Sunday, January 19, 2014

Emotional Intelligence and Risk-Taking

Jeremy Yip and Stéphane Côté have published an interesting new study in Psychological Science.   They examined the effect that emotional intelligence had on risk aversion.  They found that people with lower levels of emotional intelligence tended to react to "unrelated stressors" by making risk averse choices.   Those with higher levels of emotional intelligence were willing to take more risk.  Yip tells Knowledge@Wharton: “By identifying the source of their emotions, those with high emotional intelligence realize whether their emotions are irrelevant to the decisions they need to make.  As a result, they don’t experience that spillover effect. They might feel anxious, but they don’t let it affect their decision.”

Interestingly, in one of their experiments, they actually induced the subjects to think a bit about what might be causing them anxiety.   In that situation, the people with a lower level of emotional intelligence behaved no differently than those with higher levels of emotional intelligence.  Côté explains: “By analyzing the source of the emotions and discovering that these emotions are, in fact, unrelated to the decisions we are making, we may de-bias our decisions." 

As a result of these findings, the authors suggest asking three questions to "de-bias" our decisions in stressful situations: “How do I feel right now? What is causing me to feel that way? And are my feelings relevant to the decision I need to make?”


Mario Recine said...

Interesting findings. It leads one to reflect on the meaning of emotional intelligence. Can an aggressive self-serving individual possess an abundance of emotional intelligence? They sure can. In fact, such qualities in a person probably expose the individual to greater risk since irreversible alienation of allies might prevail.

Risk taking is a fact of social, business and political life. It's a necessity if we are to progress as individuals and society. The universe would probably still be revolving around the earth were it not for the risk Galileo took to pursue his ideas. Now we have research that draws correlation between emotional intelligence and risk taking. I think this causal relationship warrants, at a minimum, a discussion in an MBA class on strategy or international business.

russconte said...

They are interviewing college students and asking them to imagine various scenarios. I think there is a more accurate way to see if the relationship is valid.

I'd suggest doing what Gary Klein did - ask people in real life about real situations, such as firefighters who decide whether or not to go into a burning building. Lots of other options are possible. I'm a snowboarder - a risky hobby - and extremely risk averse. Instead of talking to college students, look at what real people do in real situations where their skin is in the game and there is an honest possibility of significant loss or gain. That's risk. Measure their emotional intelligence, watch what they do and record outcomes. Then they'll have something.

If they can get it to the point where researchers can PREDICT what people will do given the risk factors and their emotional intelligence, then they'll have something. They don't have it yet.

Acton Ace said...

Emotional Intelligence the term introduced twenty year back has started gaining its due importance nowadays. EQ has emerged as major job skill which many companies are looking for in their employees while hiring rather than IQ. According to a research people with low EQ doesn’t realize what important skills they lack. The people with high EQ are emotionally strong and work while keeping their emotions aside. There are many benefits of working with people high EQ rather than with low EQ, as people people with high EQ can handle pressure in a healthy way , understands to cooperate with others, are the good listeners, are Empathic, set examples for others to follow, make more thoughtful and thorough decision. Working with people with less EQ is generally less rewarding sometimes becomes difficult to work with them. Certain ways have to be followed while handling people with Low EQ. Alan Garvornik who is a successful business leader, innovator and entrepreneur with over 32 years of real life, hands on experience in achieving results has provided evidence-based recommendations for managing that situation when you are working with people having Low EQ.