Prophecies, labels, economy, and consciousness – expecting to change

You come home at 10 PM, tired and exhausted after working long hours. You turn the TV on to relax a little and catch up with the latest news. In that moment, you hear on your favorite news channel that bank “X” – which happens to be the largest in your country and the one where you have most of your money invested in – is about to fall into bankruptcy. You start feeling insecure; your head becomes flooded with doubts, “Is it true?”, “Is this possible?”, “What am I risking now if I keep betting that my money will be safe?”

Unfortunately it is 10 PM and there’s not much you can do right now. But what about the next day? Would you wait to see whether the news confirms itself? Or would you go to the bank to withdraw all your money?

If you said that you would go to the bank first thing in the morning to withdraw all your money, then you are like most people. Whenever I make this exercise in seminars, the answers are 99.9% the very same, “I would immediately withdraw all my money.”

What follows from this statement is what really interests me. Robert Lucas won the Nobel Prize in 1995 for showing how entrepreneurs and people in general views on the future influences their decisions and activity (“Rational Expectations”, 1995). In a sense, if everybody does believe that the bank will fail and everybody decides for the same course of action – withdrawing the money – the bank will inevitably fail.

By the same token we, as human beings, relate to others in similar ways. Rosenthal & Jacobson (1963) showed that simply setting different expectations about the evolution of IQ for two groups of boys by randomly selecting them and attributing them to a group of “bloomers” or “non-bloomers” was enough to make the “bloomer” group outgrow the other by 50% in IQ development. Rosenthal’s experiment, later replicated and confirmed in different settings, came to be known as Label Effect, Pygmalion Effect or Self-Fulfilling Prophecies.

What are the reasons around such a difference? How can one explain that simply labeling someone intelligent might be enough to make this person intelligent? The difference stems from four main factors, which Funder (1997) discusses, that I like to call I.C.F.O. – input, climate, feedback and output.

Prophecies 2

When we are told that we are going to be working with an awesome employee or peer, we tend to provide more input, that is, to offer more material and more difficult content to that person because we expect them to get it.

In parallel, we also offer a warmer emotional attitude towards those that we expect to do well.

In a warmer environment, feedback is calibrated according to the real needs of those high expectancy employees and in accordance to the correctness or incorrectness of employees’ tasks.

Finally, when we expect more of someone, we usually provide them with more chances for outputs, that is, not only do we give them more room to show what they have learned but also additional chances to exercise what they have learned.

The beauty of the Label Effect is that there is no magic. No one will be able to change the genetics of any other person by simply labeling him or her this or that. Yet, in the ever intertwining process of nature and nurture that shapes our development, labeling someone as an intelligent employee or as an awesome individual to work with has several impacts on the nurture part of the equation; i.e. we change the environment in which genetic is about to express its intricacy.

Just as economy tends to settle its place in accordance to market agents’ expectations, so do people around us tend to converge to the expectation we set about them.

Moreover, in our mental models, once we establish a base ground to judge someone or something, we tend to look at facts from that vantage point in a way that will confirm our own initial bias, selectively gathering or unduly weighing evidences (Nickerson, 1998, p 175).

No wonder then that once we have labeled someone boring or stupid anything this person does is a chance for us to confirm his / her boringness or stupidity. The converse is also true: when we put someone on a pedestal, anything this person says or does is seen as an astonishing feat; just as it happens to the character named Chance played by Peter Sellers in the movie “Being There.”

“And so what?”, some might be asking right now. As we grow as conscious human beings or evolve our senses around conscious business and start taking an “actor role” in our lives, it is important to understand that our expectations as well as the way we talk about people around us are real determinants of what these people might become.

In my past corporate life, I still remember having spent several coffees and lunches talking to colleagues and friends to hear what they had to say about other people I was just about to begin to work with in a new project or assignment even before I had had any chance to work with them.

On many occasions, not to say on all, what I heard, either positively or negatively, set the initial ground for the kind of relationship, trust, and freedom I was willing to provide any of them with. Of course, I had false positives and false negatives, but I must admit that the false positives always had more chances than did the false negatives; and the latter had to engage in a much bigger effort to revert their first initial impression that I had set for myself even before meeting them.

As Kegan (1982) puts it, growth and development entail transforming the subject into object; getting out of our own embeddedness to evolve to our next stage. Understanding how some things happen in our life is the first step into making the subject into object; and that is the reason why grasping the implications of the Label Effect and the Confirmation Bias are so important for anyone willing to grow as a human being.

Understanding that what we say and expect of people might lead them, one the one hand, to converge to such an expectation and, on the other hand, to determine how other people will perceive them might be our chance to promote small, but significant changes in our work environment and in peoples’ lives.

I don’t know about you, but nowadays, whenever someone asks me about impressions on this or that person, my best answer is, “You’d better find out for yourself.”



About the author

Fernando is Axialent Faculty Network Member. He built his career in strategic management consulting and in the banking industry. Besides the role of consultant and banker, he has always supported the recruiting and coaching processes. This led him to move into the field of coaching and professional development. Read more >




Funder, D. C. (1997). In The personality puzzle. New York: W.W. Norton.

Kegan, R. (1982). The evolving self: Problem and process in human development. Cambridge, Mass: Harvard University Press.

Kelley, H. H. (1950). The Warm-Cold Variable in First Impressions of Persons. Journal of Personality, 18: 431–439. doi: 10.1111/j.1467-6494.1950.tb01260.x

Lucas, R. E., & Sargent, T. J. (1983). Rational Expectations and Econometric Practice. The Economic Journal, 93(370), 442-445. Retrieved from

Nickerson, R.S. (1998). Confirmation Bias: A Ubiquitous Phenomenon in Many Guises. Review of General Psychology, 2, 2, 175-220.

Rational Expectations. (1995, October 12). The Washington Times, p. A2

Rosenthal, R., &. Jacobson, L. (1963). Teachers’ expectancies: Determinants of pupils’ IQ gains. Psychological Reports, 19, 115-118.

2 thoughts on “Prophecies, labels, economy, and consciousness – expecting to change

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  1. Thank you Fernando, this has big implications for culture change work… when a community (or its culture) labels their own culture ‘dysfunctional’ you better watch out, people might just live down to it…

  2. Really nice, Fernando. This is much more widespread than we care to admit… Imagine teachers talking about the kids they’ll get next term, people giving references about a professional seeking a new job, and on and on… They could be causing irreparable damage. I like your suggestion: “You’d better find out for yourself.”

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