Sadly there might be four more less happy people in Singapore soon

Most of us think that if we win the first prize in a lottery we’ll be happy forever.  misforecasting

A few days ago four fellow inhabitants of Singapore won the TOTO Hongbao draw bagging about S$3 Million each.  Soon they will find out first hand whether our forecast is true or not.

The research on happiness after striking it big in the lottery suggests that not only is it not true, but if anything, lottery winners become less happy.

The main culprit for that?  Their lives are disrupted in any number of ways which makes them unhappy.

So, why do we still dream of winning the lottery or having a better future?  We suffer from the affective forecasting errors.  Ok, let’s not suffer so much.  So to put it positive, we are great in affective misforecasting.

The psychologist Daniel Gilbert suggests a simple antidote to that inborn error of us.

 

But first try his thought experiment:

You’re going to go on a vacation to a tropical island (not Singapore – think Maldives or Fiji instead).  It’s offered at a very good price, and you have to decide whether you’re willing to pay.  You are offered one of two pieces of information to help you make your decision.  Either you can have a brochure about the hotel and the recreational activities on the island, or you can find out how much a randomly selected traveler who recently spent time there liked his or her experience.

Which would you prefer?

In Dan Gilbert’s studies modelled on this thought experiment, roughly 100 percent of the people prefer the kind of information contained in the brochure.  After all, who the hell wants to hear from some random guy when they can look at the brochure and judge for themselves?

Nonetheless, if you actually give people one of these two pieces of information, they more accurately predict their own happiness when they see the random traveller’s report then when they see the brochure.

Why?

Real vs. Imaginary Experiences

The brochure enables you to simulate what the island might be like and how much you’d enjoy it, but these sorts of predictions are susceptible to a wide variety of errors.

On the other hand, another person’s report enables you to avoid these errors because it allows you to base your predictions on real experience rather than imaginary experience.  If another person liked the island, the odds are that you will like it too.

There’s a delicious irony here, which is that the information we need to predict how we’ll feel in the future is usually right in front of us in the form of other people.  But because individuals believe so much in their own uniqueness—because we think we’re so psychologically different from others—we refuse to use the information that’s right before our eyes.

this glass is half-full

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 who’ve been in the situations you are only imagining.  The more similar to you the person is, the more informative their experience will be, of course.  But what’s amazing is that even the experience of a randomly selected person provides a better basis for forecasting than does your own imagination.

Certainly this approach does not only apply to lotteries and holidays.  For example, if you were trying to decide whether you should take job X or job Y, you might try to imagine yourself in each of them, or you might instead observe and talk to people who have job X and job Y and simply see how happy they are.  Or you are aiming for financial independence by your mid 40s (just saying), or you imagine yourself driving a sexy convertible, or you imagine yourself being with that special person (ok, that might not be such a good example – unless you are going after someone who is already attached, which you certainly shouldn’t).

Anyway, what Dan Gilbert and his team have discovered is that

(a) when people do this, they make extremely accurate affective forecasts, and

(b) no one does this unless you force them to!

Which brings me back to the urge (and regular theme here at TACOMOB) that we humans love to forecast although living in the only time that exist – the NOW – might generally bring more happiness.

 

The Big Wombassa: What you think you’re going to get, and what you don’t get, when you get what you want.  – John Brockman

2 Comments

  1. Unintelligent Nerd

    Hi Andy,

    Saw this article from another blogger, think it ties in nicely with your post

    http://www.freedomthirtyfiveblog.com/2017/02/winning-lottery-jane-park.html

    • Hi Unintelligent Nerd,

      Thanks for sharing that article. This looks to me like a typical case of lack-of-financial-education.
      I read just now that she decided to drop her plans to sue those lottery bosses.

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