Conversation with Dan Ariely — Why People Believe Irrational Things

Dan Ariely, a professor of psychology and behavioral economics at Duke University, joins Scott to discuss what makes rational people believe seemingly irrational things. He also shares how we avoid certain facts when we don’t like the solution, as well as how a lack of trust in one area can spiral into others. Follow Professor Ariely on X, @danariely. Scott opens with his thoughts on the podcast space and then discusses why tech companies are still laying people off in droves. Algebra of Happiness: the role of parents. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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• 1:00Scott Galloway?

  Episode 285. Route 285 is a US highway known as the death highway. In 1985, Microsoft released the first version of its Windows operating system, Window 1.0, and The Breakfast Club, great teen movie, hit theaters, becoming an instant classic. True story, I have the body of a teenager. It's amazing we can find on eBay in developing markets.

• 1:21Speaker 04

  Go, go, go!

• 1:31Scott Galloway?

  Welcome to 285th episode of the Prop G Pod. In today's episode, we speak with Dan Ariely, the James B. Duke professor of psychology and behavioral economics at Duke University and author of a number of influential books, including his latest, Misbelief: What Makes Rational People Believe Irrational Things. What is that, like 98% of America right now? We discuss with Dan exactly that, why people believe seemingly impossible things, as well as how we can avoid certain facts when we don't like the solution. Professor Ariely is sort of a role model of mine. I just love how he takes behavioral psychology and makes it compelling. And I think he's a great storyteller and I've actually seen him a few times on the speaking circuit. He's literally like a bit of an aspirational role model. Okay, what's happening? Now I'm headed to New York.

• 2:16Scott Galloway?

  That's right. The dog's coming into the city. Little, little walking around Soho, little zero bond, little too much alcohol, little lot of alcohol. I'm having dinner. Why am I having dinner? I'm having dinner. I think I'm having dinner at Babo. I'm gonna have dinner at Cafe Select, one of my favorite places. I'll do lunch or breakfast or brunch at either Jack's Wife Frito, which I love. And I'll get pastries from the Balthazar, the Boulangerie at Balthazar, where I find a $14 brownie. I absolutely love New York. Thrilled to get back there. And then I'm going to Tulum. Then I'm going to Tulum to be a total privileged douchebag on mind-altering drugs. Minus the mind-altering drugs, I don't really do a lot of that stuff. I love it down there.

• 3:01Scott Galloway?

  Everyone says it's turned and it's gotten. Whenever TikTok says something that they're over something and that it's so passe, that's when I start going. Like, something's on its way out, that's when I move in. And if you go on TikTok, they'll just convince you that, oh, Tulum was amazing 10 years ago, but now it's not amazing. People say the same thing about New York. I think New York's never been better post-COVID. I think it's just incredible. Okay, on to some serious news. Elon Musk tweeted that his company Neuralink successfully implanted its first chip into a human brain. According to Elon, initial results show promising neuron spike detection. What do you think he was gonna say? Yeah, we're killing people left and right. It's not working. Anyways, what is Neuralink?

• 3:43Scott Galloway?

  An Elon-founded neurotechnology company that is building a brain-computer interface. The goal is to let those with traumatic injuries, such as loss of limbs, control a phone or computer just by thinking. So I think this is incredible. And you gotta give in as much shitposting as we do of Elon. He definitely is an incredible innovator and doing really aggressive, amazing things. And this feels, I think there's enormous opportunity here. But I'd also like to point out that he seems to never be the one that goes into space or actually implants shit in his own brain. Anyways, the FDA approved Neuralink's plans for human trials last May. Nita Farahani, a professor of law and philosophy at Duke University and previous property guest, says the global market for neurotech is growing at a

• 4:28Scott Galloway?

  compound annual rate of 12% and is expected to reach 21 billion by 2026. I'd like to have my friend Josh Wolf on. He's a venture capitalist who invests in what I affectionately call crazy shit, like this kind of stuff. And whenever he talks to me about his companies, I think that's too bleeding edge. But his returns to his LPs would indicate that he's, that's not true. He's done really well. Anyways, moving on, there's some big news in the podcast space. Smartless, a show hosted by Will Arnett, Jason Bateman, and Sean Hayes, is ditching Amazon for Sirius XM. Bloomberg reported that the three-year deal between Sirius and Smartless is worth more than $100 million, 33 million bucks a year. Amazon reportedly paid between 60 and 80 million for the show back in 2021.

• 5:12Scott Galloway?

  We haven't seen the big bucks associated with podcasts in quite some time. In 2020 and 2021, these were the hot years for pod acquisitions, specifically for Spotify and Amazon that bid the market up. Back in 2021, Spotify reportedly only brought in 215 million revenue from podcasts despite investing more than $1 billion in them. And the Financial Times noted that that was only 2% of Spotify's total revenue. And then they absolutely exited the business. The thing about podcasting, people ask a lot of questions about podcasting, is that I don't think there is a medium that has more income inequality. And that is, I would bet that the top 170 do 98% of the revenue

• 5:56Scott Galloway?

  and 150% of the profits. What do I mean by that? If you're not in the top 1,000 podcasts, it is not self-sustaining. The end market here is very much crowded in kind of the top probably 500 podcasts. So unless you're in the 0.0001%, you're unemployed, or it's a marketing vehicle, not a revenue-producing vehicle. This is a very difficult market. Why? The good news is the barriers of entry are just nonexistent. The bad news is the barriers of entry are nonexistent. It kind of got, went through some different stages where initially, it was sort of a few celebrities who were interesting doing stuff. That didn't pan out. I think the guy that's really busted this whole thing open is Joe Rogan, both long-form He's very talented at it. He kind of defines the medium.

• 6:39Scott Galloway?

