Social Affect

Huge Fall in Global Markets Causes Fear and Panic for Investors

September 16, 2008, as a result of the failure of over a dozen large banks in the United States, was the beginning of a stock market crisis around the world. On October 11, 2008, the head of the International Monetary Fund (IMF) warned that the world financial system was teetering on “the brink of systemic meltdown.”

The Dow Jones Industrial Average fell 21 percent in one week, and BusinessWeek referred to the crisis as a “stock market crash–the “Panic of 2008.”

Over the next year, the crash erased $8.3 trillion in shareholder wealth.

Stock traders are expected to make rational decisions about their investments, but their emotions can influence their decisions. JaulaDeArdilla – Broker #2737 – CC BY-NC-ND 2.0.

Stock traders, bankers, and everyday investors all responded with panic:

“We aren’t dealing with a fundamental economic issue any longer,” said James Paulsen, chief investment strategist for Wells Capital Management. “We are dealing with fear. And that doesn’t respond to economic medicine.”

“I think right now there are just some very powerful negative images that are alive in many people’s minds—images of the Depression, images of people selling apples,” said George Loewenstein, a behavioral economist at Carnegie Mellon University.

Some investors, like software engineer Sandeep Bhanote, did their best to keep their emotions in check: “Fear is the most dangerous emotion. It can really do the market a lot of harm when maybe it is not necessary to be afraid,”

“When investors act purely on emotion, there is greater chance of them sabotaging their financial goals,” said Stuart Ritter, a certified financial planner at T. Rowe Price.

Source: http://www.usatoday.com/money/economy/2008-10-09-145686747_x.htm?csp=34.

Although a good part of our social behavior is determined by cognitive, thoughtful, and rational processes, another part—and particularly those behaviors that have substantial impact on our health and happiness—is the result of affect. Our everyday experiences arouse in us a wide range of moods and emotions, both positive and negative, and these feelings have profound consequences for our lives.

Emotions are particularly social, and that is why they are of such interest to social psychologists. Although we may get angry at our computer, frustrated by our stock trading decisions, or be in love with our car, most emotions have a social component (DeSteno & Salovey, 1996; Keltner & Haidt, 1999). We experience love, anger, guilt, shame, jealousy, and embarrassment for a reason—because these emotions help us develop and maintain positive relationships with others.

We share our emotions with others through our social behavior, including our facial expressions, touch, voice, and posture, and even in our art, poetry, and music (Hertenstein, 2002; Oatley, 2003; Scherer, Johnstone, & Klasmeyer, 2003). And emotions influence our social judgments (Howard & Gengler, 2001; Ramanathan & McGill, 2007). When we are subliminally exposed to a happy facial expression of another person just before we see another stimulus, we perceive that stimulus more positively than we do when angry facial expressions have been primed (Murphy & Zajonc, 1993; Winkielman, Berridge, & Wilbarger, 2005). Viewing sad faces of other people makes music seem more sad (Strahan, Spencer, & Zanna, 2002), and viewing happy faces of others make us like TV shows more (Ravaja & Kallinen, 2004). When we are with another person who is smiling, we rate products more positively (Tanner, Ferraro, Chartrand, Bettman, & Van Baaren, 2008).

The goal of this chapter is to review the wide influence of affect on our social lives. We’ll see how we use moods and emotions to help us understand our social worlds and how they relate to our current happiness and well being (our sense of satisfaction with our everyday experience). We’ll consider the negative outcomes of powerful negative affective states, including anxiety, depression, and stress, but also the healing power of positive emotions. And we will review some of the most effective ways to cope with negative emotions in order to improve our everyday affect.

Basic and Secondary Emotions

The basic emotions (anger, contempt, disgust, fear, happiness, sadness, and surprise) are emotions that are based primarily on the arousal produced by the SNS and that do not require much cognitive processing. These emotions happen quickly, without the need for a lot of thought or interpretation. Imagine, for instance, your fearful reaction to the sight of a car unexpectedly pulling out in front of you while you are driving, or your happiness in unexpectedly learning that you won an important prize. You immediately experience arousal, and in the case of negative emotions, the arousal may signal that quick action is needed. Paul Ekman and his colleagues (Ekman, 1992; 2003) studied the expression and interpretation of the basic emotions in a variety of cultures, including those that had had almost no outside contact (such as Papua New Guinea). In his research, he showed people stimuli that would create a given emotion (such as a dead pig on the ground to create disgust) and videotaped the people as they expressed the emotion they would feel in that circumstance.

Ekman then asked people in other cultures to identify the emotions from the videotapes. He found that the basic emotions were cross-cultural in the sense that they are expressed and experienced consistently across many different cultures. A recent meta-analysis examined the perception of the basic emotions in 162 samples, with pictures and raters from many countries, including New Guinea, Malaysia, Germany, and Ethiopia. The analysis found that in only 3% of these samples was even a single basic emotion recognized at rates below chance (Elfenbein & Ambady, 2002).

Figure 3.1

The secondary emotions are derived from the basic emotions but are more cognitive in orientation (Russell, 1980).

In comparison to the basic emotions, other emotions, such as guilt, shame, and embarrassment, are accompanied by relatively lower levels of arousal and relatively higher levels of cognitive activity. When a close friend of yours wins a prize that you thought you had deserved, you might well feel depressed, angry, resentful, and ashamed. You might mull over the event for weeks or even months, experiencing these negative emotions each time you think about it (Martin & Tesser, 1996). In this case, although there is at least some arousal, your emotions are more highly determined by your persistent, and negative, thoughts. As you can see in Figure 3.1, there are a large number of these secondary emotions—emotions that provide us with more complex feelings about our social worlds and that are more cognitively based.

Moods and Emotions in Our Social Lives .

Although affect can be harmful if it is unregulated or unchecked, our moods and emotions normally help us function efficiently and in a way that increases our chances of survival (Bless, Bohner, Schwarz, & Strack, 1990; Schwarz et al., 1991). The experience of disgust helps us stay healthy by helping us avoid situations that are likely to carry disease (Oaten, Stevenson, & Case, 2009), and the experience of embarrassment helps us respond appropriately to situations in which we may have violated social norms.

Affect signals either that things are going OK (e.g., because we are in a good mood or are experiencing joy or serenity) or that things are not going so well (we are in a bad mood, anxious, upset, or angry). When we are happy, we may seek out and socialize with others; when we are angry, we may attack; and when we are fearful, we are more likely to turn to safety. In short, our emotions help us to determine whether our interactions with others are appropriate, to predict how others are going to respond to us, and to regulate our behavior toward others.

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