EMOTIONAL IMPACT ON ECONOMIC DECISIONS: THE ROLE OF FEAR, JOY, DISGUST, AND SOCIAL EMOTIONS

Abstract

The article examines the impact of emotions on economic decision-making, focusing on fear, joy, disgust, and social emotions. It highlights the role of emotions in shaping individual and collective economic behavior, demonstrating that economic decisions are rarely purely rational but rather influenced by emotional states. Fear tends to drive risk-averse behavior, leading individuals to prioritize loss prevention over potential gains, whereas joy and optimism often encourage risk-taking, sometimes leading to financial overconfidence and speculative investment behavior. Disgust plays a regulatory function in decision-making, prompting individuals to avoid morally or ethically questionable choices, even when they are economically advantageous. Social emotions, such as shame, guilt, and pride, significantly influence consumer behavior, investment choices, and corporate decision-making by aligning personal economic actions with perceived social norms. Additionally, the study explores how uncertainty amplifies emotional responses and influences decision-making strategies. Fear of the unknown may lead to overly cautious financial behavior, while hope and optimism may encourage individuals to embrace risk in pursuit of greater returns. The article also discusses the mechanisms of emotional contagion and group thinking, emphasizing how collective emotional dynamics can lead to economic bubbles, panic-driven market crashes, and herd behavior in financial markets. A crucial aspect examined in the study is the role of emotional intelligence in moderating the influence of emotions on economic choices. Individuals with higher emotional intelligence are more capable of recognizing, regulating, and leveraging their emotions effectively, allowing for more balanced financial decisions. The research also identifies gaps in existing studies, such as the long-term impact of emotional experiences on economic strategies and the combined effect of multiple emotions on financial behavior. The findings contribute to the field of behavioral economics by offering insights into the emotional determinants of economic decision-making. They have practical implications for improving financial decision-making models, investment strategies, and economic forecasting by incorporating emotional factors into economic analysis.