Eyal Winter is professor of economics and the former director of the Center for the Study of Rationality at the Hebrew University of Jerusalem, one of the world’s leading institutions in the academic study of decision making. He served as chairman of the economics department at Hebrew University and was the 2011 recipient of the Humboldt Prize, awarded by the government of the Federal Republic of Germany. He has lectured at over 130 universities in 26 countries around the world, including Harvard University, Stanford University, Princeton University, the University of California at Berkeley and the University of Cambridge. Winter is also the co-founder of CHANGE a company that develops a software to assist people to spend less and save more based on behavioral tools.
His latest book, Feeling Smart: Why Our Emotions Are More Rational Than We Think, was published by PublicAffairs (2014). The book has been blurbed with endorsements by seven Nobel laureates in economics and by Larry Summers. It is currently translated by publishers in China and Japan.
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Morris: When and why did you decide to write Feeling Smart?
Winter: I have been working on decision-making and game theory since the beginning of my academic career. We tend to think about decision making as a territory in which emotions harm rather than help. This is largely wrong. In fact emotions facilitate our decision making especially those that involve interaction with other people. In the last several decades economists and psychologists made a substantial progress in understanding how emotions affect our decision-making. I have contributed to this literature and I wrote the book in order to share these fascinating research findings with the general public.
Morris: To what extent (if any) does the book in final form differ significantly from what you originally envisioned?
Winter: When my father passed away in 2007 he left a fascinating document that summarizes his childhood memories as a Jewish kid in Nazi Germany. I had been planning to write the book before my father’s death but I really got myself to do it after I recovered from the grief over my loss. Going over my dad’s writing I was struck by the fact that many of the stories he was telling beautifully match with important scientific insights about the role of emotions in decision-making. I actually used some of these stories to explain his insights. I didn’t plan to do it in the first place but it seemed so natural and it made the outcome of my journey with the book much more accessible and interesting.
Morris: Long ago, Ernest Hemingway suggested that all great writers have a “built-in, shock-proof crap detector.” (Apparently his did not always work properly, especially when evaluating his own work.) Just because someone “feels smart” — or “feels dumb,” for that matter — does not necessarily mean that they are. Of course, there is also Henry Ford’s suggestion, “If you think you can or think you can’t, you’re probably right.” Your own thoughts about all this?
Winter: This is to a large extent true. Self-confidence and even slight over-confidence can help achieve their goals. But major over-confidence can be detrimental. I discuss it in detail in my book and show how investors often pay a heavy price because of the alarming over-confidence of their portfolio managers.
Morris: What is the relevance of game theory to the potential importance of emotions to decision-making?
Winter: Game Theory is the theory of strategic behavior. When we interact with other people whether it is in the workplace, at home with our spouses and kids or in the market place with clients and suppliers we use strategies. Emotional reactions are strategies, because they affect the behavior of our counterparts. Even when we are not fully aware of it we all use emotions strategically and we do so through a fascinating deliberation between our rational being and our emotional one.
Morris: What is the relevance of evolution (i.e. natural selection) to the potential importance of emotions to decision-making?
Winter: Much of our emotional reactions can be thought of as evolutionary mechanisms to improve our social interaction. A nice example is embarrassment. How can it be that at a moment of embarrassment, when we wish we could vanish and be unnoticeable, we blush like an alarm lamp making ourselves more salient and visible. Darwin himself speculated that blushing is an evolutionary mechanism for admitting wrong doing and asking for forgiveness. Interestingly, recent laboratory experiments confirmed Darwin’s explanation. People tend to be more forgiving toward an asocial behavior of a person if this person reacts with embarrassment by blushing. This is only one example but my book is full of those.
Morris: My use of “potential” is deliberate. I agree with Darrell Royal: “potential means you ain’t done it yet.” There is great value in understanding what you have to say about emotional rationality but even greater value in using that understanding to make better decisions. Why do so many people make so many decisions based on emotional [begin italics] irrationality [end italics]?
Winter: Evolutionary mechanisms are not perfect. They rarely fine-tuned. Consider physical pain. Clearly it is one of the most critical mechanisms for our survival. It is an indispensible alarm system about our body condition. But very often it provides us with information that we already know, and we can’t shut it off. Pain at this stage has negative effect on our well-being and even on our survival. Emotions can have similar effect. Anger and frustration, for example, are useful mechanisms that motivate us to change our unfavorable social situation but they may persist even if we can do nothing to improve our social situation, and sometimes our emotional reaction is so severe that it can even worsen our social situation. To minimize these negative effects of emotions we must recruit our rationality. We have no mechanism to fine-tune our physical pain but we do have a mechanism to fine-tune our emotional reaction. This mechanism is called rationality.
