Table of Contents
Modeling the Future
Psychologist David Gilbert argues that economic decisions are inherently affective forecasts, and that it’s up to individuals to decide how they use them. Gilbert is interested in learning how people can become better affective forecasters, but not because he believes they should be.
Economists believe that people engage in economic transactions in order to maximize their utility. Psychologists argue that utility is actually a stand-in for something like happiness or satisfaction. Gilbert thinks that we are the only animals that can peer deeply into our future hedonic states.
We are able to model the future and predict our hedonic reactions to it much better than any other animal.
Two Types of Errors
There’s a difference between an error and a systematic error. If you’re standing in front of a dart board and you’re trying to hit the bull’s-eye, you are bound to miss sometimes. But your errors will be randomly distributed around the middle of the board.
People tend to overestimate the impact of future events; they predict that future events will have a more intense and enduring hedonic impact than they actually do. We call this the impact bias. Systematic errors beg for scientific explanations, and as it turns out, the errors people make are quite systematic.
We’ve seen the impact bias in just about every context we’ve studied. People expect to be happier for years after getting tenure than after being denied tenure. But the two groups are equally happy in a brief time, and the impact is demonstrably smaller and less enduring.
Most robust phenomena in nature are multiply determined, which is to say there are probably a lot of independent mechanisms making it happen. That’s what we’ve found with the impact bias. People have a talent for changing their views of events so that they can feel better about them. He says rationalization doesn’t necessarily mean self-delusion. Once we discover how wrong our wife was for us, her departure is a blessing.
Rationalization
Rationalization is largely an unconscious process.
When people predict how they’re going to feel in the face of adversity, they tend to expect more intense dissatisfaction than they actually experience. People are less disappointed when feedback comes from a computer than from a clinician. After all, what does that computer know about their personalities?
A mental image captures one moment of a single event. But one’s happiness a year after the event is much more than that. These things aren’t nearly as important as the tragedy, but they are real, there are a lot of them. Forecasters tend not to consider these things.
When we’re trying to predict how happy we will be in a future that contains Event X, we tend to focus on those events that also populate that future.
Errors in human judgment are logical violations. If you say you’ll feel 7 on a 1-to-10 scale and end up feeling 5, then you’ve made a mistake. Errors can have adaptive value, as organisms learn how to cope with loss of offspring.
Many economists believe that affective forecasting errors are impediments to rational action and should be eliminated. But cognitive errors may be more like optical illusions than they are like illiteracy.
Imagining The Future
When people imagine themselves in the future, they make extremely accurate affective forecasts. No one does this unless you force them to! If you’re trying to decide whether you should take job X or job Y, you might instead observe people who have job X and job Y and simply see how happy they are.
Imagine that two pieces of information (brochure or talk to a randomly selected traveler) can help you decide whether or not to go to a tropical island. Which would you prefer? 100 percent of the people prefer the information contained in the brochure over a traveler’s report on the island. After all, who wants to hear from some random guy when they can judge for themselves?
But in reality, they more accurately predict their own happiness when they see the tourist’s report than when they read the brochure. There’s a delicious irony here, which is that the information we need to predict how we’ll feel in the future is right in front of us in the form of other people.
If you want to be a better affective forecaster, then you would do well to base your forecasts on the actual experiences of real people. The first $40,000 buys you almost all of the happiness you can get from wealth. Even the experience of a randomly selected person provides a better basis for forecasting than does your imagination.
Happiness
The relationship between money and happiness is complicated, and definitely not linear. Psychologists, philosophers, and religious leaders are a little too quick to say that money can’t buy happiness. That betrays a failure to understand what it’s like to live in the streets with an empty stomach.
Happy people have extensive social networks and good relationships with the people in those networks. Most of us spend most of our time trying to be happy by pursuing wealth. On the other hand, social relationships are a powerful predictor of happiness—much more so than money is.
Source: Thinking: The New Science of Decision-Making, Problem-Solving, and Prediction , John Brockman