Hot Summers and Cautious Decisions

Chances are that wherever you have living, it has been a hot summer. In fact, heat records have been shattered across North America and Europe. Surprisingly, hot weather has an unexpected consequence beyond our health or comfort, it can actually lead us to make risk adverse decisions.

In Matthia Sutter’s book, Behavioral Economics for Leaders, the author looks at data which seems to indicate that the outside weather affects our decision-making process. This is true even if we make our decisions in a climate-controlled environment. Sutter notes:

Conventional models of human decision-making behavior completely ignore the factor of heat. According to these modes, referred to as neoclassical in economic theory, only the costs and benefits of specific decisions and the choices they are based upon play a role, while things such as heat, tiredness, or general mood are seen as insignificant. However, psychological research shows that heat reduces general wellbeing, mood and a willingness to perform.

Photo by Oleksandr P on Pexels.com

Sutter goes on to reference studies that show how judicial decisions become more risk adverse as outside temperatures rise. Specifically, a judge was less likely to give a defendant a favorable ruling on hotter days. But it is not only temperature that had an effect. Sports scores would also influence decisions.

For example, if the local football team wins big, there are more judges’ decisions favorable to the defendant. This again is a question of predominant mood.

As we move through the remaining hot summer days, take a moment to consider your own decisions. If the heat outside has risen, or your favorite team has lost, you may want to take extra care with your choices or defer them entirely for another day.

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