  And I've often said that we should all send 10 cents or some sort of royalty every time we do a podcast to Joe Rogan because he kind of exploded the medium. What is also interesting about it is that it peaked in 2019. Everybody wanted a podcast. And what I've found is even some very good podcasters have decided to get out because it's a decent amount of work and you effectively have a medium that's not really growing as fast as the podcasts were. So in, you know, 20, call it 2015, there were maybe 100,000 podcasts. By 2020, there were a million new podcasts. Think about that in 2020. Obviously, we're at home a lot. A million new podcasts started. And last year, there were about 220,000 new podcasts.

• 7:23Scott Galloway?

  My guess is we're going to see a net decline in the number of podcasts over the next several years. So there's some good things about it. It's growing. The podcast medium is growing, I think, at low double digits. And it's getting pretty good CPMs. At Pivot and Prop G, we get about $40 or $45 CPMs, which is actually really good for anything that I guess technically is digital. It's even good for television or radio. Why is that? Because our audience reaches hard to reach demographics. Specifically, on Prop G, we reach upper income young men, which are very difficult to reach and also very attractive to advertisers because they buy stupid things like BMWs and Nikes and coffees. And they are difficult to reach

• 8:07Scott Galloway?

  because they're not watching ad-supported television other than sports. And then on Pivot, we reach kind of the great white rhino of listeners, and that is very, very powerful tech executives who software companies are looking to sell software into. I believe the market's coming back. Why? The key attribute, the key value add of podcasts, they can be, the top 200 are relatively small businesses for media, but they're very profitable. Once you hit, you know, a big production team at half a million bucks a year or maybe a million bucks a year. And then, once you hit that, in terms of advertising, you know, 80, 90% of it is gross margin plus the bottom line. But even more than that, the reason why it gets higher CPMs is because it's intimate. What do I mean by that?

• 8:52Scott Galloway?

  When someone approaches me, I track this pretty carefully. I get about one and a half when I go out, when I decide to actually leave my apartment, which is one of the reasons I'm looking forward to going to New York and Tulum. For some reason, I actually leave the hut or the apartment, so to speak, in reverse order. Anyways, I don't get out much. And when I do go out, I get recognized. I'm now up to about 1.3 times a day. Some days I get three people, some days I get zero. And people come up to me, super nice, super friendly. It's one of the nicest things in my life. I can tell how they know me based on how they approach me and the tone and the complexion in which they present themselves.

• 9:34Scott Galloway?

  If they come up and they're just like, hey, man, hey, Prop G, high five, it's a video. It's a video. It's something on TikTok or a clip of something or even TV. If it's, they want to like, sit down and they kind of put their hand over their heart and they want to talk about how meaningful something I've done is to them. They read something I wrote, specifically something about family or relationships. The written word still moves to the heart faster and in a more impactful way than I think any medium. If they come up to me and just start speaking to me, they don't even introduce themselves. They just come up and they're like, Scott? And I say, yes, and I turn around. And it's almost as if I can, I sit there and think, how do I know this person? Because clearly they know me. No, I don't. It's the podcast.

• 10:19Scott Galloway?

  People believe that they know you. And one, you're in their ears for an hour. And specifically, the operative term there is in. It's very intimate because you're inside of their ear. You're on their person. And also, they're usually doing something quite intimate or they're doing an activity that traditionally was reserved for people or things that meant a lot to them. They're fixing breakfast for their family. They're listening to it in the car with their son. They're with their dogs on a walk. They're working out. Whatever it might be, it's usually a space or a time and space where they don't typically have strangers speaking to them. So when you're in their life that way, they feel as if they know you.

• 11:00Scott Galloway?

  And as a result, host readovers get twice the CPMs of inserted ads. Why? Because if they hear your voice continuing to read an ad, they're sort of interested in the ad. The skipthers, or whatever you call it, the percentage of people who actually listen to the ads. I think it's above 70% and for some podcasts it's 80 or 90, which makes no sense to me because people can skip the ads pretty easily. But people don't seem to mind when it's the host reading, reading the ads. Anyway, so small but profitable business, still growing unlike most of media outside of TikTok and the kind of the digital guys. A huge income inequality, high CPMs because it's very, very intimate. Okay, one last story before we get to our conversation with Professor Ariely.

• 11:45Scott Galloway?

  Layoff season and the year of efficiency continues for the tech sector. In just the first few weeks of the year, nearly 100 tech companies, including Meta, Amazon, Microsoft and Google have collectively laid off around 25,000 employees. As a reminder, 2023 was brutal for tech companies. Around 1,000 of them cut nearly 260,000 jobs last year. In 2022, we predicted that 2023 would be the year of the Patagonia vest recession. But in their last quarters or towards the back half of the year, the big guys would have their most profitable quarters because they would, while their revenue growth wouldn't accelerate, it wouldn't decline, and they would be able to reduce costs. And we saw a tripling in the net income of Meta.

• 12:28Scott Galloway?

  The bottom line is the market loves layoffs when they're not economically, they're not driven by a recession. And these are quote unquote discretionary layoffs. And here's why layoffs are cost reductions. I don't even say layoffs, but cost reductions can be so powerful. If you have 20% operating margins, I mean, meaning for every $100, you end up with $20 in gross profits, right? And that's pretty healthy. It's not tech-like margins of 40, you know, some of these companies have 40%, but it's not manufacturing operating margins of high single or low double digits. So let's call it 20, 20% operating margins. You have two choices to grow shareholder value. How do you grow shareholder value? You grow the company, you more strategically grow top line revenue

• 13:11Scott Galloway?

  or become more strategically advantaged to companies, whatever it might be. Or you just increase earnings. One increases the multiple, one increases the earnings. So how do you increase earnings, right? One of two ways. You either grow the top line, right, by five bucks? Or if you have 20% operating margins, you reduce costs by $1.