Morris: What are the most significant differences between intellectual rationality and emotional rationality?
Winter: I assume you are referring to the difference between analysis and intuition. Both are important factors of decision-making but very often the second is dominating. Let me give you an example. Most of us have experienced situations where we come across someone whom we are sure to have seen in the past but cannot recollect where and under which circumstances. We won’t recall the name of the person his or her profession and many other important details.
But we would definitely remember the overall impression the person made on us. Whether he/she was friendly or arrogant, whether we liked the person or felt uncomfortable in his or her company. These bits of information are stored way more effectively in our brain than the other factual details I mentioned earlier because these impressions involve emotional reactions.
Emotions are stored deeper in our brain than facts and they are retrievable much more easily. This is why intuition or emotional rationality is often more useful than analytical rationality that is based on assembling facts and deriving conclusions. Whenever the facts are available – clear and sharp, analytical rationality will dominate intuition but in most situations this is not the case.
We are lacking hard evidence and therefore using intuition is indispensible. In many situations we can invoke both. Start with analytical rationality in way of eliminating options and then use intuition to select among the remaining ones. :
Morris: What is the “Prisoner’s Dilemma” and why can it be significant?
Winter: The Prisoner’s Dilemma symbolizes the conflict between individual rationality and collective rationality. Very often each of us prefers to choose a selfish course of action that is detrimental to a group. With oil prices going down, for example, more people us would prefer to use larger vehicles that are more wasteful of energy, but if all of us behave in this manner we would all end up being worse off because of the environmental consequences. When self-interest is at odds with collective interest we need mechanisms to sustain cooperation. Legislation and enforcement could be one type of mechanism but social norms and reciprocity can very often be as effective in getting people to favor the collective interest over their own interest.
Morris: At one point in your brilliant book, you observe, “Our emotional and intellectual mechanisms work together and sustain each other. Sometimes they cannot be separated at all.” What are the significance and major implications of what I characterize as a collaborative convergence?
Winter: I think that the most significant implication of this collaboration is that we manage to perform decision-making of reasonable quality. We wouldn’t have been able to do it without this collaboration. The final trigger of every decision is emotional. These emotions are processed at the pre-frontal cortex of our brain. People who suffer damage in this part of the brain due to an accident or a stroke often are unable to make decisions. They might know the facts and the pros and cones of each option but they would not be able to get themselves to actually decide for one of these options because they are lacking the emotional trigger.
However, the process that produces a quality decision is more than just this trigger. It’s a delicate back and forth dialogue between our cognitive mind and our emotional one. We collect and process information that is summarized in a form of an emotional reaction (positive or negative). Then the emotional reaction motivates us to look elsewhere and perhaps seek more information which again trigger and emotional reaction and so forth and so on.
Morris: In my review of Feeling Smart for various Amazon websites, I make a distinction between [begin italics] enlightened [end italics] and unenlightened intuition. With rare exception, people never have complete information when having to make an especially important decision. Consider physicians in an ER or officers in combat. Those who have prior training and experience are much better to make a decision than those who don’t.
What are your own thoughts about all that?
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Eyal cordially invites you to check out the resources at these websites:
Feeling Smart Amazon link
The Guardian link
Psychology Today link
TIME linkTags: Albert Einstein, Amazon, Brooke Manville, Center for the Study of Rationality at the Hebrew University of Jerusalem, Darrell Royal, emotional impostor, Ernest Hemingway, Eyal Winter on “Feeling Smart”: Part 2 of an interview by Bob Morris, Federal Republic of Germany, Feeling Smart: Why Our Emotions Are More Rational Than We Think, Harvard University, Henry Ford, James O’Toole, Judgment Calls, Lao-Tse, Peter Drucker, Princeton University, Psychology Today, PublicAffairs, Stanford University, Tao Te Ching, The Guardian, the Humboldt Prize, the University of California at Berkeley, TIME, Tom Davenport, University of Cambridge, Voltaire, “Prisoner’s Dilemma”, “the ideology of comfort and the tyranny of custom”