Mind Macros 62: Hedonic adaptation (why we’re never happy), risk management, and manipulating our memories
"It turns out, though, that after an initial period of exhilaration, lottery winners end up about as happy as they previously were."
Welcome to another issue of Mind Macros - I hope you find something of value.
Food For Thought
I. Hedonic Adaptation: Why We’re Never Happy
“The psychologists Shane Frederick and George Loewenstein have studied this phenomenon and given it a name: hedonic adaptation. To illustrate the adaptation process, they point to studies of lottery winners. Winning a lottery typically allows someone to live the life of his dreams. It turns out, though, that after an initial period of exhilaration, lottery winners end up about as happy as they previously were. They start taking their new Ferrari and mansion for granted, the way they previously took their rusted-out pickup and cramped apartment for granted.
“Another, less dramatic form of hedonic adaptation takes place when we make consumer purchases. Initially, we delight in the wide-screen television or fine leather handbag we bought. After a time, though, we come to despise them and find ourselves longing for an even wider-screen television or an even more extravagant handbag. Likewise, we experience hedonic adaptation in our career. We might once have dreamed of getting a certain job. We might consequently have worked hard in college and maybe graduate school as well to get on the proper career path, and on that path, we might have spent years making slow but steady progress toward our career goal. On finally landing the job of our dreams, we will be delighted, but before long we are likely to grow dissatisfied. We will grumble about our pay, our coworkers, and the failure of our boss to recognize our talents.
“We also experience hedonic adaptation in our relationships. We meet the man or woman of our dreams, and after a tumultuous courtship succeed in marrying this person. We start out in a state of wedded bliss, but before long we find ourselves contemplating our spouse’s flaws and, not long after that, fantasizing about starting a relationship with someone new.
“As a result of the adaptation process, people find themselves on a satisfaction treadmill. They are unhappy when they detect an unfulfilled desire within them. They work hard to fulfill this desire, in the belief that on fulfilling it, they will gain satisfaction. The problem, though, is that once they fulfill a desire for something, they adapt to its presence in their life and as a result stop desiring it—or at any rate, don’t find it as desirable as they once did. They end up just as dissatisfied as they were before fulfilling the desire.” — From A Guide to the Good Life: The Ancient Art of Stoic Joy by William B. Irvine.
II. Why Risk Management is Flawed: The Lucretius Problem
To take one example, risk management professionals look in the past for information on the so-called worst-case scenario and use it to estimate future risks—this method is called “stress testing.” They take the worst historical recession, the worst war, the worst historical move in interest rates, or the worst point in unemployment as an exact estimate for the worst future outcome. But they never notice the following inconsistency: this so-called worst-case event, when it happened, exceeded the worst case at the time.
“I have called this mental defect the Lucretius problem, after the Latin poetic philosopher who wrote that the fool believes that the tallest mountain in the world will be equal to the tallest one he has observed. We consider the biggest object of any kind that we have seen in our lives or hear about as the largest item that can possibly exist. And we have been doing this for millennia. In Pharaonic Egypt, which happens to be the first complete top-down nation-state managed by bureaucrats, scribes tracked the high-water mark of the Nile and used it as an estimate for a future worst-case scenario.
“The same can be seen in the Fukushima nuclear reactor, which experienced a catastrophic failure in 2011 when a tsunami struck. It had been built to withstand the worst past historical earthquake, with the builders not imagining much worse—and not thinking that the worst past event had to be a surprise, as it had no precedent. Likewise, the former chairman of the Federal Reserve, Fragilista Doctor Alan Greenspan, in his apology to Congress offered the classic “It never happened before.” Well, nature, unlike Fragilista Greenspan, prepares for what has not happened before, assuming worse harm is possible.” — From Antifragile by Nassim Nicholas Taleb.
III. Imagination Inflation: How We Manipulate The Past
“Elizabeth Loftus, a leading scientist in the field of memory, calls this process ‘imagination inflation,’ because the more you imagine something, the more likely you are to inflate it into an actual memory, adding details as you go. (Scientists have even tracked imagination inflation into the brain, using functional MRI to show how it works at a neural level.) For example, Giuliana Mazzoni and her colleagues asked their study participants to tell them a dream, and in return gave them a (false) ‘personalized’ dream analysis. They told half the participants the dream meant that they had been harassed by a bully before the age of three, been lost in a public place, or been through a similar upsetting early event. Compared with control subjects who were given no such interpretations, the dream subjects were more likely to come to believe the dream explanation had really occurred, and about half of them eventually produced detailed memories of the experience. In another experiment, people were asked to remember when their school nurse took a skin sample from their little finger to carry out a national health test. (No such test existed.) Simply imagining this unlikely scenario caused the participants to become more confident that it had happened to them. And the more confident they became, the more sensory details they added to their false memories (‘the place smelled horrible’). Researchers have created imagination inflation indirectly, too, merely by asking people to explain how an unlikely event might have happened. Cognitive psychologist Maryanne Garry finds that as people tell you how an event might have happened, it starts to feel real to them. Children are especially vulnerable to this suggestion.
“False memories allow us to forgive ourselves and justify our mistakes, but sometimes at a high price: an inability to take responsibility for our lives. An appreciation of the distortions of memory, a realization that even deeply felt memories might be wrong, might encourage people to hold their memories more lightly, to drop the certainty that their memories are always accurate, and to let go of the appealing impulse to use the past to justify problems of the present. If we are to be careful about what we wish for because it might come true, we must also be careful which memories we select to justify our lives, because then we will have to live by them.” — From Mistakes Were Made (But Not By Me) by Carol Tavris and Elliot Aronson.
Quotes to Ponder
I. Fyodor Dostoevsky on exercising personal agency:
“To go wrong in one's own way is better than to go right in someone else's.”
II. Friedrich Nietzsche on setting our own standards:
“People are always angry at anyone who chooses very individual standards for his life; because of the extraordinary treatment which that man grants to himself, they feel degraded, like ordinary beings.”
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