There are Free Lunches Statement of Intentions

There are Free Lunches: Behavioral Clues to Live Happy in the Economic World is a blog that intends to present updated and relevant information about the "hidden" and only recently uncovered dimensions of the economic science: the behavioral factors. With this blog we intend to promote in Europe and in the rest of the World, the top research articles and perspectives on behavioral economics, decision making, consumer behavior, and general behavioral science. We aim to be followed by journalists, academics, managers, civil servants, and everyone who wishes to improve their daily interaction with the economic world and consequently, their lives' happiness.

Thursday, 26 May 2011

Principle 6: Think About What You’re Not Thinking About

According to a recent poll, a majority of adult Canadians dream of owning a vacation home, preferably by a lake (Gilmer & Casser, 2009). The features they highlight as important for their dream cottage include peace and quiet, access to fishing and boating, and sunset vistas. These are features that are central to the very essence of a lakeside cottage, and they naturally come to mind when people envision owning a vacation home. But, taking a broader view, there are many other, less essential aspects of cottage ownership that are likely to influence owners’ happiness, from the mosquitoes buzzing just outside, to the late-night calls about a plumbing disaster in the lakeside area, to the long drives back home after a vacation weekend with sleepy children scratching their mosquito bites. Cast in the soft light of imagination, these unpleasant, inessential details naturally recede from view, potentially biasing consumers’ predictions about the degree of happiness that their purchases will provide. This phenomenon stems from a peculiar property of imagination. The farther away an experience lies in time, the more abstractly we tend to think of it (Liberman, Sagrastino, & Trope, 2002). This oversight matters because happiness is often in the details (Kahneman, Krueger, Schkade, Schwarz, & Stone, 2004; Kanner, Coyne, Schaefer, & Lazarus, 1981). On any given day, affective experience is shaped largely by local features of one’s current situation—such as experiencing time pressure at work or having a leisurely dinner with friends—rather than by more stable life circumstances (e.g., having high job security, being married; Kahneman et al., 2004). Over time, psychological distress is predicted better by the hassles and “uplifts” of daily life than by more major life events (Kanner et al., 1991). Thus, in thinking about how to spend our money, it is worthwhile to consider how purchases will affect the ways in which we spend our time. For example, consider the choice between a small, well-kept cottage and a larger “fixer upper” that have similar prices. The bigger home may seem like a better deal, but if the fixer upper requires trading Saturday afternoons with friends for Saturday afternoons with plumbers, it may not be such a good deal after all. Of course, after buying a new home, our happiness will depend not only on the ripple effects associated with home ownership, but also on the many aspects of daily life that are simply unrelated to home ownership, from birthday cakes and concerts to faulty hard drives and burnt toast. Yet, because such “irrelevant” details of daily life are obscured from view when we focus our mental telescopes on an important future event, we may frequently overestimate the emotional impact of a focal event (Wilson, Wheatley, Meyers, Gilbert, & Axsom, 2000). Wilson et al. (2000) found evidence for this idea by surveying football fans at the University of Virginia (UVA) prior to a big game against a rival school. Asked to imagine how they would feel in the days following the game, football fans expected that they would be much happier if their team won than if they lost. The day after UVA won this game, however, football fans were not nearly as ecstatic as they had expected to be. Prior to making their affective forecasts, another group of participants were asked to imagine what they would doing, hour-by-hour, on the Monday following the football game, and these participants made more moderate affective forecasts, apparently recognizing that the joy stemming from their team’s victory would be offset by the mundane activities of daily student life (e.g., eating, studying, attending class) that are unrelated to football. This suggests that consumers who expect a single purchase to have a lasting impact on their happiness might make more realistic predictions if they simply thought about a typical day in their life.

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