Tim Hogg

By Tim Hogg

I started feeling less certain about the likely outcome.

I’d just read a news article which emphasised the negative risks.

My worry creeped in further when I saw the ‘risk warning’ at the top of the page and thought about what could happen.

Then I saw that my most recent small investment had fallen slightly since I last logged on to my account.

By this point, I was feeling downright anxious about my decision to invest some more of my savings.

I did not end up investing as much as I had previously decided.

What role do emotions play in decision-making?

The amygdala is the emotional centre of the brain. Neuroscience has shown the key role the amygdala plays in decision-making, especially where people are weighing up risk and reward.

'Emotions constitute potent, pervasive, predictable, sometimes harmful and sometimes beneficial drivers of decision making.' (Lerner et al., 2015)

We benefit from split-second emotional responses to stimuli. These ‘in the moment’ emotions (also known as ‘integral emotions’) guide our decisions.

We also tend to ‘carryover’ our emotional state from previous contexts and experiences (also known as 'incidental emotions’). This too affects our decisions.

The extent of the influence of emotion on decisions varies. Research has shown that people who are more impulsive find that their emotions have a greater influence on their decisions. But no one is immune from the influence of emotions.

The importance of emotion may not seem like a big revelation... but the role of emotion is typically forgotten when thinking about how to help consumers make good decisions. In the rest of this article, we'll see what we miss if we overlook emotion.

Are emotions bad?

Emotion is not a ‘bias’. In fact, emotions help us function within our cognitive limitations:

  • Emotions help us quickly find the right response to a situation, saving time and thought. The amygdala is rapid and efficient.

  • Emotions help us determine how much of our scarce cognitive resources to devote to a task. A vital task.

  • Some emotions motivate us to take action (e.g. fight or flight), overcoming our inertia.

How do different emotions affect financial decisions?

Emotions are more complex than a simple scale of positive to negative. Different emotions have different effects on the likelihood that you save for the future, take risks with your money, or act generously to others.

The chart below is from Meier (2022). It shows the correlation between self-reported risk attitudes and emotions.

  • Greater happiness --> greater willingness to take risks

  • Greater anger --> greater willingness to take risks

  • Greater fear --> reduced willingness to take risks

Source: Meier (2022), based on a large-scale study on people in Germany between 2008-16. Scroll to the end of the article for a note on the questions asked, and how to interpret 'happiness'.

Do we realise the impact of our emotions on our own decisions?

Probably not.

Studies show that we are not very good at anticipating the influence of emotions on their decisions. And when we do think about the effects of emotions, we underestimate their influence.

Is it possible to de-emotion people?

Good luck with that, you’ll need it.

You can’t get people to switch off their amygdala.

The most effective strategy for reducing the effect of an emotion is to force a time delay before people can finalise their decision. This is often not practicable. And even it is was possible, the decision will still be influenced by emotions.

If specific emotions are leading to ‘foreseeable harm’ for your customers, you would be better off designing the choice architecture to mitigate the impact of emotion.

Design for real humans with real emotions, not the hypothetical robots that you might wish patronised your website instead.

So, what? The Consumer Duty implications…

Given that emotional responses to your choice architecture are predictable, and that the impact of those emotions on customer decisions is also predictable… how are you avoiding foreseeable harm?

  • What steps have you taken to assess whether your website, app, and physical communications are helping customers make good decisions?

  • Have you checked to see if there are any inadvertent deceptive patterns in your digital journeys, playing on likely emotional responses to stimuli?

  • What evidence would show that you have seriously considered the behavioural science of your customers' purchase decisions?

I hope your emotional response to this article is positive, and prompts you to spend some of your scarce cognitive resources thinking about these questions.

Notes on Meier (2022)

The survey asked (in German): ‘How would you describe yourself: Are you generally willing to take risks, or do you try to avoid risks? Please answer on a scale from 0 to 10, where the value 0 means risk averse and the value 10 means fully prepared to take risks.’; and ‘“I will now read to you a number of feelings. Please indicate for each feeling how often or rarely you experienced this feeling in the last four weeks,” which they can then answer with “Very Rarely, Rarely, Sometimes (Occasionally), Often, Very Often.’

‘Greater happiness’ in this case can also be interpreted as ‘reduced sadness’, due to the way the study calculated happiness/sadness.


Gupta et al. (2011): The amygdala and decision making - PMC (nih.gov)

Lerner et al. (2015): Emotion and Decision Making | Annual Review of Psychology (annualreviews.org)

Meier (2022): Emotions and Risk Attitudes - American Economic Association (aeaweb.org)