In 2002 Daniel Kahneman received the Nobel prize in economics. At first sight this is not so surprising. The surprising aspect becomes obvious when we realised that he is a psychologist. How is it possible that an expert in psychology would receive the highest award in economics?
The Princeton University professor studied the aspects of life that make it either pleasant or unpleasant (Hedonic psychology). It explores pleasure, pain, boredom, sadness, satisfaction and other such feelings. He found a clear connection between happiness and economics; in fact, he has proven that the average American would be happy with a salary of around 60,000 dollars a year. (Read more about it at My Money Blog)
We did not need Kahneman to point out the obvious. Who can forget that the Economic Crash of 1929 was followed by the Great Depression that lasted until the Second World War? It is not a coincidence that the period is referred to as a Depression!
The connection became very clear to me when I visited Greece at the peak of the economic downturn in 2011. You could see people in the streets with their heads down. You could listen to interminable conversations where the re-occurring topic was the people’s economic suffering. You could smell the decay in the centre of Athens.
The economic depression may have been caused by a slump in economic growth but was sustained because of the people’s prolonged depressive moods.
Once they realised how difficult it would have been to get out of their current situation, they became passive, negative, depressive, even suicidal. During 2011 the suicidal episodes in Greece increased by 40%!
Emotions and Business
Once the population entered a long period of depression, businesses suffered greatly. Their owners became unable to complete basic tasks, they lost their creativity and, on the whole, gave up.
Emotions and moods have a direct impact on your business. After all, business is only a series of economic decisions. If the mood of the masses affects the economy (as has been proven), why should it not affect also daily work-related decisions?
Let me give you an example. The fear of rejection is one of the most potent emotions that affects sales. The salesman may have the right product to push to the market. S/he may be willing to drive the sale to its close. If the fear of rejection settles, s/he will face several obstacles in pushing for a final yes or a no. I am certain that several salesmen suffered from it in the past and they saw a reduction in their income as a result.
Different negative emotions may affect businesses in different ways. In a recent research 57 people were asked to indicate whether they felt fear or anger, when they were going through a process of selecting a job candidate, and the researchers criticised their decisions. The angry group seemed to be more eager to support its initial decision. The people who were more afraid backed off. (How Emotions Affect Decision Making)
The researchers concluded that anger increases the feeling of personal control; hence they are not inclined to admit their mistakes. On the other hand, fear causes doubts and sends people to different (unwanted) directions.
There is nothing wrong with making business decisions based on emotions. In fact, emotions tend to be great indicators of accuracy. However, we should always be aware on the range of the emotions we feel and how these may affect us. Above all, we should emphasize on a positive outlook of life, if we wish to strive for success and greater profits.
When I wrote my blog post on 6 Steps to Use Effectively the Law of Attraction in your Quest to Make Money, the power of positive emotions is exactly what I had in mind. If you want to overcome negative thoughts and false beliefs, I would strongly recommend to attend several coaching sessions