This-time-is-different-bias or why we don’t learn from our mistakes

Did you know that it is the default settings of our brain that often drive usdespite past experiencesto do things that make no logical sense, though they make perfect emotional sense?

That, however, does not make us completely irrational; it makes us human.

As consumers, for example, we routinely escalate our purchases, hoping that new stuff would make us happier because “This time it would be different.”  this time is really differentBut sadly the feeling isthe same as beforeonly temporary.

Still, we expect the next car, the next house, or the next promotion to make us happyeven though the last ones didn’t, and even though others keep telling us that the next ones wouldn’t.

Why don’t we learn to avoid these mistakes in the same way we learnt to avoid warm diapers?  If practice and coaching can teach us to keep our pants dry, then why can’t they teach us to predict our emotional responses?

Unfortunately, those emotional circuits deep in our brains make us instinctively crave whatever feels likely to be rewarding and shun whatever seems liable to be risky.

Moreover, the fact that the least likely and most extreme experience is often the most likely memory can wreak havoc with our ability to predict future experiences.  Exactly that tendency of our adapted brainto recall and rely on unusual instancesis one of the reasons why we so often repeat mistakes.

That of course is good to know; nonetheless, knowing the right answer and doing the right thing are miles apart.

So, what can we do to escape the emotional trap that is set up by our biased brain?

Well, we could check out the right ways of how Money Can Buy Us Happiness.

And this scientific finding might be useful as well:

One key to changing the adaptation process would be to interrupt it.

People would suffer less when they do not disrupt  annoying experiences and would enjoy pleasurable experiences more when they break them up.

For example, test candidates mentioned that they would pay twice as much for the same but interrupted massage in the future.  Or, one could get more “happiness buying power” out of one’s money, if one limited the purchases, took breaks, and slowed down the adaptation process.

On the other end of the spectrum, it would be better not to take any breaks when tearing off that super adhesive band-aid from your skin.

Talking ourselves out of irrational and dangerous judgments/decisions remains our responsibility and cannot be delegatedclearly another area where we have to take care of our own business, where we have to Tacomob.

How do you ensure that you learn from your money mistakes?

Do make us richer (at least in knowledge) and share with us your secrets in the comments section below.


“Emotions are great, the spice of life, but don’t let them rule your decision-making process.  Don’t just feel, think!” — Guy P. Harrison

“If you are supposed to learn from your mistakes, why do some people get married more than once?  Because of the triumph of hope over experience.” — Samuel Johnson (back in 1791)

“A man must be big enough to admit his mistakes, smart enough to profit from them, and strong enough to correct them.” — John C. Maxwell

“Stock data is always different this time.  Valuation metrics are always different this time.  How the economy grows is always different this time.  But human emotions—greed, shortsightedness, overconfidence, extrapolation, and overreaction—are timeless.  They’re never different this time.” — Morgan Housel


  1. I have recently started following your blog & i find most of the entries very interesting & thoughtful.
    Irrationality of the human mind has been a favourite topic for many psychologists & many keyboard warriors like me. There are a lots of theories which try to answer some of the questions raised.

    But personally i feel gettting to know your biases & irrationalities is the first way of discovering ourselves.
    I feel that by your writings you are doing a great job.

    • Hi GP Blogger,

      Thank you so much for your encouraging words.

      Yes, the greatest single source of wealth is between our ears. So it is quite worth our time to understand our brain and the biases it produces to entertain us (to put it in a positive light and not to say “trick us”).

      Awareness of its intricate workings is the first step followed by understanding that we can never trust it unconditionally when trying to separate truth from fiction.

      Actually I used to think the brain was the most important organ. Then I thought, look what’s telling me that. 😉

  2. Hi Andy,

    One of the reasons that people do not learn from their mistakes is “distraction!” Even divine people who educate in the name of god got distracted….you know who I am referring to in Singapore!

    And often, distractions stem from the desire to obtain the “experiences!”

    For e.g. You know that spending on a luxury car, house or even clothings are not the wisest choice! It is most likely not because you are damn materialistic, but you cannot resist the temptations of having “own the experience at least once!”

    • Hi Rolf,

      Yes, I know who you are referring to. I am amazed how the followers of that ‘divine’ can be so patient and understanding. Wasn’t it their money that was misused there?

      So true what you say about distractions. All this oiled marketing machinery surrounding us has a big part to play here. We have to stay alert of not getting brain-washed.

      On a lighter note, if one of my readers would like to just experience the purchase of a luxury car, I would volunteer to drive the car around for you.

      Ok, maybe I take that back (too much wishful thinking). But then on second thoughts. Maybe I leave it, because you never know. In Singapore you never one. There are all kinds of people here.

      By the way I do prefer Ferrari or Maserati.

  3. Hey, great blog u have. I have since gone thru all your posts. Very nice writing!
    I try to make as few errors when managing my money. I do the norm: monitoring my expenses, buying only needs and few wants, and if I want to buy a “luxury” item, I will normally go look at it a few times, take a few days off, and then see how I feel again about the item. People might think I am too extreme, but I hardly spend on what I think are not my needs. That being said, I do love to spend on experiences (holidays) and on my loved ones (great to see their smiles when I surprise them). So I stinge on myself so that I can spend on love. And always, I get what I want back, when my loved ones spend back on me. Haha 🙂

    • Wow, An9elfire, I am impressed and feel very honored by your kind words. You are the first one who ‘admits’ going through all my posts 😉
      It appears to me that you have it all figured out already and don’t need to read my posts any longer. Haha
      I have the same experiences as you. Spending on others (especially on experiences) is one of the best ways to utilize money to buy happiness. And when loved ones reciprocate they are super happy and you are super happy. What else is there to wish for?
      I’d love to give you a big hug. Aeh, are you male or female by the way?

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