Fallout: The Financial Crisis

Obama must manage big expectations

Marketplace Staff Jan 19, 2009
HTML EMBED:
COPY
Fallout: The Financial Crisis

Obama must manage big expectations

Marketplace Staff Jan 19, 2009
HTML EMBED:
COPY

TEXT OF INTERVIEW

Bob Moon: It’s certainly not just the Europeans who have lofty hopes for the president-elect. A CBS News-New York Times poll found a combined 68 percent of Americans expect Mr. Obama will be a good or very good president. He seems to have noticed, lately he’s been trying to play down those soaring expectations. Witness his remarks at the kick off to his inaugural festivities on the steps of the Lincoln Memorial last night.

Barack Obama: I won’t pretend that meeting any one of these challenges will be easy. It’ll take more than a month or a year. It will likely take many.

He can try to ratchet down the perceptions, but Obama still faces some tough questions. What is he going to do to jump start the economy? Can he put forward a new bailout plan in record time? And with all these expectations, are we setting him up to fail? Our behavioral economist Dan Ariely has some thoughts on that. Dan, welcome to the program.

Dan Ariely: Very nice to be here.

Moon: So, sure you’ve got the pragmatists and just plain cynics out there who’ve questioned this man’s qualifications through the campaign really, but I wonder about the flip side. Does he need to worry more about this, almost savior-like mantle that he’s been given?

Ariely: Yes. So it turns out that high hopes have both an upside and a downside. So let me tell you first about the upside. We did some experiments on something very simple, which is beer and vinegar. We gave people two glasses of beer — one had vinegar, one did not. And we said try these two cups and tell us which one you want a big jug of.

Moon: Yum.

Ariely: Well, here’s what happened. When we did not tell the people about the vinegar, the beer with the vinegar was more popular — it actually tasted better, people liked it more. But when we told people about the vinegar, they hated it. Now what’s interesting here is that the moment they thought that vinegar would be terrible in beer, that self-fulfilling prophecy actually made the beer less palatable. So when you expect something to be bad, it actually will be bad. And no matter how much beer they tasted, it just didn’t correct their impressions. And I think the same thing would happen for Obama. The people who have high positive expectations from him will see his actions in a much more popular and positive way, and therefore will get a more positive impression about him.

Moon: But as we learn more, how are those expectations of Mr. Obama likely to change?

Ariely: Yeah. So, that’s the downside, of course. And here I’ll tell you a little bit about something we found from online dating. We found that when people describe themselves in very vague terms, a lot of people like them. So if I say I like music, everybody thinks initially that I like the kind of music they like, and there’s a good chance they’ll like me too. But as people would learn more about those people, it turns out you like the other person less. And there’s no question that this is likely to happen with everybody, including with Obama.

Moon: So are you saying lay low here? Mr. Obama needs to stay out of the spotlight?

Ariely: So I think so. I think the more ambiguous he will be in terms of what we know about him, the more chances we will have to maintain his positive image. And he has to do something else, which is he has to manage his expectations. One of the things that can happen is that when these expectations will start crashing down, people would become disenchanted. And I think it will be very important for him in his inaugural address and in general in his initial days in office, is to basically lower the expectations so we don’t have this burn and crash reaction.

Moon: Well, I have to tell you, the more I hear about this, I don’t know how I’m supposed to feel.

Ariely: Well, I think we’re all supposed to feel hopeful. I mean, that’s what would keep us alive for now. Things are very depressing around us and we need hope. And we’re clinging to hope in the Obama case. We’re clinging to the hope that he will deliver us. I mean, some of the way you see people and hear people react to this, it’s as if he’s a messiah. And we need to cling to some of it, but not, not to too much of it I think.

Moon: Dan Ariely is a professor at Duke University and the author of “Predictably Irrational.” Thanks again for joining us.

Ariely: My pleasure, as always.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.