• 13:31Scott Galloway?

  So when faced with growing, when Meta, Alphabet and Amazon said, all right, we need to increase, we need to increase our profits by $10 billion, what would be easier? Growing the top line revenue by 50 billion or cutting costs by 10 billion? So they said, you know what? It'd be much easier, given that we've been stuffing so many calories on the esophagus of this company for the last 20 years, to cut 10 billion expenses as opposed to growing the top line 50 billion. That's probably the wrong example. Cut costs by 2 billion versus trying to grow the top line by 10 billion. And I think this is kind of rolling through the economy. And then they've been given this tool called AI. And they think, well, I could actually probably use this to replace some jobs.

• 14:15Scott Galloway?

  In addition, it's been such boom times and we've been hovering up all human capital that quite frankly, we could probably lose 10 or 15% of our employees and not notice or the end consumer, the front end consumer wouldn't notice that they're gone. This is all to say that as an entrepreneur and as a manager, your job is to grow shareholder value, your job is to grow enterprise value. And there's a bunch of ways to do that. I can give you an example of Prof G or we have Prof G Media. We have several lines of revenues. We have speaking, we have podcasts, we have books. What else do we have? Oh, revenue from our newsletter. And up until about two years ago, everything was basically a marketing vehicle that was sort of break even to drive this incredibly high revenue, high margin business called

• 15:00Scott Galloway?

  my speaking business. Over the last two years, our speaking revenues have gone from 50% of our revenue to about a quarter of our revenue. And while that has slowed top line growth, it has made the enterprise worth more because it's a media company, not an enterprise supporting one person's speaking business. My speaking business will never be acquired, or at least I don't think it will be. I don't see how a company would come in and say, we want to buy this company to get your speaking revenues. But they might want to buy a media company that has repeatable assets, that seems to have consistent revenue and our podcast does generate within a certain confidence interval, a certain amount of revenue each month and it's growing, call it 20, 25% a year. If you were to describe, if you were to try and zero in on what drove an incredible

• 15:42Scott Galloway?

  year in the markets in 2023, you'd say, well, it was really just seven stocks or AI inspired. But even more than that, more than that, specifically talking about the operational efficiencies, if you will, or what was the financial, I don't know, construct or dynamics that drove so much shareholder value was the following. It was one, The great taste of reduced expenses without the calories of reduced revenues. These companies continued to increase their revenue growth or continued to have revenue growth as they were decreasing their costs. If you're ever in a situation where you turn around, this happened at a bunch of companies. Quite frankly, sometimes it wasn't their idea. Salesforce had an activist investor, Elliot, come in and say, we own a couple billion dollars of your stock now. We'd like you to take a hard look at your costs.

• 16:25Scott Galloway?

  Marc Benioff, who is very savvy, what is the rookie move among quote unquote experienced CEOs when an activist shows up? They circle the wagons and they immediately put up the middle finger and say, how dare you question me, master of the universe? And they fight them. Well, no, Marc Benioff is a grown up, smart, very shareholder driven and said, sure, guys, what are your ideas? Listen to them and said, yeah, there's probably some fat to cut here. Cut some fat, didn't lose any revenue growth and boom, champagne and cocaine, bottom line explodes. So, so as a young entrepreneur, you're going to be totally focused on growth. That makes a lot of sense, but adults also focus on costs. And I know firsthand that venture capitalists love entrepreneurs who throw nickels around as if they're manhole covers. Keep in mind, you push up revenues or you push down costs.

• 17:09Scott Galloway?

  Both are fantastic ways to grow shareholder value. We'll be right back for our conversation with Dan Ariely. Support for the show comes from Built. Most of us work hard to earn our keep, but usually there's no one around to hand you a cookie when you successfully pay your monthly housing bill. No one except Built, that is. Built has expanded from their original renter rewards program and they have a lot more going on for members now. For example, members can earn points on mortgage payments too. Every housing payment gets you points that get you a lot more than baked goods, such as flights with top travel partners, including United and Hyatt, Lyft rides, Amazon.com purchases, and much, much more. Here's another benefit of Built membership. You also get access to what they call a neighborhood concierge.

• 17:53Scott Galloway?

  You can make restaurant reservations, book fitness classes, and find new local spots, all while rewarding you at more than 45,000 merchant partners. It's simple. Being a renter and now owning a home feels a lot better with Built. You can download the Built app and join the membership for where you live at joinbuilt.com/propg. That's J-O-I-N-B-I-L-T.com/propg. Use our link so they know we sent you.

• 18:19Scott Galloway?

  Support for the show comes from Vanta. As AI adoption grows, so does your company's security risks and requirements. New frameworks, audits, and vendors keep piling on, but your team isn't getting any bigger. Most compliance tools promise automation, but you're really stuck doing all the work by hand, chasing screenshots, validating controls, and playing catch-up when audit season comes around again. Vanta works differently. The Regentic Trust platform is built to scale with you, not slow you down. With over 1,400 automated tests across 400-plus integrations, Vanta collects evidence and monitors your controls year-round, cutting your audit prep by 82%. Plus, you can access the Vanta agent everywhere you work, whether your team is in Vanta every day or living in tools including Claude or Cursor. Want proof?

• 19:04Scott Galloway?

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• 19:26Scott Galloway?

  Support for the show comes from Vanta. As AI adoption grows, so does your company's security risks and requirements. New frameworks, audits, and vendors keep piling on, but your team isn't getting any bigger. Most compliance tools promise automation, but you're really stuck doing all the work by hand, chasing screenshots, validating controls, and playing catch-up when audit season comes around again. Vanta works differently. The Regentic Trust platform is built to scale with you, not slow you down. With over 1,400 automated tests across 400-plus integrations, Vanta collects evidence and monitors your controls year-round, cutting your audit prep by 82%. Plus, you can access the Vanta agent everywhere you work, whether your team is in Vanta every day or living in tools including Claude or Cursor. Want proof?

