we refer to as dehumanization. You are not engaged with the mind of the other person.

The other class of errors comes from the mistakes we make when we are actually trying to engage the mind of another person. Right now, for instance, I’m experiencing one of the central challenges that we all face as we behave like mind readers. I’m trying to communicate with you in an interview where I cannot see you. You’re not right here in front of me. You are on the other side of the planet! I know nothing about what you were doing earlier today. I know very little about your background. I’m trying to communicate something complicated to a mind that is fairly different from my own. That’s a challenge for us because one of the ways we understand other people is by using our own mind as a guide.

I am telling you about this book, which I know inside and out. I spent four years on every detail, thinking about the book, writing it and editing it before it was published. I know it every which way. That would lead me to conclude that the book is clearer to you than it actually is. Because it’s clear to me, I am likely to assume that it is clear to you. That represents the first challenge that we have in thinking about the minds of others. It’s called egocentrism, the assumption that people think the way we do.

The second challenge is that once we know more about someone, we apply stereotypes. I’m talking to you from Chicago. I’m American. You are talking to me from Tokyo, and you’re Japanese. There are stereotypes about what American and Japanese people are like that filter into our judgments of each other in ways that are not entirely inaccurate. For instance, when you learn something about another’s political beliefs, when you learn they are a liberal or conservative, that gives you some accuracy that is above chance levels [in reading their minds].

But the problem with these stereotypes is that they tend to focus on differences between groups rather than similarities. The stereotypes you have about an American are about qualities and attributes that make Americans different from other people, not what makes them the same. That can lead us to exaggerate differences between a group when, in fact, there are many similarities. We all love our kids. We all enjoy great food and interesting experiences. We all like to learn new things and have some sense of autonomy in our lives. There is a lot more similarity that comes from being a human being, but stereotypes tend to focus on differences, overlooking these similarities. Sometimes this tendency can lead us to imagine that differences between people are greater than they actually are.

In mindreading, for instance, there are very strong beliefs about the differences between men and women: Women are more socially sensitive than men. They are better able to understand others’ emotions and more sensitive to social cues. They are better able to keep track of what they want or think they need. There is some truth to this stereotype, but not a lot. The effect sizes are relatively small. They correspond to a correlation of about 0.2 as compared to no correlation at all, which would be 0. But if you ask people to predict the size of the effect of gender, they do not predict a difference of 0.2 but of about 0.8. That is, they exaggerate the differences between men and women hugely. You will find very popular books, international best sellers like Men are from Mars, Women are from Venus, which suggest that men and women are very different. In fact, those stereotypes tend to exaggerate the differences between the minds of men and women.

That last challenge in understanding the mind of another person is that once we know even more about a person, we can see their behavior over time the way I am around my graduate students. If you and I spend some time together, I come to know all about you. I see your behavior. Then, I use your behavior as a guide to what your thoughts are. The problem is that behavior can be misleading as well because we tend to take behavior at face value. We tend to overlook the context in which the behavior occurred, making it appear very different.

For instance, if you are trying to understand what I’m like as a person, how sociable, extraverted or outgoing, you might use my behavior in this interview as a guide. I’m pretty talkative, pretty chatty. I ramble on and on. The truth is that I am actually quite shy most of the time. You have me in a situation where my job is to talk because I am being interviewed by you. You ask me questions, and I respond. The problem with behavior is that it can be somewhat misleading because behavior is complicated to interpret. My behavior now is a function both of the kind of person I am as well as the context that I am in. Our understanding of each other tends to overlook the context, focusing too much on the behavior we observe. This tendency can lead to some mistakes.

To summarize, I think there are two main challenges that make it difficult to read others’ minds. One is that we don’t always turn on this ability to understand the minds of others when we should. Then, the processes we go through to understand each other can lead to systematic mistakes stemming from egocentrism, stereotyping, and relying too much on the person’s observable behavior.

3.  In Japan and other countries where high-context languages are common, individuals are even

     less inclined to clearly speak their minds. Furthermore, power distance seems to be much 

     greater. What suggestions would you make for increasing direct, transparent communications 

     in such organizations? What recommendations can you make for Westerners who must work 

     with Asians?

One thought that I have is that there are Japanese institutions that are exceptionally well known for facilitating open and honest communication with employees. For instance, I see the Skype image of you I have on my screen right now has the Toyota insignia behind it. Toyota has seven pillars in their management philosophy. One of them is this notion of kaizen, constant improvement. Toyota is a very interesting example. When they first came to the U.S., that is, first began moving their manufacturing to the U.S., their first plant was the N.U.M.M.I. joint venture with General Motors in Freemont, California at a plant that GM had closed two years prior. It had been the worst plant at GM at a time when GM was a disaster. They were really making bad cars. They had a large share of the American market, but they were essentially making junk, and everyone knew it. But the plant in Fremont was the worst in their entire line of vehicles. So GM shut it down.

