Perhaps you fear catastrophic illness or untimely accidents. Maybe you’re afraid you’ll lose your job (or work at the same boring job forever). Or maybe your biggest fear is that you won’t live up to your own high expectations or important obligations.
Whatever keeps you up at night is likely to shape your decision-making at critical moments. Here are some of our favorite studies from the Kellogg School that tackle this tough—or maybe, scary—topic.
Fear can prevent us from taking care of ourselves
The fear of learning we might have a serious illness makes us less likely to get a mammogram or use other types of diagnostic tools, according to research by Kellogg assistant professor of marketing. Hetana Ahar. After all, nobody wants bad news.
But if health providers can make detection—which is scary—more like prevention—which isn’t so scary—we might be more willing to use this diagnostic tool after all.
In one study, Achar and her colleagues recruited more than 400 women online to read about a free tool, the National Cancer Institute’s Breast Cancer Online Risk Assessment Tool (BCRAT), which detects someone’s risk of developing cancer of breast. For some women, BCRAT was framed as a way of detection, while for other women it was framed as a detection tool that helped prevent breast cancer.
Participants then did a writing exercise where they wrote about how or why they might use the BCRAT. The researchers analyzed the number of fear-related words used by the participants and found that “when detection is framed as prevention, the fear expressed by participants is much lower,” says Achar.
In addition, after the written exercise, participants had the opportunity to actually use the BCRAT. The results showed that when the detection tool was framed in a more proactive light, participants used it at a higher rate.
Fear of career repercussions can lead to underperformance
Many people are nervous about their career trajectories—and their salaries—and executives are no exception.
Research by the Professor of Economics David Matcha and his colleague Todd Gormley finds that top executives sometimes shy away from risky, but potentially rewarding, investments that might deliver significant value to their shareholders. Why; They want to keep the wealth of their compensation packages tied to the company, as well as the glow of success that their next job will bring them.
The researchers found that career concerns led executives to make safe, differentiation-focused acquisitions that did not create shareholder value. This included overpaying for large and irrelevant “cash cows” with healthy earnings, rather than making more strategic purchases.
This was especially true for managers who were protected by state laws from the threat of a hostile takeover, giving them more room to avoid taking risks.
Consistent with the idea that protected executives play it safe, companies that did the most diversification-focused acquisitions tended to be at higher risk of failure, the researchers found. In addition, their managers tended to have larger ownership stakes in their companies — putting more of their personal finances at risk — and to be under 55, with longer careers still ahead of them.
We are risk averse… but we also want to see ourselves as courageous
Executives may be risk averse, but to be honest, so are we: people are too afraid to lose what they already have.
It is well documented, for example, that our unhappiness at losing ten dollars is far greater than our happiness at winning the same amount.
So why do people still do risky things all the time—things far more risky than betting ten dollars?
Professor of Marketing Derek Rucker and his colleague, David Gall, had a theory: courage might be a key motivator. That is, for many important life decisions, making a risky choice requires courage—and courage, valued by almost all cultures, is something we desire for ourselves.
Indeed, across studies, researchers have found that the motivation to be courageous can lead people to make riskier choices—but only to the extent that the choices allow one to feel truly courageous (e.g., when the stakes feel meaningful or life changing). For example, participants who had thought about courage were more likely to choose a risky medical treatment—but not more likely to take a trivial financial gamble.
“When people see an opportunity to be courageous, such an opportunity can actually lead to a preference for the riskier option,” says Rucker.
Fear of losing… a good investment
Okay, choosing an investment portfolio is not generally scary. But we couldn’t fail to mention a study by the economics professor Dimitris Papanikolaou which finds that anxiety about missing out on the next big opportunity—essentially, FOMO—drives investors to overpay for startups with the most transformative or disruptive potential.
“One of the most enduring conundrums in finance is that so-called ‘growth stocks’ are usually overvalued relative to some measure of fundamentals and have very low returns,” says Papanikolaou. “This pattern has been going on for about a hundred years – ever since we have stock market data.”
Papanikolaou and colleagues built a model that made a new assumption: while innovation is usually a net economic positive, it does not benefit all participants in the economy equally. That is, while the “winning” innovator will make a fortune—along with any investors lucky enough to choose his company—those who don’t bet on the company will lose big.
The results from their model matched the actual economic data of the past century well—suggesting that their hypothesis about investor fears could be correct.
“If people have this fear of missing out or being left behind, they’ll see investing in something like Tesla as a way to hedge against future disruptions and inequities,” he explains, comparing investing in growth stocks to wallet insurance.
Fear of falling short as a parent
Some of our deepest concerns are not about terrible things happening to us, but about our own ability to juggle our various obligations and aspirations.
Consider working parents. A study by Cynthia Wang, clinical professor of management and organizations, finds that working parents are highly vulnerable to fears that they are not focusing enough on parenting. These fears may be caused by conflict planning, rude comments, or the realization that they let the ball drop at home.
“Parents are always wondering if they are a good parent and there is so much societal pressure about the ‘right’ way to parent. All these pressures weigh so heavily on us that shame becomes a dominant emotion,” says Wang.
Wang and her colleagues asked some working parents to read about (fictitious) research suggesting that working parents are less involved in their children’s lives than non-working parents. The rest read other research (also fictitious) suggesting that working parents participated just as much as non-working parents. Those who read results that threatened their identity as working parents by suggesting they were less involved reported feeling higher levels of shame and lower levels of work productivity.
But a related study revealed something else: parents who felt more shame from parental identity threat also invested more energy in parenting. In short, “we make up for the shame we feel by spending more quality time with our children,” Wang explains.
Gift: Fear and disgust make us crave comfort foods
“We don’t think of buying a traditional Oreo as a way to bring control into our lives, but apparently that’s how people behave,” says the marketing professor Gregory Carpenter. Read more here.