• 20:11Scott Galloway?

  Over 16,000 fast-growing companies like Ramp, Ryder, and Harvey save time and resources while scaling fast with Vanta. Learn more at vanta.com/profg and get $1,000 off. That's spelled V-A-N-T-A dot com slash prof G for $1,000 off.

• 20:42Scott Galloway?

  Welcome back. Here's our conversation with Dan Ariely, a professor of psychology and behavioral economics at Duke University and the author of a number of books, including his latest, Misbelief: What Makes Rational People Believe Irrational Things. Professor Ariely, where does this podcast find you?

• 20:58Speaker 05

  I'm currently at Duke, in my office, in the Center for Advanced Hindsight. But my mind is scattered all over the place. I'm thinking about Israel, I'm thinking about Gaza, I'm thinking about London, I'm thinking about what's happening in American universities, about Iran, Syria, what's happening in South America. So the world is really troubling these days. I think if somebody wrote a book about this particular era that we're living in, we wouldn't believe them.

• 21:37Scott Galloway?

  Yeah, I sometimes assign it to the fact, as I get older, I get more anxious. I was sort of sleepwalking through life from sort of zero to 30. I think from 30 to 50, I had the right amount of anxiety. I call it productive anxiety. And now I'm anxious about everything. But it feels, these times feel especially anxious. So it feels...

• 21:58Speaker 05

  Let me say one more thing about this. You know, I view my world, my job, as trying to promote small improvements. Big improvements are tough, small improvements are possible. I think that within the realm of social science, there's lots of opportunities for small improvements. We can get people to sleep slightly better, we can get people to save a bit more, to fight a little bit less, all of those things. But then these big things happen. They take us back. And, you know, it's very hard to say, okay, we make these small improvements, and it's a big step back that are... How do we find the energy to continue driving these small improvements?

• 22:42Scott Galloway?

  We were speaking off mic about how the Holocaust deniers are now merging with the October 7th deniers. People who are saying or questioning whether these events ever really happened. And when I, and that in itself is disturbing. But what I find more disturbing is when I hear these people and I see them interviewed. Other than the words that come out of their mouth, their background, their education, it just doesn't fit. You think these look like normal Americans that would, you would expect to be rational and they're not. And that's where your work kind of comes in, what it means to be irrational. So let's start there. Give us an overview of what it means to be irrational.

• 23:24Speaker 05

  Yeah, so there's, there's lots of ways to be, there's one way to be rational and there are many ways to be irrational. But, but what you said is, is very true about this notion of beliefs. And, and you know, my, my latest book is called Misbelief exactly because of that. And we see these people and we say to ourselves, five years ago, we thought that we had the same beliefs. And now we look at the same people and say, we don't understand. How are, how are they and us looking at the world in, in the same way and, and coming to such different conclusions? And it turns out that there's a psychological machinery that gets people to a state of disbelief.

• 24:10Speaker 05

  And as a metaphor, you think, you can think about the cookie. And the cookie is a, is a weaponized food that is designed to get us to want one and then eat another one, another one, another one. And somebody designed the cookie, not intentionally to create the obesity epidemic, but somebody designed the cookie with an optimal combination of sugar, fat and salt to get this, to get this behavior. And we have this machinery that gets us to. Believe very strange things, things that you would say, I don't understand how, how this happened, but this, this machinery is, is much more complex than the cooking, because it attracts almost all of our psychology.

• 24:52Speaker 05

  If you look at, if you look at misbelieve, it's basically kind of almost like an introduction to psychology textbook where it's about emotion and stress, cognition, personality, social, and all of these elements have a role in the descent of people from having standard beliefs to having some very strange beliefs. And the basic ingredient that starts this whole path is stress. And, and let, let's take us for a second away from, from politics and, and the world around us. Think about two tribes of fishermen.

• 25:33Speaker 05

  One tribe of fishermen fishes in the deep sea, one of them fishes in the lake. Those in the deep sea have a much more unpredictable environment. Those that fish in the lake, much more predictable. Which one of them develops more superstitions?

• 25:52Speaker 05

  The ones in the deep sea. Why? Because a superstition gives people a sense of control. I'll clap my hands, I'll pray to a god, I'll do this and this thing, and it will give me some sense of control. And it turns out that when we're stressed, and I don't mean the stress of saying, oh my goodness, I'm so busy, I'm not sure how I'll manage. I mean, the kind of stress that says, I don't understand the world. I don't understand why the Houthis in Yemen are all of a sudden attacking Americans. I don't understand what's happening in South America. I don't understand why Russia is attacking the Ukraine. Like, I don't understand what ChatGPT is going to do for my future work. When, when people are living in an environment and say, I just don't understand the world,

• 26:37Speaker 05

  they want a story. So superstition is one story, but we want a story. But we don't end there. It's not just a story. We want a story with the villain, right? Because now it's not our fault, it's somebody else's fault. And we want a complex story. And why do we want a complex story? Because the complex story basically gets to say, I thought I don't understand how things are. Now I feel that I understand more than other people.

• 27:06Speaker 05

  I understand that there's a cabal, there's all kinds of things like that. So people want story with the villain, and the story has to be slightly complex. And that's not the end of this, that's not the end of the, the final of disbelief. It's not the end of the descent that we're misbelieve. This is just a starting condition of what it starts. And if you think about COVID, I don't know what your feeling is, but my feeling is that we haven't finished even dealing with the emotional aftermath of COVID. And I think about kids who are now in college. It's been the last two years of high school or the first two years in, in, in COVID. I think about people who are restricted, worried,

• 27:51Speaker 05

  concerned, and lost money, lost faith in other people helping them. Like, think about all of this. It takes a long time to, to recuperate. And we haven't recuperated from COVID. And now we get these other avalanches that are just making it very tough for us, very tough psychologically, very tough to cope.

