The Pygmalion effect can be quite powerful in a variety of ways in determining people’s performances in given circumstances.
- People who are given higher expectations in a healthy, “you can do this” way frequently perform better because they are instilled with the grit and confidence to do so (Angela Duckworth’s book Grit talks about this a lot)
- People who are given higher expectations can perform better because their teacher, boss, or other figure who is responsible for measuring their results or facilitating their progress provides a higher quality of education, tools, or management that leads to a higher achievement. The big example of this is teachers and their students.
- People who have higher expectations can be seen as performing better (especially when performance is not easily measurable in concrete terms) because the party responsible for determining their achievement has a more positive bias toward their expected performance.
Something that I think is important to maintain, however, is a sense of being genuine with expectations and performance – people need to feel like they are actually believed in in order to have a higher performance. If they feel they are just being hollowly motivated by someone who really doesn’t believe they can do it, the positive affirmation will backfire.
As a side note, it’s a fundamentally ironic quality of the stock market that it is so fickle. When people feel like things are going badly, they make things go badly. I remember a town manager once told me about how her town of Cary, North Carolina, recovered faster from the economic downturn of 2008: she said that she insisted they maintain the budget for keeping the town beautiful with painting, landscaping, etc. and helped small businesses (like coffee shops, restaurants) stay afloat. This provided people with a sense of normalcy and safety, and the consumers resumed “normal” behavior and spending habits sooner than elsewhere.
