In an experiment he called "the cookie monster" study, Dacher Keltner, professor of psychology at University of California, Berkeley, and author of The Power Paradox: How We Gain and Lose Influence, brought groups of three people into a lab and randomly assigned one person a position of leadership. He then gave the group a writing task. After a half-hour of work, Keltner placed a plate of four freshly baked cookies in front of the team—one for each team member with one left over. In all groups, each person took one. Who would take the last remaining cookie? In nearly all cases, it was the person who'd been named the leader of the group who took the last cookie for themselves.

"In addition," Keltner writes in the Harvard Business Review, "the leaders were more likely to eat with their mouths open, lips smacking, and crumbs falling onto their clothes."

Such an experiment illustrates what Keltner calls "the power paradox." While people often gain power through behavior that advances the interests of others, such as empathy and collaboration, once they begin to feel powerful, those are the very qualities that diminish. Leaders then become more likely to engage in rude, selfish, and unethical behavior. In short, the old saying is true: Power does corrupt.

There's a neurological explanation at work. Sukhvinder Obhi, a neuroscientist at McMaster University in Ontario, put the brains of the powerful and the not-so-powerful under a transcranial-magnetic-stimulation machine, a device with an electromagnetic coil that that uses magnetic fields to stimulate nerve cells in the brain. What he found was that power impairs a specific neural process called "mirroring." In neural mirroring, a neuron fires both when we perform an action, like laughing or raising our hand in a meeting, and when we observe the same action performed by another. Researchers say this kind of vicarious experience may be a cornerstone of empathy.

But not only does neural mirroring, an unconscious response, decrease in the powerful, so too does psychological mimicking, the empathic response to laugh when others laugh, for example, that allows us to momentarily have an understanding of another person's experience. Powerful people "stop simulating the experience of others," Keltner told the Atlantic, which leads to what he calls an "empathy deficit."

It's not just power in the workplace, however. Other forms of privilege and entitlement, such as wealth can have a similar effect. In another experiment, for example, Keltner and a colleague found that drivers of the least expensive cars always ceded the right-of-way to pedestrians in a crosswalk. People driving luxury cars such as BMWs and Mercedes yielded only 54% of the time; nearly half the time they ignored the pedestrian and the law.

Power also heightens feelings of egocentricity. In another study, participants were asked to draw a capital E on their forehead with a washable marker. Those with power tended to draw the E on their forehead oriented to their own point of view, but which would appear reversed from the point of someone standing opposite them. Lack of empathy, coupled with egocentrism, aids and abets those in power to see people as means to an end, objects along their personal path to success.

"[Power] creates psychological distance between the powerful person and everything else," Batia Wiesenfeld, a management professor at New York University's Stern School of Business, told Fast Company.

"Here's the thing," wrote David Rock and Mary Slaughter of the NeuroLeadership Institute in Fast Company. "A lot of leaders fall into the trap of being stuck in the big picture, as well as the outcome. This can lead them to make ethically dubious decisions without thinking about the consequences. Similarly, this type of thinking can also present problematic business risks." To say nothing of your team turning on you.

So what's a powerful leader to do? Keltner says it comes down to awareness and actions of empathy, gratitude, and generosity.

The practice: Awareness

Awareness at work, and examination of one's demeanor at the office, is no different than a mindfulness practice at home: sit quietly, breathe deeply, quiet your mind. Practice what Buddhist teacher, Tara Brach, calls RAIN: Recognize, Allow, Interrogate, Non-Attachment.

The proof: Studies show that spending just a few minutes a day on such exercises gives people greater focus and calm; it's why these techniques are taught in training programs at companies like Google, Facebook, Aetna, General Mills, Ford, and Goldman Sachs, Keltner notes.

The practice: Empathy

Practice empathy in the workplace by thinking before a meeting about the individuals who will be present and what's going on in their lives. Is someone in the midst of a move or did they just drop their kid off for the first day of kindergarten that morning? Listen actively with attentive body language and vocal engagement (no looking at your phone during meetings). Ask questions and paraphrase the important points you hear. When employees come to you with difficult situations, take a moment to sympathize with them before launching into problem-solving mode. "That's really tough," and "I'm sorry" mean a lot.