• 28:11Scott Galloway?

  I want to double click on that. I, I, I really, I find that really interesting. And the notion that we become more vulnerable to conspiracy theory, or misinformation, or behaving irrationally when we're under stress. And that just makes a ton of sense to me. And as a boomer, I find that some of the views, some of this conspiracy theory, I mean, it's kind of cuts across all age groups. But the place I find it most surprising is with the young people because they're the most educated generation in history. And yet on some of the biggest issues, I find that they're the most prone to misinformation or conspiracy theory. So taking that one step further, you know, the thesis I would put forward is it's not what's going on

• 28:53Scott Galloway?

  in Ukraine or even in the Middle East that stresses them. It's what you said, COVID. I think that's remarkably obvious, and I wish I'd thought of that. But also that the younger generation with Instagram, social media, Bulldozer parenting, my colleague and your friend Jonathan Haidt has written eloquently on this, that you have the most stressed generation in arguably American history. I mean, maybe young people during World War II, but you see all the indicators are young people are depressed and anxious.

• 29:26Speaker 05

  I think you're absolutely right, but there's another component of it. And the component is, we've been thinking about the inputs for stress, right? And you were writing, you write about them. What's the cure against stress? What's the remedy? And the basic remedy against this kind of stress is resilience. Now, now, think about resilience. What is resilience? Usually, we think about, okay, we go through life, something bad happens, like in my case, an injury, life gets really bad. And then the question is, do you bounce back? How long it takes you? And do you bounce back to where you were, a little bit below, a little bit above?

• 30:08Speaker 05

  That's usually what we think about resilience is coming back from a tragedy. But resilience is not just about coming back from a tragedy, it's also about the way we go about our life. And do we feel that if something bad happens, somebody will catch us? You know, I think of it as like an umbrella policy for everything, but not with the insurance, but as a social contract. And the standard way to think about it is what is called secure attachment. Right? So imagine you're a parent, you have a kid, they're three years old, you go with them to the park and you say, kid, go to the swing.

• 30:48Speaker 05

  If the kid goes to the swing and come back 45 minutes later, you have a kid with secure attachment. But if the kid goes and every two minutes, they look behind your shoulder to see if you're still there, you have not been so successful. And that for me is the process of resilience. Do we think that as we go about our lives, whatever we do, do we think that if something bad will happen, somebody will catch us? And I think that that feeling is at an all time low. And how, how much time do people spend with their bodies? How much do people spend meaningful time with their bodies?

• 31:32Speaker 05

  How many, how many friends do we have that we think will travel 3,000 miles and spend $20,000 to bail us out of jail? Not that this is the, the only test of friendship, but the reality is that we're getting into a situation that we have less and less resilience in society. And, and another interesting input is that as economic inequality increases, resilience goes down. Why? Because even at the level of a neighborhood, people with high income inequality in a neighborhood are less likely to ask their neighbors for help. So we are, we are less together.

• 32:14Speaker 05

  Of course, the Democrat, Republican separation, there's all kinds of other things, but we're less together. We feel that there's less things to rely on. So all of this stress is not just increasing, but we have less resilience. So we have less things to, to defend ourselves. Like our psychological immune system against stress is weaker. So all of this is, is creating lots of tension. And then if you think about, so we said, you know, misbelief is about stress, cognition, emotion and social. If we jump for a second to the social, think about a young person who, you know,

• 32:55Speaker 05

  hasn't heard much about Israel or Hamas or the Palestinians, but they heard the, the phrase from the river to the sea. And they don't necessarily know what river it is or which sea it is, but, but that, that statement.

• 33:10Speaker 05

  Is basically a community statement for them. We have these people, we're marching, we are a group, we're together. All of a sudden, it fulfills a need. It fulfills a need. They belong to something, they have a group. And you know, you said earlier that it's not the people that you would suspect are intelligent and caring and creative and so on. That's right. One of the things I learned through this journey of disbelief is that we shouldn't discount those people and we shouldn't discount their opinions. And what I mean by that, it's not that they are correct, but those beliefs answer real needs that people have, right?

• 33:55Speaker 05

  Yes, we can say, okay, they are descending to the path of disbelief, they are ending up believing in something else, but what function do these beliefs have? Why is it that these people have a need to believe that the world is flat or the World Health Organization is doing something or they are G5, whatever it is? Nobody wakes up in the morning and say, I want to have some disbelief today. People have some deep psychological needs and they find these misbeliefs as a remedy for those needs. Now, it's not the ideal remedy, but it is a remedy.

• 34:35Scott Galloway?

  I love that. I love the notion that you become more susceptible to misinformation and conspiracy theory when you're stressed and that the resilience, just as you were talking about, you know, it's a lack of resilience. I was thinking, the thing that popped into my mind is the thing that gives you resilience is deep and meaningful relationships. And you articulated that beautifully, the notion of a kid who feels like someone is there for them and doesn't have to be in the proximity, feels more resilient, more trusted. The thing you didn't touch on, that I wonder is part of this, is that people no longer trust institutions, which used to serve as a form of security. Any thoughts?

• 35:17Speaker 05

  Yeah. Absolutely. So, you know, of course, the mistrust in journalism makes it very hard to know who to trust online. Lack of trust in politicians is a lack of trust in academics and lack of trust in physicians. You know, the basically, basically, the feeling is, is that we are on the road. And even the court system, right? You would want to believe that if something happens, that there is a sense of justice out there. And when the sense of justice is eroding, that's very, very tough.

