Behaviouronomics: Impact Bias

Human beings are generally terrible at predicting their own future emotional states which leads them to overestimate how extreme positive or negative events would affect their long term happiness.

Let’s say there was a way to quantify the mental state of a human being in terms of how happy and content he is feeling at certain moment. Now I invite you to contemplate following two different futures for two persons, given that their present mental state measures 1,000 units each.

The first person has just won US$ 10 million lottery. The second person had a terrible accident and both his legs had to amputated. Can you make a guess about each person’s mental state 1 year down the line after the above two events have happened? In first case would his mental state be less than or more than 1,000? Of course, it would be more than 1,000. Isn’t it? After all he’s a very rich man now.

What about the second case? In fact, most people talk about how devastating it would be. Some people even say they would rather be dead than never be able to walk again. And what would be your prediction about the reading on victim’s mental-state-meter? Isn’t it obvious it would be far less than 1,000? May be even less than zero.

Before we start discussing the answer to this question, take a moment and think about what your brain is doing to generate an answer for above question. You brain is imagining the state of mind of each person i.e. it’s simulating each scenario by putting itself in the situation and doing a rough evaluation about how it will feel. Right?

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