The proof: Keltner advises we look at the U.S. Senate. Research has shown senators who used empathetic facial expressions and tones of voice when speaking to the floor got more bills passed than those who used domineering, threatening gestures and tones in their speeches.

The practice: Gratitude

Practice gratitude by making thank you's a regular part of how you communicate with your team. It can be handwritten notes, emails, and public praise and acknowledgement. Don't be afraid to give a fist bump or high-five to celebrate success.

The proof: NBA players who physically display their appreciation—through head raps, bear hugs, and hip and chest bumps—inspire their teammates to play better and win nearly two more games per season, Keltner's research has shown.

The practice: Generosity

Practice generosity by spending one-on-one time with your subordinates. Buy them lunch. Delegate and share high-profile responsibilities to those who have earned it, offer generous praise, and share the spotlight by giving credit for success not to yourself, but to all members of the team who made a win possible.

The proof: Those who share with others in a group, by contributing new ideas or lending a helping hand on projects not their own, are viewed as more worthy of respect and influence and thus well-suited for leadership, studies show.

The takeaway

Think not just about practicing empathic and generous leadership, but exercising enlightened power.

"Enlightened leadership is... the domain of awareness where we experience values like truth, goodness, beauty, love and compassion, and also intuition, creativity, insight and focused attention," said Deepak Chopra.

Sounds like a great boss.

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The Federal Reserve sets the guardrails for the federal funds rate, and through that helps control the money supply for the nation.

When you take out a loan for a car, charge something to your credit card, or get a personal line of credit, there is going to be an interest rate that applies to your loan.

A lot of different factors go into what you will be charged, including your own personal credit score. But even those with flawless credit still see a minimum charge that they can't get around. That all goes back to the Federal Funds Rate.

One thing consumers rarely realize is that all of our banks are lending money to each other every night. Banks are legally required to maintain a certain percentage of their deposits in non-interest-bearing accounts at the Federal Reserve to ensure they have enough money to cover any withdrawals that may unexpectedly come up. However, deposits can fluctuate and it's very common for some banks to exceed the requirement on certain days while some fall short. In cases like this, banks actually lend each other money to ensure they meet the minimum balance. It's a bit hard to imagine these multibillion-dollar financial institutions needing to borrow money to tide them over for a bit, but it happens every single night at the Federal Reserve. It's also a nice deal for those with balances above the reserve balance requirement to earn a bit of money with cash that would normally just be sitting there.

The Federal Reserve The Federal Reserve


The exact interest rate the banks will charge each other is a matter of negotiation between them, but the Federal Open Market Committee (FOMC) (the arm of the Federal Reserve that sets monetary policy) meets eight times a year to set a target rate. They evaluate a multitude of economic indicators including unemployment, inflation, and consumer confidence to decide the best rate to keep the country in business. The weighted average of all interest rates across these interbank loans is the effective federal funds rate.

This rate has a huge impact on the economy overall as well as your personal finances. The federal funds rate is essentially the cheapest money available to a bank and that feeds into all of the other loans they make. Banks will add a slight upcharge to the rate set by the Fed to determine what is the lowest interest that they will announce for their most creditworthy customers, also known as the prime rate. If you have a variable interest rate loan (very common with credit cards and some student loans), it's likely that the interest rate you pay is a set percentage on top of that prime rate that your lender is paying. That's why in times of low interest rates (it was set at 0% during the Great Recession), a lot of borrowers should go for fixed interest rate loans that won't increase. However, if the federal funds rate was relatively high (it went up to 20% in the early 1980's), a variable interest rate loan may be a better decision as you would be charged less interest should the rate drop without the need to refinance.

The federal funds rate also has a major impact on your investment portfolio. The stock market reacts very strongly to any changes in interest rates from the Federal Reserve, as a lower rate makes it cheaper for companies to borrow and reinvest while a higher rate may restrict capital and slow short-term growth. If you have a significant portion of your investments in equities, a small change in the federal funds rate can have a large impact on your net worth.

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