• 35:57Speaker 05

  And, and one, one other interesting thing about misbelief is that in my definition, it has two components. One component is the belief in something that is ain't so. Okay, that's the outside. But the second thing is that it's a very deep belief that colors the way we view the world in general. So imagine that I, we'll just take the example of the, the earth is flat. Imagine I think that the earth is flat. It doesn't end there. It says that NASA is lying and every airline pilot is lying and every government is deceiving

• 36:38Speaker 05

  us and every school system knows the best and the space program is a hoax and satellites and other, just think about what it is. And it's all just a belief that the earth is flat. It's a lens from which you view life and you say, I don't trust any of the institutions. And that's why it doesn't stop there. Then it goes to other things and other things and other things. And then you hear a little piece here and there and you, and you make the picture. Because if you already don't trust, everything you see creates another level of mistrust. As a society, we're losing a lot because of it.

• 37:16Scott Galloway?

  Can you explain the concept of solution aversion?

• 37:20Speaker 05

  Yes. So, so when we get, when we get to the cognitive component of how we, we change our opinion, there's of course a very simple component, which is we watch the news that we like. You, you decide if to watch NBC or Fox News, right? People decide what to watch. And if you watch TikTok, TikTok take you to one of those paths depending on their algorithm. But then there's a second component, which is not about selecting which information. Like imagine this is all the information you want. Confirmation bias is about selecting part of it. Say, "Oh, I'm just going to pay attention to this, I'm just paying attention to this." Solution aversion is part of another component, which says,

• 38:05Speaker 05

  "Even when I get exposed to the all the information, I'm able cognitively to discount the information I don't like and focus on the things that I like." So this is what is called motivated reasoning. And maybe the nicest study was done in the context of climate change. And the idea is that, you know, if I try to argue with somebody who is climate change denier, let's say, the standard strategy is say, "Here's a paper, and here's another paper, and here's another paper." But what if it's not about the evidence? These are smart, intelligent people, they can read. What if it's about their cognitive system who says, "I am going to ignore this, I'm going to discount it, I'm not going to pay attention."

• 38:50Speaker 05

  And solution aversion basically says that when we don't like the proposed solution, we reject the evidence. So maybe what we need to do is we need to start with solutions that we might agree on, and only then try to convince people. So maybe, not maybe, but a better approach would be to say to people, "No, if climate change was real, let's talk about solutions. What would be reasonable? Let's come up with something. And then, come up with something that would not upset them, that they will be willing, willing to do, and then, and then take it from there." So, there's a, there's another, by the way, interesting trick in, in that regard, in the cognitive regard.

• 39:34Speaker 05

  And we call it the illusion of explanatory depth. And the illusion of explanatory depth basically says that people think they understand many things in the world, but we have only a very superficial understanding. And when you push people, they basically realize that there's a big gap between what they think they know and what they know. So, so I demonstrated it with a flash toilet. I said to people, do you understand how a flush toilet works? Said, yes. Scale from zero to a hundred? Stand it alone. Great. Luckily for you, I have all the pieces of a flush toilet here. Please try and assemble it. Of course, nobody ever managed to assemble it.

• 40:17Speaker 05

  And then I say, how much do you think you understand flush toilet? And people say, not so much. And again, the idea is that when we try to convince people, we usually go head to head.

• 40:29Speaker 05

  But let me ask you, in the last five years, how many people have you convinced deeply that they were wrong?

• 40:41Speaker 05

  Let's agree that not many.

• 40:42Scott Galloway?

  I worry that sometimes I come on so strong that I just end up cementing their position.

• 40:48Speaker 05

  That's right. I think that's usually what happens. So usually what happens is we argue with people. And the other person is not even finished listening to our sentence. They're already counter argued. They're already thinking why we're wrong. So we think we spend an hour expressing our opinion, but the other person spends an hour cementing their own beliefs. So we are not convincing other people, we're not convincing ourselves. The illusion of explanatory depth, basically, don't fight people. Come from their side. Now, these, coming at people's perspective and exploring that process. And by the way, another context, of course, is the war between Israel and Hamas.

• 41:32Speaker 05

  So I thankfully have lots of friends from all over the world, some from Arab countries. And a lot of them contacted me after October 7th, wanting to talk. And I basically say, look, I don't want to talk about history. I don't want to talk about 1948 and 67 and so on, not now.

• 41:55Speaker 05

  I also don't want to talk about who is more morally wrong. It's just not a healthy discussion. I want to talk, what do we do from here forward? What do we think that is the right thing to do from here forward? And they say, fine. And I say, what would you like to see happen? And usually people say, I want an immediate ceasefire and I want Israel to leave Gaza. And I say, okay, I can't grant it, but let's say you got this. Let's say you got those two. So what's next? And usually they stop. They say, what do you mean what's next? This is it, it's over. I said, no, no, no, it's not over. If there's a ceasefire and Israel left Gaza, does Hamas gets to rule Gaza again? Usually they say, yes.

• 42:39Speaker 05

  And I say, do we let them arm? And they say, yes. And I say, nuclear weapon? They say, no. And air force? They say, no. And navy? So I say, okay, so what do we let them do? And then if October 7th repeats in three months, what do you want the reaction to be then? Because it's, you know, there's no question that something like this would happen again. It's not that those approaches move people from right to left or left to right. They just get us to the right state of being less sure in ourselves.

• 43:21Speaker 05

  And I think one of the dangers in polarization and in discussion is that too many people are 100% sure. And what we, like, where is the nuanced understanding of how complex the world is? And the moment you get to a higher nuanced understanding of this is a really complex situation. There's lots of wrong ways to go forward. It's very unclear. I think it's a better reflection of the situation. And it's also much more likely that we as a public, we are not decision makers in the politic, but it's a, makes it much more likely that we as a public with whatever our desires

• 44:02Speaker 05

  to pressure the political system, they would be aimed at the right, at the right direction.