Toyota wanted to come in and build a manufacturing base here in the United States. In exchange, GM thought they would get some technological innovations from Toyota. So they decided to re-open this plant in Fremont. The U.S. labor union—the UAW (United Auto-Workers) union leader Bruce Lee demanded that this new venture called N.U.M.M.I. (New United Motor Manufacturing Incorporated) hire back all of the executives from the General Motors plant. Toyota did not want to do that. GM did not want to it, but they had to.  And they ended up hiring back basically all of the workers that they had laid off—around 90% of them. These were all the same workers who had been at the worst plant General Motors had in its line.

Toyota Management, though, was based on a different philosophy from the American one. Toyota management fundamentally believed that people want to do a good job. They take pride in their work. They want to have some sense of respect about what they do. They want to have some sense of autonomy, some sense that their work matters. They wanted to have a sense of the sort that the nurse I spoke to on the train this morning was lacking in her job. GM management had a very different philosophy about what their employees were like that they had acquired over the years. That belief was that their employees were idiots who were just there for a pay check. Toyota management had this philosophy that people want to do a good job and that they would tell you how to do a better job if only you would listen to them.

Here was a case where the management had this philosophy that made them very open to feedback from their employees, a philosophy that runs contrary to the cultural stereotype that you just described though it may be true in lots of other social settings in both the U.S. and Japan. Here in GM was a plant that wanted to hear nothing from their employees. Management did not care at all what their employees thought about their jobs. Management just thought of employees as cogs in a machine. “Just sit down there in the assembly line, and do your job!”

Toyota management came in and said, “We care about what our employees think and believe, and we’re going to tell them we think they know how to do their jobs better. And we are going to give them the ability to tell us how to create a better plant.” Management communicated this belief to their employees. Management went down to the factory floor, something GM employees said they had never, ever seen. Toyota management was there all of the time. Toyota also installed a device, the Andon cord, which has since become famous. It’s a cord that employees could pull to stop the line. The cord did not stop the line on the first pull, but on the second. Employees pulled this cord when they noticed something that could be improved, something that could become a problem. This environment, this world that Toyota had created for the employees, was driven by management’s belief in kaizen, and the recognition that their employees are human beings who care about doing a good job. Employees will tell you how to do their job better if you just enable them to tell you.

The success of this JV is rather astonishing. Within a year of reopening this plant, which had been the worst in the line producing more defects than any other; with ridiculous absenteeism rates, drugs, sex, everything you could imagine that could reduce productivity, became the best plant in the GM line. Working with the very same management under a different philosophy and environment, they now had the fewest defects and very low absenteeism. Employees took great pride in their work. Industry analysts calculated that the old factory line would have to be manned by 50% more employees to produce the same kind of output being produced at the NUMMI plant, and that output would be full of defects.

I think there is a valuable lesson here. Regardless of the place they happen to be, management around the world can facilitate open dialogue. As a manager or leader, if you recognize your employees are human beings, they are trying to do the best jobs they can, they probably know more about their job than you do as a leader or manager, and if you maintain a sense of humility—the belief there are some things you don’t know—that becomes the starting part for creating a space where employees can tell you what they think. Wherever you are on the planet, if you keep this Toyota example in mind, you will know what you have to do to enable employees to speak their minds.

On the employee side, this is more of a challenge. Here, you are trying to influence someone over whom you really do not have any formal influence. So you need to find opportunities for open dialogue wherever you can. I don’t have any insights into where your readers will find those openings. But individuals probably can see times when they can bring up something they would want to talk about. They need to think about where these opportunities are and how to use them. The advice that I would give for using those opportunities to foster open dialogue are twofold. One is to recognize that you are probably talking about some issue that’s not a reality. If you are unsatisfied in your job, or you think that you are underpaid, what you are talking about is a matter of perceptions, which can differ between employees and employers. So you need to approach the process with a humble attitude.

The other thing that helps in difficult conversations is to focus on the future more so than on the present. Let’s say you are having trouble with your spouse right now, and you are trying to figure out how to have that conversation. That’s a difficult conversation to have. It’s difficult to express your mind, and it’s difficult to get your partner to express his or her mind in this context because you get defensiveness. The standard approach is to talk about what’s happening in the relationship right now or focus on what has happened in the relationship in the past. Doing that is a way to make people really defensive.

