If/Then - More than a Feeling: The Power of Emotional Decision-Making, with Baba Shiv

More than a Feeling: The Power of Emotional Decision-Making, with Baba Shiv

03/20/24 • 24 min

If we want to make better decisions, then we need to think more like an artist.

Rationality is often seen as the gold standard when it comes to making decisions, but Professor Baba Shiv prompts us to consider: “Is a good decision based on reason? Or is it based on emotion?”

Shiv is the Sanwa Bank, Limited, Professor of Marketing at Stanford Graduate School of Business. Throughout his career, he’s researched how brain structures related to emotion and motivation affect the choices we make. “Emotions, these instinctual brain-body systems, have a profound influence on our decisions and we aren’t aware of it,” he says. Even when we think we’re rationally deliberating about a decision, Shiv’s research reveals that our conscious minds are often “simply rationalizing what the emotional brain has already decided to do.”

In this episode of If/Then: Business, Leadership, Society, Shiv explains why emotion can be just as powerful as rationality in helping guide decisions, and why, if we want to make better decisions, then we need to think more like an artist.

Key Takeaways:

Emotions drive decision-making: Human decision-making is much less rational than we think. Shiv emphasizes that emotions and instinctual brain-body systems operate at a nonconscious level to shape the choices we make.
Decision confidence rooted in emotion: “Decision confidence,” Shiv says, is the conviction that we’ve made the right choice. That feeling, crucial for commitment to a chosen course of action, is fundamentally rooted in emotion.
Balancing rationality and emotion: Both the scientific and artistic minds play into decision-making. While rationality and data-driven approaches have their place, incorporating emotional aspects, akin to thinking like an artist, can lead to more meaningful and confident decisions.

More Resources:

Baba Shiv is The Sanwa Bank, Limited, Professor of Marketing at Stanford Graduate School of Business.

If/Then is a podcast from Stanford Graduate School of Business that examines research findings that can help us navigate the complex issues we face in business, leadership, and society.

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

If we want to make better decisions, then we need to think more like an artist.

Rationality is often seen as the gold standard when it comes to making decisions, but Professor Baba Shiv prompts us to consider: “Is a good decision based on reason? Or is it based on emotion?”

Key Takeaways:

Emotions drive decision-making: Human decision-making is much less rational than we think. Shiv emphasizes that emotions and instinctual brain-body systems operate at a nonconscious level to shape the choices we make.
Decision confidence rooted in emotion: “Decision confidence,” Shiv says, is the conviction that we’ve made the right choice. That feeling, crucial for commitment to a chosen course of action, is fundamentally rooted in emotion.
Balancing rationality and emotion: Both the scientific and artistic minds play into decision-making. While rationality and data-driven approaches have their place, incorporating emotional aspects, akin to thinking like an artist, can lead to more meaningful and confident decisions.

More Resources:

Baba Shiv is The Sanwa Bank, Limited, Professor of Marketing at Stanford Graduate School of Business.

If/Then is a podcast from Stanford Graduate School of Business that examines research findings that can help us navigate the complex issues we face in business, leadership, and society.

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Previous Episode

The Brain Gain: The Impact of Immigration on American Innovation, with Rebecca Diamond

Immigrants’ contributions to America include culture, cuisine — and groundbreaking ideas. “No one is that surprised that immigrants play a disproportionate role in innovation,” says Rebecca Diamond, a professor of economics at Stanford Graduate School of Business. But, she notes, “Innovation in itself is an elusive thing to measure.” By studying patents, Diamond has revealed new insights into the important role immigrants play in fueling innovation. Diamond explains more in this episode of If/Then: Business, Leadership, Society.

Today, foreign-born Americans make up around 10% of the population of the United States. Yet, as Diamond found in her research, immigrants are responsible for 24% of recent U.S. patents. What’s more, she explains, these immigrant inventors serve as catalysts for their native-born collaborators, pushing them to be more creative. Altogether, Diamond says, “You find that 36% of all innovation can be attributed to immigrants.”

“That’s a big number,” Diamond says. This finding not only highlights immigrants’ outsize contribution to the U.S. economy but also provides a glimpse into the teamwork that generates new ideas. “The way to have successful innovation is not to just put smart people in a room by themselves and tell ’em to think hard,” she says. “It’s to collaborate and work together and create new ideas through the synergies of their knowledge.”

Immigration is a contentious political issue. Diamond notes that “any policies that would limit or lower the number of immigrants coming to the U.S. for these super high-skill innovative jobs would have a large effect on future innovation.” As this episode of If/Then explores, for America to remain a source of new ideas that contribute to economic growth and technological progress, we’ve got to understand the vital link between immigration and innovation.

Key Takeaways:

Outsize impact: Immigrant inventors register more patents than native-born Americans. While only 10% of U.S. citizens are immigrants, immigrants are responsible for 24% of recent patents.
The collaboration connection: Immigrants positively influence the productivity of their American collaborators.
The global knowledge network: Immigrants are more likely to cite foreign patents and are more likely to be cited by patents produced abroad.

More Resources:

Rebecca Diamond is the Class of 1988 Professor of Economics at Stanford Graduate School of Business.

If/Then is a podcast from Stanford Graduate School of Business that examines research findings that can help us navigate the complex issues we face in business, leadership, and society.

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Next Episode

Is Money Really the Best Measure of Value? With Mohammad Akbarpour

A dollar is a dollar, right? While most conventional economic theories view money as an objective store of value, Mohammad Akbarpour says this misses a subtle but important fact: different people value money differently.

Many economists assume that the price someone is willing to pay for a good or service is equivalent to the utility they get from it. But Akbarpour, an associate professor of economics at Stanford Graduate School of Business, isn’t convinced. “Different people have different marginal value for money,” he says. “If someone is willing to pay $1,000 for a Taylor Swift concert, they do not necessarily get more value [than] someone willing to pay $500. If you're willing to pay more for something, that does not mean that the social welfare is maximized for giving the good to you. It could be that you're rich.”

As Akbarpour explores on this episode of If/Then: Business, Leadership, Society, money doesn’t have to be the sole decider of how scarce resources are allocated. By considering money’s subjectivity, we can design more equitable markets that maximize value and welfare for more people.

Key Takeaways:

People value money differently: People have different subjective valuations of money based on their own circumstances and financial well-being. $100 means something much different to the CEO of a large, successful corporation than it does to a family on the brink of eviction.
Market distortions can be warranted: For some goods and services, price controls or subsidies can be more efficient than a free market at allocating resources and benefiting those with less wealth.
Real-world application: From ridesharing to concert tickets, Akbarpour shares how theoretical economics can be applied to address inequality and improve society.

More Resources:

Mohammad Akbarpour

Voices profile, Mohammad Akbarpour, "In some ways, all of academia hinges on this receptiveness to having your mind changed."

Akbarpour's research in Stanford GSB Insights:

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