I remember listening to a lecture delivered by a clinical psychologist about how to cure a person's fear of dogs (technically called cynophobia). During the question period that followed, a person from the audience asked, "Isn't the problem complicated by the reactions of the people and the dogs they meet? It's my understanding that dogs can smell fear on a person and that that scent triggers an aggressive response in the animal. That would mean that the individual's phobia would be strengthened because their fearful scent will generate a hostile response in any dog that they encounter."
The psychologist responded by noting that she had also often heard about dogs detecting and responding to the emotional scent produced by people. However, she knew of no direct data, and as far as she could tell, it might just be a popular myth.
There is a lot of evidence which suggests that dogs are good at reading human emotions from facial expressions (click here for more about that), and also from human voices and body postures (click here or here for more) and that this can affect the dog's responses to things or people in their world (click here to see more). However, all of these studies focused on the dog recognizing visual and auditory cues for emotion transmitted by people.
The question about whether dogs can smell emotional states, and whether they respond to them was recently experimentally addressed by a team of researchers headed by neurobiologist Biagio D’Aniello of the University of Naples “Federico II.” The results were published in the journal Animal Cognition. The researchers say that their study "was designed to examine a new perspective, namely the transmission of emotional states from humans to dogs via human body odors produced during happiness and fear."
The first step in a piece of research like this involves gathering the scent stimuli. The "odor donors" came from a laboratory in Lisbon. A number of people were shown a 25-minute video designed to induce the emotional states of either fear or happiness. Samples of sweat were then collected on pads, placed in sealed packets, frozen, and returned to the behavioral lab in Naples.
The test subjects were a sample of 40 Labrador retrievers and golden retrievers who had been outfitted with mobile heart rate monitors. Each dog was tested in a small room with its owner and a stranger (who was not one of the odor donors). Both the dog's owner and the stranger sat reading magazines and did not specifically interact with the dog. Meanwhile, an apparatus was used to disperse scents from either the "happy sweat" or the "fearful sweat," while in a control condition no odorant was introduced.
The dogs' behaviors and physiological responses changed as a result of their exposure to emotionally tinged sweat-related odors. The dogs that had been exposed to the fear-related smells showed more behavioral signs of stress than those exposed to the happy or neutral smells. These dogs seemed to also be seeking reassurance through contact with their owners. In addition, when the fear smell was in the room the dogs' heart rates were considerably higher than they were in either the happy or neutral conditions.
While the dogs were clearly responding emotionally to the scent of fear, it seemed as though their response mirrored the emotion that they were detecting in that they were acting in a fearful manner themselves. There was no evidence of aggression toward either the owner, the stranger, or the scent dispensing apparatus.
The dogs also seemed to recognize the odor associated with a happy emotion. Exposure to that scent did not produce stress signs or an elevated heartrate, but rather the dogs now tended to show more interest and approach behavior to the stranger.
In an interview, D’Aniello summarized the results, saying, "Thus our data, while supporting the dog's ability to perceive human emotional chemo-messages, do not prove that they trigger attack." As for the suggestion that someone who is afraid of dogs is more likely to be the recipient of hostile responses when they meet dogs, he suggested, "When people are afraid of dogs, they also assume unusual postures and look the dog in the eyes. This behavior can be interpreted by the dog as a threat."
So the bottom line is that dogs do seem to be able to smell our emotional state and they then seem to trust our responses to the situation by adopting those emotional states as their own.
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D’Aniello, B., Semin, G.R., Alterisio, A., Aria, M., Scandurra, A.(2017). Interspecies transmission of emotional information via chemo signals: from humans to dogs (Canis lupus familiaris). Animal Cognition, Https://doi.org/10.1007/s10071-017-1139-x