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Noreena Hertz is an internationally noted speaker, an economics expert, and the bestselling author of IOU: The Debt Threat and Silent Takeover (which accurately predicted the 2008 financial crisis).
I invited Noreena to Marketing Smarts to discuss her book, Eyes Wide Open: How to Make Smart Decisions in a Confusing World, which uses scientific research and real-world examples of the factors that influence our decision-making, and offers tips for making more independent and empowered decisions in every context, whether you’re a professional, a patient, or a parent.
Here are just a few highlights from my talk with Noreena.
You think you’re making rational decisions, but sometimes you’re not (2:15) “It’s incredible how many of our decisions are shaped by factors we’re not even slightly aware of. There’s research which looks at how color shapes our decisions, so men rate women as being more physically attractive and sexually desirable when they see their photo superimposed against a red background rather a than a white, gray, blue, or green background. Even savvy financial investors, when they’re given information about a stock set against a red background…are less likely to want to buy it than if they get the same information against a green background. So, color is one area where we might be making a decision thinking that we’re making it for a whole host of rational reasons, but actually there’s something going on which we’re not aware of.”
Just one word can radically affect your decisions (3:10): “There was a wonderful experiment done at an American university where participants were given a passage about a fictional city, Addison, a city that was plagued by crime. The two passages that the two groups were given were absolutely identical, the only difference was one word in a passage of 79 words. In one, it said crime is a ‘beast ravaging the city of Addison.’ In the other it said crime is a ‘virus ravaging the city of Addison.’ Then they asked the two groups what should be done about crime, and the group who had the passage with the word ‘beast’ in it…all the strategies they came up with were ‘catch and cage’ strategies: we need to hire additional police officers, we need to build more jails, that sort of thing, so really ‘let’s attack the beast,’ whereas the participants in the group who got ‘virus’ in their passage, that was all about ‘let’s put in place crime prevention strategies. Let’s implement educational reforms. It was all about treating the illness. And when you asked people afterwards ‘why did you come up with this particular solution for dealing with crime,’ only 3% of people knew that it was because of the metaphor used, so there’s so much going on…so many things we’re not aware of that are steering our decisions.”
You’re hard-wired to believe experts (12:00): “A study was done where people were put into an MRI scanner and their brains were scanned as they processed experts’ information and advice. When experts gave advice, what you could see on the brain scan was that the part of the brains that we use to make independent decisions literally switched off. So, people trust experts and believe what they say, whether they are right or wrong. If the last (few) years have taught us anything…it’s that experts frequently don’t get things right.”
Snacking can help you to make more rational decisions (23:52): “There’s been a whole host of studies now, done around blood sugar levels and decision making… There have been studies that show that people make worse financial decisions when their blood sugar dips. There was even a study done in Israel of judges granting parole decisions, and the thing that determined most whether or not the judge granted parole was not the gender of the person before him, nor the type of crime, nor the ethnicity of the person. It was whether the judge had recently eaten or not. If you went before a judge just before they’d had lunch or their mid-morning snack, that was disastrous: virtually no chance of getting parole. But if you went before them just after they’d eaten, (those chances) shot up again.”
For more information, visit www.noreena.com or follow Noreena Hertz on Twitter: @noreenahertz.
Noreena and I talked about much more, so be sure to listen to the entire show, which you can do above, or download the mp3 and listen at your convenience. Of course, you can also subscribe to the Marketing Smarts podcast in iTunes or via RSS and never miss an episode!
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Music credit: Noam Weinstein.
This marketing podcast was created and published by MarketingProfs.
Noreena Hertz, academic, speaker, and bestselling author of IOU: The Story of the Debt and Eyes Wide Open: How to Make Smart Decisions in a Confusing World.
Kerry O’Shea Gorgone is director of product strategy, training, at MarketingProfs. She’s also a speaker, writer, attorney, and educator. She hosts and produces the weekly Marketing Smarts podcast. To contact Kerry about being a guest on Marketing Smarts, send her an email. You can also find her on Twitter (@KerryGorgone) and her personal blog.