A way to take some of the edge of that defensiveness is not to talk about the past or present, but rather to open the dialogue by talking about the future. You can go to your spouse and say, “Look. I have committed to being with you for the rest of my life. That means I want us to have the best marriage that we possibly can for the next twenty, thirty, or forty years until death do us part. I want to help us have that kind of marriage going forward. I am not worried about where things are right now. I want us to think about how we can develop the best marriage possible over the next five to ten years.” Because you both want that, I think starting out that way, trying to focus on things down the road, might help you to talk about difficult things in the present.

You can do this in your firm, too. You can tell your boss, “Look. I want to be in this job for the long haul. I think this is a great place for me to work. I would like to be able to excel in my job over the years, and I really want to figure out how to best do that. I’m worried that I may not be doing that to my maximum ability right now. Here’s where I am right now. Here is where I would like for both of us to be two years down the road. Can you and I come up with a development plan for getting there? Opening the conversation by focusing on the future can open dialogue because people do not get defensive about the future. It hasn’t happened yet. It’s easy to align perspectives about the future. Both you and your boss want you to succeed over the next two years. You are on the same page.

4.  In your New York Times article, you refer to framing effects to explain how a greater 

     percentage of a tax refund is typically spent when described as a tax bonus rather than a rebate.

    In what situations in companies are framing effects likely? Can you give a few concrete 

    examples?

Let me give an example of a framing effect from our research that is close to your (upcoming) question on the recent increase in the Japanese consumption tax. That was some research that we did a few years ago, where we were looking at how people handle or spend money when it’s described in different ways. This may seem like an odd place to go to study this kind of behavior, because money, after all, is money. But it turns out that people don’t treat all money as the same interestingly. Framing is simply a difference that you get in behavior or in how people treat or evaluate some stimulus or object depending on how it’s described. A credit-card tax and a credit-card surcharge might be the same thing, but tax and surcharge sound different. The government can give money back to citizens at the end of the year in ways intended to stimulate the economy. That is what our government was trying to do a few years ago. They can give that money out in a few different ways. They can describe it, for instance, as a tax rebate. That is, they are giving taxes you have already paid back to you. Or they could describe the money as a bonus.

Both of these things are objectively true. Neither of these descriptions is truer than the other. The government is giving you money back. That’s a bonus. They are taking it out of tax paid so it could be called a refund. Both are money, and a dollar is a dollar, just the way a yen is a yen, and a euro a euro. The money is the same no matter how you describe it. But changing the name changes how people think about it. What we found in our experiments is that people were much more likely to spend the money when we referred to it as a bonus rather than a rebate. The reason is that when I give you a rebate, the way that you understand that or interpret or construe that money is as money that you are getting back.

It’s as if I walked up to you on the street, tapped you on the shoulder, and said, “Here’s money I found on the street. It looks as if you dropped it out of your wallet.” I could also walk up to you and say, “Here’s some money. I just found it on the street, and I thought you might like to have it.” In both cases you are richer by the amount of money I gave you, but in one case, you probably don’t feel like you’re richer. I just returned money that you already had. You do not have any additional money in your bank account than you did in some objective sense.

In the other case, when I give you money that described as a bonus, it feels like you somehow received money that you did not have before. Again, you are richer by the same amount in both cases. But psychologically, it feels different. If you have extra money, you are more likely to spend it than if you don’t feel like you have extra money. In our experiments, we found that when we described the money as a bonus, participants were much more likely to spend it than when we described that money as a rebate. In fact, they were eight times more likely to spend it. These framing effects were some of the largest I have ever seen. People saved the rebate, but they spent the bonus money.

That’s an example of a framing effect. Framing effects can come up almost anywhere. You can talk about the number of lives that a policy will save as opposed to the number of lives that would be lost without it. In terms of calories, a big deal in the United States, where people want to eat healthier, you can describe the meat that you eat as 80% lean versus 20% fat. Both of those descriptions are the same, but you will eat the meat described as 80% lean, and not the meat described as 20% fat. You are describing the exact same objective reality, but the descriptions conjure very different images. Framing effects like these are greatest when there is some uncertainty or ambiguity in the stimulus that you are evaluating. Is this meat that you are eating healthy? Well, we can’t be too sure. It depends on how you describe it. If you describe it as 80% lean, it sounds healthier than when you describe it as 20% fat.

If something is very concrete, it’s very clear what the truth of the matter is. In these cases, framing effects do not appear very much. But you find that there are situations where there is some ambiguity. Those cases are actually very common. You can see how common it is in our studies when we take money, which is arguably the most objective thing of all that you could evaluate. A dollar is a dollar, a yen a yen, a euro a euro. They are all the same. They are objective values. The way I describe the money is not going to effect the amount that you have: If I give you $50 or fifty yen or whatever you can tell me how much it is. But the decision about whether you are going to spend that money is ambiguous. That is where you will see framing effects.