• 44:07Scott Galloway?

  Well, you talk about this. You talk about a means of combating disbelief. It requires a strategy rooted in empathy. And we talked about asking questions. Isn't oftentimes also really important to acknowledge points on the other side and acknowledge the other viewpoint?

• 44:24Speaker 05

  Acknowledge the other viewpoint in the suffering. Like, you know, the discussion is like on both sides. There were some really wonderful academic papers showing that both sides just want someone to say, "You were wrong. This was terrible. This shouldn't have been like this. You were wrong. Now let's talk about what do we do in moving forward." But hearing our pain, having some sympathy. Because the other way, we just think we're fighting, right? Couldn't you hear me? Here's what I just said, that, like, why can't you acknowledge anything? But people treat discussions as if it's a battlefield.

• 45:09Speaker 05

  It's not a battlefield. At the end of the day, we should come up with a new joint understanding of what we are. And people are just not collaborative in this process.

• 45:23Scott Galloway?

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• 46:27Scott Galloway?

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• 47:35Scott Galloway?

  You speak a lot about motivation. You've written and spoken a lot about it. What gets us to care about things and act on them?

• 47:45Speaker 05

  So lots of things. I'll tell you, this is strictly out of the context of this discussion, but in the last seven years, I have been tracking how companies treat their employees, how the employees feel about the company, and what it means for the company's performance in the stock market. So for example, I'll ask you a few things. Do you think that companies that pay their employees better

• 48:20Speaker 05

  have a higher return to their stocks?

• 48:24Scott Galloway?

  I'd like to think yes.

• 48:27Speaker 05

  So the empirical answer is no, not much. And what about health benefits? The companies that give better health benefits have higher return to their stock?

• 48:41Scott Galloway?

  Well, I mean, I'm cheating here. I know the answer is no, because McDonald's has gone up 12x and doesn't have healthcare. I mean, yeah, the answer is no.

• 48:52Speaker 05

  Yeah, so the reality is that there is forking the road between extrinsic motivation and intrinsic motivation. And intrinsic motivation is salary and bonuses and chairs and tables and health benefits and retirement benefits. And all of those things that are called extrinsic motivation don't end up mattering so much. And this is research that we had data from 2006 ongoing. So, you know, for this, for this period and hundreds of companies. The things that do matter end up being about intrinsic motivation.

• 49:30Speaker 05

  And one of the things that is the most important is, do you feel appreciated?

• 49:36Speaker 05

  Now, now, think about what does it mean to feel appreciated? By the way, I think, I think that when I heard about this, when I heard, when we saw the results for this, I thought about all the, all the waste in the world in which we just don't get people to feel sufficiently appreciated. Think about all the people who work with us. Sometimes, sometimes it feels to me that people behave as if we're born with a limited amount of compliments. And if we gave all of our compliments away, we would die, but it's not true. We can give, there's an endless amount of appreciation, endless amount of thanks. And, and, and it really matters. People do lots of things and they want to know that somebody is watching.

• 50:21Speaker 05

  Want to know that somebody is watching and it's, and it's worthwhile. Another thing is psychological safety.

• 50:28Speaker 05

  Psychological safety is basically people's ability to express their opinions. And it's a little bit like resilience. And, and they feel that nobody would attack them, nobody would cancel them, nobody would attack them, that it's a, it's a safe environment to express thoughts and, and feelings.

• 50:50Speaker 05

  Alignment with the company is important. Right? We work somewhere, but we need to know that we're aligned with the company, that we care about what it is that they are doing, that we feel connected.

• 51:02Speaker 05

  Bureaucracy, by the way, is one of the things that kills motivation. Almost nothing kills motivation as much as bureaucracy. Because when we add bureaucracy, we basically say to people, "We don't trust you, we don't care about your time, and we don't want you to do anything different. You see an opportunity for improvement, don't do it. Just do what's easy, without tackling the bureaucracy." Of course, all of those are very, very negative in terms of motivation. So we have extrinsic motivation, intrinsic, what's really important is intrinsic. And then within intrinsic, there are these two subcomponents. One is goodwill.

• 51:49Speaker 05

  Think about your current amount of efforts and call it a hundred. Not you, but you know, somebody. Think about your current level of effort at your job and call it a hundred. Now ask yourself how much lower you could get and still not lose your job. For many people, it's quite a lot. And then think about how much up you can go if you were truly excited about what you do. That range between the minimum you had to do not to lose your job and the max you could do if you could be very excited, that's I call goodwill. Because that's the part where the employee controls. I decide if to sit here and drink coffee or to try very hard.

• 52:33Speaker 05

  So that's one, the first component. Then the second component, I call the utility embracing. And think about the following story. Imagine a janitor in hospital. The janitor has a job description. "So, water..."

• 52:51Speaker 05

  Toilet paper, whatever. One day, a janitor walks in the hallway and they hear a patient crying. Should they go and check on him? You say, yes. One day, the janitor walks and they see a family getting lost in the corridor. Should we redirect them? Yes. In fact, we understand that there's lots of things that are not in the janitor's job description that we want the janitor to do. We want the janitor to take the utility of the hospital. Saying, this is good for the hospital. It's not good for me right now because it takes time for me and I'll have to go back to my duties later, but it's good for the hospital. And when you think about it, there are lots of cases in which we want people not to do their job description.

• 53:36Speaker 05

  We want people to look around and say, where else can I be helpful? What can I do to be helpful for the organization that is not in my job description? So those two components, utility embracing, opening our eyes and looking around and goodwill, make a huge difference. And, and the thing about it, it's, it's good for everybody. People who go to a workplace where they love going to are happier and more productive. And everybody wins. But nevertheless, lots of organizations are not doing it the right way.

• 54:10Scott Galloway?

