The Self-Fulfilling Magic of Belief and Perception

For years, psychologists have known that each person's own "reality" is created through the lenses of their own experiences, personality, and beliefs. Because experience is such a powerful teacher, including the experiences we observe in others, we can be passive participants and still be influenced. This is particularly true when we observe social approval for some acts and disapproval for others. Social approval is one of the most powerful sources of motivation. This explains why so many people are like sheep in determining what to wear, what to do, and sadly, even what to like, dislike or believe.

Additionally, as I have blogged previously, our bodies are known to respond physiologically to the feelings we attach to our perceptions and beliefs. We can signal our bodies to release good hormones or harmful hormones based on our emotions and beliefs. That's "Why Zebras don't get ulcers" as Robert Sapolsky wisely noted. Zebras don't spend time worrying about the consequences of what has happened in the past, or the possibilities of what might happen in the future. They live in the moment. By doing so, Zebras release stress hormones only when it is necessary for their survival.

Which brings me closer to the point of this post. Part of the reason the world economy is tanking is because people are spending so much time behaving as though they believe the sky is falling. The economy will only worsen if group think leads to the emotions and behaviors that make it so. A recession is the opposite of the unbridled euphoria of an economic bubble. People bought property because they believed it would lead to greater wealth. As soon as those beliefs changed collectively, and it was perceived that Armageddon was upon us, people began behaving in ways that began to create the outcomes they feared, and that we now have.

How does the world turn around a collective perception of doom to one that leads to behaviors of investment and optimism? That, my friends, is the central task confronting political leaders everywhere. Can each of us help? Certainly we can, by taking actions ourselves that signal optimism. Need a new washing machine? Buy it. You'll never get a better deal. But purchase it with money saved, not money borrowed. How about the Rolex? On that one, perhaps don't make the purchase. A Rolex is a high priced functional watch. It doesn't keep time better than a less expensive watch, and it's an unnecessary indulgence. Displaying this new purchase will not be greated with much glee in the current environment. But more to the point, such a purchase will not do much to stimulate the economy.

So, what is the intended take away message for today? It is simply this: We can do ourselves and our world a favor by shedding the current mindset of doom and gloom and adopting a self-fulfilling belief that brighter days are ahead. In fact, through our beliefs and behaviors, they can be created just around the corner.

Optimism and its global Importance — Especially Now

A recent article describing Sir David Tang's observations about optimism as the cure for the global economic meltdown is one of the most important messages delivered in the past three months. You can read it in its entirety here. It deserves far more exposure, in my opinion.

Sir David makes several wise observations, including the need to distinguish value and cost, to recognize that size and importance are not the same thing, and to appreciate that productive work is one the most important "assets" we have. Notice that productive work is not the same as making money. People who trade paper derivatives on wall street make money, but their work is not productive in the sense that it adds much value to the world.

There are not more educated people as a result of trading derivatives, no new houses, roads or labor saving products as a result of the work of those financiers, and no entertaining poems, or beautiful planted trees to decorate the landscape. Nor, indeed, are there well made clothes, shoes, or cars that provide useful benefits to society as a result of such work. If work is done only to make money, no real tangible wealth is created. It's just paper that can be traded for products and services that represent real work. Often, this wealth comes at another person's expense.

Work that produces something of value for the world is work that gives the doer a sense of contribution and pride. When that work goes away, people lose meaning and become depressed. People without productive work are among the unhappiest people in the world, not because they lack money, but because they lack the work itself. As a result, they can lose hope and become pessimists.

Sir David Tang notes that pessimists have a way of creating more pessimism. And when people are pessimistic, they often create a self-fulfilling prophecy. If they believe there is no future, they begin to act in ways that creates that dismal outcome. On the other hand, laughter and optimism are equally contagious and inspire hope and actions that create better futures. Humans in groups have the power to create optimism or pessimism.

There is abundant research in the psychological literature that demonstates the value of optimism. Few if any of these studies discuss optimism and economic outlook, but many show that optimistic people are more resilient, live longer, and are able to influence their own healing. Studies show that optimists make the best salespeople. While their mood probably makes them seem more approachable or engaging, their belief in making the sale also makes them more engaged and persistent. Sales success requires persistence.

Besides, optimists are more fun to be around. Economic stimulus packages that create jobs double the return on their investment. Why? Because the result can not only be people with the ability to earn money for rent, food and clothes, but more importantly people who feel better about themselves and their futures because they are doing productive work.