5. As you may know, the Japanese government recently raised the consumption (sales) tax from 

    5% to 8% after many years at the former level, with planned increases in the near future. If you 

    were a consultant for the government, how would you suggest they refer to the tax or explain it 

    in order to achieve their ultimately goal of stimulating the economy overall?

Referring to the consumption tax, are you wondering how you can change people’s feelings about it? Is that kind of the idea?

Follow-Up Question: Is there a way of applying your research on framing effects to help the Japanese government better sell the tax to the Japanese people, making it possible for the former to achieve their conflicting goals of increasing state revenue while simultaneously stimulating the economy?

Most of my advice will be very context sensitive, so your wisdom will be important here. If I were a policy maker, what I would consider doing is based on our research in the U.S. These were government programs. Both in 2001 and again in 2006, the Bush Administration gave rebates to U.S. citizens, hoping they would spend that money, thereby stimulating the economy. The programs were intended as an economic stimulus package. They were based on the simple philosophy that people will spend money if they have it. The government is giving people money to spend. The problem was that they described the program to people as a tax rebate. That term did not give anyone the sense that they had more money. It was like getting money back. The program was not presented to U.S. citizens in a way that enticed them to spend with patriotic abandon. In fact, people saved this money. Depending on which rebates you look at and how you interpret the figures, people saved about 80% of the money at a time when the savings rate was actually negative. On average, people where spending more money than they were earning at the time.

If I had been a policy maker at that time, I would have thought about different ways of distributing that money that would encourage more consumption. The government could have appealed to Americans’ patriotism. They could have had “Economic Upturn Weekends,” where you encourage people to bring in their tax bonus checks to stimulate the American economy. You could easily have gotten marketers on this case. They think about these types of issues all the time. Marketers could have made it possible for policy makers to present their programs in a way that would encourage some degree of nationalism, some sense that the money they are giving the people is intended for spending. “Make America better by spending this money in a particular way.”

This question about the consumption tax is in Japan is really a question for people familiar with the context to think through. Can we describe this consumption tax in a way that will appeal to Japanese consumers’ pride and encourage them to stimulate the economy? “This tax it not meant to hurt you. It is meant to help all of us.” I certainly would not call it a consumption tax. I might call it, the “Rising Japan Plan.” Even the simple description “Stimulus Plan” might be sufficient.

6. You have co-authored several studies on anthropomorphism. Can you explain the meaning of 

    this word using some concrete examples?

Anthropomorphism is simply attributing human-like characteristics to non-human agents. Most often, what that means psychologically is attributing a human-like mind to one of these agents. If you ask people on the street the defining feature of humans —what makes them different from chimpanzees or dogs, from cats or trees—people will not likely tell you, “Two arms, “ or “Two legs.” They will not mention parts of the body. Instead, they will tell you things about the human mind. We can think. We are better able to feel. We have more sophisticated tastes and preferences. We can reason. This thinking goes back to Jeremy Bentham and Emmanuel Kant, philosophers who made the very same kinds of arguments.

When we study anthropomorphism, the way we define it is as attributing a human-like mind to a non-human agent. For instance, thinking that your car is able to think. That it’s intelligent, that it can sense what is occurring around it. These are all instances of anthropomorphism. We have done some recently-published research funded by General Motors here in the U.S. Adam Waytz , Joy Heafner and I completed the research together. We looked at the consequences of anthropomorphizing these autonomous vehicles for people’s trust in them. This is a challenging case for engineers to handle. You have a car that drives itself, but you have to get willing users behind the wheel. That’s a real challenge, not an engineering challenge, but a psychological one. You have to get people to trust this thing.

We conducted some experiments where we had some people behind the wheel. These were not real autonomous vehicles. They were simulators. But they were real enough that when we get people in the simulator to have an accident, they can be very traumatized. The simulator was a very real, immersive device. In the experiment, we put people in three different conditions. In one condition, they drove the autonomous vehicle as they would a regular car. They controlled the steering and breaking and the like. In another condition, they drove the autonomous vehicle. They would turn on the features, and the car would drive itself.

In the third condition, the anthropomorphic one, we added some features that we thought would enable drivers to anthropomorphize the vehicle. That is, we added features that would make them believe it was thoughtful and intelligent, and able to do things with a plan. Planning is a mental capacity, something that our minds do. We felt the features would lead participants to believe that the autonomous vehicle could control its behavior. We gave the car a name like Iris. We gave it a human voice that could talk to the driver. This enabled real interaction. In other experiments, we find that a person’s voice is really essential in recognizing that the person has a mind. If I can hear you speaking, even if it’s the exact same content, I judge you to be more thoughtful, more reasonable, more rational than if I had just read the content of your voice. The voice is the essential feature. The car talks to you in a real human voice with intonation and pitch variance. These factors are critical to communicating the presence of mind.