  So on a larger scale, what global societal issues, and I imagine there's a lot to pick from right now, have occurred as a result of our own irrational behavior? What are self-inflicted wounds here?

• 54:25Speaker 05

  Well, right now, I think one of the big ones is, is social media and it's multiple wounds. The, the class action lawsuits, lawsuits in the U S against tobacco are about 200 billion, I think, something like that. What would the number be if there were class action lawsuits against social media? It'll be hard to quantify, but, but we talked about loneliness and depression and social polarization and fake news and people are not getting vaccinated. And you, you can just name the, name the thing. Imagine we would, we would quantify that.

• 55:02Speaker 05

  That would be much more, I think. And it's self inflicted in the sense that, you know, when I started writing this book, in the proposal I wrote, it'll be a chapter on solutions. I don't have a chapter on solution. I have these little sections in the middle called, hopefully helpful. Because I think that the real solutions have to be much broader and bigger. We have to control social media. We have to create new standards for truth. I think the freedom of speech is a wonderful idea, but when it can be weaponized in a way that it is now, we have to reconsider it.

• 55:43Speaker 05

  It's one of the biggest problems, I think, of modern society is misinformation and polarization. Like 10 years ago, if you asked me what are the big problems facing humanity, this wouldn't be one of them. Now, I think that for, in order to go forward in anything, we need to unite. If whatever decision we make, the other half is going to say, I'm not accepting it, or I think this, like, we're not going to move forward in any meaningful way. So I think that could be number one for me now, is the way that our information systems are working. We need to, we need to do something really big to fix them.

• 56:25Scott Galloway?

  Dan Ariely is a professor of psychology and behavioral economics at Duke University and a founding member of the Center for Advanced Hindsight. He's also the bestselling author of a number of books, including Irrationally Yours, Predictably Irrational, and The Upside of Irrationality. His latest book, Misbelief: What Makes Rational People Believe Irrational Things, is out now. He joins us from the great University of Duke. Professor, it's always good to speak to you. And I came late to writing books. It's, I wish I'd started earlier. It's been something wonderful for me. And your book, Predictably, I think it was Predictably Irrational, was motivation for

• 57:07Scott Galloway?

  me to write the book because your agent reached out to me and said, you remind me of Professor Ariely, and you should write a book. So, thanks for that.

• 57:15Speaker 05

  And Jim Levine is an amazing, amazing, amazing guy. What to mention.

• 57:22Scott Galloway?

  Yeah, exactly. Thanks again. Best of luck to you.

• 57:33Scott Galloway?

  Altru of Happiness, something that struck me. I'm not, I don't know much about Michelle Obama. I've always thought she was a really impressive first lady and impressive person. And like most people, I'm very fond or have very, I don't know, positive memories of the Obama administration. Something she said recently, though, really struck me. And that is, "You're not your kid's friend. You're their parent." And I have found as my boys have gotten older, I kept kind of hoping and pushing me and them to be friends, that we would hang out and do stuff together and talk together. I remember I said to my kid, "It's time to have, you know, the sex talk." And I have never seen a look of horror like I saw in his face. And he literally screamed out reflexively, "No."

• 58:16Scott Galloway?

  And I think I was sort of upset because I thought, "Well, we should be able to have these conversations." And the reality is, I'm not his friend. And that might be a conversation that a dad and a son have. It probably should be. But it's probably not necessarily a conversation a dad and a son need to have. But I was upset because I thought, I thought maybe he'd think of me as a friend who could give him good advice. I get my kid, my youngest now out of bed every day. I have my boys. And it's a frickin' nightmare. My kid is like me. He's nocturnal. We start this three-hour process called putting him to bed at about 9:30 PM. And by 1 AM, he's finally in bed. "I want to get milk. I need to brush my teeth. Oh, I need to check my phone."

• 58:59Scott Galloway?

  I mean, it's just like, the, like, delay and stall tactics that would make any professional athlete, I don't know, whimper or cower in impressiveness. Anyways, he's very good at stalling around them. And then I wake up, you know, my alarm goes off at 7:15. I feed the dogs. I come down and I get him. The first thing I do, I go in, I wake up the shades and I say, "Nolan." And I turn off the sound machine. And he's like, "Yeah, a little bit longer." And then I go down. And eventually, it just digresses to, at some point, me screaming at him and sometimes even throwing the covers off of him and not physically dragging him out of bed, but basically dragging him out of bed. And it's upsetting for me. I don't like it. The reality

• 59:42Scott Galloway?

  is, you're not your kid's friend. You're their dad. You're their mother. And that's what you're here for. You're here to make sure they know their love, but you're here to logistically get shit done, put guardrails around them, give them values, make sure they have confidence and self-esteem. And I think a certain amount of discipline and guardrails and forcing them to have a certain set of objectives such that they know how to get things done, they know what's required to get things done, they know things involve a trade-off, and still a certain level of discipline, know that there is a hierarchy and authority in every situation, including a household. I think that's really important. And sometimes it hurts, and a lot of times it's not as fun. Sometimes I'd rather have

• 1:00:23Scott Galloway?

  a couple of friends to hang out with. But here's the thing. Here's the thing. I'm not their friend. I'm their dad. This episode was produced by Caroline Shager. Jennifer Sanchez is our associate producer, and Drew Burrows is our technical director. Thank you for listening to the Prop G Pod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn, and on Monday with our weekly market show.

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• 1:01:19Speaker 09

  I'm Glenn Washington from Snap Judgment, the storytelling podcast from KQED. Imagine an iconic piece of paradise overrun by one of the most horrific fires in recent memory. Everyone flees. Everyone, except one person who decides to fight the flames alone. The moment when nature, institutions, and technology fail at the exact same time. That's All Systems Down and new Snap Judgment mini-series from KQED. Tap to listen now.