We found when we give a car a voice, a real voice, as opposed to a flat, computerized one, people trust that vehicle more. They feel safer. They’re more relaxed while driving it, particularly when they are involved in a stressful event like an accident.

In this experiment, everyone got into an accident at the end. To ensure that everyone had the same accident, we had to manufacture it. We had to make sure they had been hit by another vehicle. The accident was another driver’s fault. Subjecting all participants to the same accident ensured experimental control. We asked the people how much they blamed the car, the engineers who designed the car. We found that when people anthropomorphize the vehicle, when they regarded it as more thoughtful and intelligent, better able to sense what was around it and plan, they also tended to blame the car the least. If your car is thoughtful, if it can think and feel, if it gets into an accident caused by another person, it’s clearly the other’s fault, not yours. We found that when we anthropomorphed the car, people treated it as more human. They regarded it as more intelligent.

We think that is one of many kinds of implications of anthropomorphizing technology. The late Clifford Nass, formerly a researcher in computer science at Stanford, studied this phenomenon for many years. He wrote a great book titled The Man Who Talked to His Laptop. I recommend that your audience take a look at the book if they are really interested in the topic. He described a lot of interesting, related consequences of anthropomorphism. I think it important for engineers to recognize that when people are interacting with their technology, they are interacting with it based on some model they have about how the interaction should occur. One of the easiest models to adopt or use is a human-like one. We spend lots of time interacting with other people. If you anthropomorphize technology, then you get the same types of consequences that you have when you see people interact. Engineers certainly need to keep this fact in mind.

7. According to a web article I recently read, you were an offensive lineman on your college     

    football team (and suffered a broken nose during your first game). Reflecting on your 

   experience as an athlete, can you think of how your Mindwise theories might apply in other 

   arenas like competitive sports, especially ones such as tennis, boxing and others where 

   individuals compete one to one?

Sports are a great example of why mind reading is essential for success in competition. On the football field when I was playing, if I knew what my other players were planning to do, and if I knew what the opposing team was planning to do perfectly, we would have won every game. Certainly, there is a skill component. Even if I know what you plan to do, if I do not have the talent to anticipate your actions and counter them, I am not going to win. If I were playing basketball against one of the greatest players in the world, I would still lose even if I knew exactly what he is going to do. But in most sports, skill is actually relatively well managed.

The competitive advantage derives from other attributes, like the ability to anticipate what a player is going to do before he or she does it. That’s a case where the importance of being able to understand the other side’s mind is clear and obvious. I think lots of sports teams spend time trying to figure that out. “Can I read my opponent better?” This skill is less obvious in sports. People think less about it in other domains with very much the same attributes as competitive sports. Negotiations, where you are really trying to maximize value not only for your side, but also for the other side as well, are a good example. Mind reading is every bit as essential in these domains as in sports.

Follow-Up Question: Due to the influence of behavioral economics, do you think more MBA students in the United States take psychological aspects of business more seriously rather than focusing exclusively on number crunching?

The field of psychology is going through a really interesting period right now. Behavioral economics is not really about economics but about psychology applied to economics. Either economists are trying to incorporate psychology into their work, or psychologists are interested in economic problems. It’s a really interesting interdisciplinary effort. Here in the U.S., more and more MBA classes on behavioral economics are being offered. There are some widely read books on the topic, too. Daniel Kahneman’s book, Thinking Fast, and Slow, for example, is doing exceptionally well. My colleague Rick Thaler’s book Nudge with Cass Sunstein is also popular.

Behavior economics is having some real impact on people’s lives. Particularly in the U.K., where these ideas have been adopted most extensively, government interventions are being made. In the United States, I think students are beginning to take behavioral economics more seriously because they are likely to be seeing the impact it is having on the world more clearly. The proof is still in the pudding for us, though. We still need to do more work in the field to show the real impact of this approach to understanding people. I think that this is less of a problem in the interpersonal world. Psychology has always been front and center when thinking about leadership and management issues in the corporate world, too. But in the realm of public policy, psychology is just coming to the fore, so I can’t tell you how much impact it is going to have or how much MBA students are going to appreciate it in the long run. That story is still unfolding. 

This is my recent Kindle book with colleague Dr. Yuzo Sugimoto. It presents real English dialogues introducing American culture with supplemental usage problems for standardized test preparation.