Affective forecasting
In The Theory of Moral Sentiments (1759), Adam Smith observed the personal challenges, and social benefits, of hedonic forecasting errors: [Consider t]he poor man's son, whom heaven in its anger has visited with ambition, when he begins to look around him, admires the condition of the rich ….
Through the whole of his life he pursues the idea of a certain artificial and elegant repose which he may never arrive at, for which he sacrifices a real tranquillity that is at all times in his power, and which, if in the extremity of old age he should at last attain…, he will find to be in no respect preferable to that humble security and contentment which he had abandoned for it.
It is this deception which rouses and keeps in continual motion the industry of mankind.In the early 1990s, Kahneman and Snell began research on hedonic forecasts, examining its impact on decision making.
While affective forecasting has traditionally drawn the most attention from economists and psychologists, their findings have in turn generated interest from a variety of other fields, including happiness research, law, and health care.
For example, one's tendency to underestimate one's ability to adapt to life-changing events has led to legal theorists questioning the assumptions behind tort damage compensation.
[11] The finding that people are generally inaccurate affective forecasters has been most obviously incorporated into conceptualizations of happiness and its successful pursuit,[12][13] as well as decision making across disciplines.
[27] This is related to immune neglect in that when these unwanted acts of randomness occur people become upset and try to find meaning or ways to cope with the event.
They found that students who generally coped with their emotions instead of avoiding them would have a greater impact bias when predicting how they'd feel if their team lost the game.
These participants appeared to collapse their compassion by correctly forecasting their future affective states and proactively avoiding the increased negative emotions resulting from the story.
[33] These studies suggest that in some cases accurate affective forecasting can actually promote unwanted outcomes such as the collapse of compassion phenomenon by way of the region-beta paradox.
In regard to forecasting both positive and negative emotions, Levine, Kaplan, Lench, and Safer have recently shown that people can in fact predict the intensity of their feelings about events with a high degree of accuracy.
[19] This finding is contrary to much of the affective forecasting literature currently published, which the authors suggest is due to a procedural artifact in how these studies were conducted.
[36] They found that although people tended to believe that someone from the Midwest would be more satisfied if they lived in California, results showed equal levels of life satisfaction in residents of both regions.
This suggests the mind constructs memories based on what actually happened, and other factors including the person's knowledge, experiences, and existing schemas.
For example, in recalling painful experiences, people place greater emphasis on the most discomforting moments as well as the end of the event, as opposed to taking into account the overall duration.
[5] In addition to producing errors in forecasts about the future, this discrepancy has incited economists to redefine different types of utility and happiness[16] (see the section on economics).
[11] Thus, psychologists suggest[weasel words] that a lack of concrete details prompts forecasters to rely on more general or idealized representations of events, which subsequently leads to simplistic and inaccurate predictions.
[15][20] For example, the way options are framed affects how they are represented: when asked to forecast future levels of happiness based on pictures of dorms they may be assigned to, college students use physical features of the actual buildings to predict their emotions.
[3] In this case, the framing of options highlighted visual aspects of future outcomes, which overshadowed more relevant factors to happiness, such as having a friendly roommate.
As with projection bias, economists use the visceral motivations that produce empathy gaps to help explain impulsive or self-destructive behaviors, such as smoking.
In a study conducted by Quoidbach and Dunn, students' predictions of their feelings about future exam scores were used to measure affective forecasting errors related to personality.
Transparency between consumers and producers would increase as "sellers will have an incentive to put buyers in a long-run average mood rather than an overenthusiastic state".
[50] By implementing Loewentstein's recommendation, firms that understand projection bias should minimize information asymmetry; such would diminish the negative consumer externality that comes from purchasing an undesirable good and relieve sellers from extraneous costs required to exaggerate the utility of their product.
[21] Research in affective forecasts and economic decision making include investigations of durability bias in consumers[18] and predictions of public transit satisfaction.
The knowledge that forecasts, and therefore, decisions, are affected by biases as well as other factors (such as framing effects), can be used to design policies that maximize the utility of people's choices.
[69][70] Research in health-related affective forecasting suggests that nonpatients consistently underestimate the quality of life associated with chronic health conditions and disability.
[14] A patient, or health care agent, who falls victim to focalism would fail to take into account all the aspects of life that would remain the same after losing a limb.
Because a primary goal of healthcare is maximizing quality of life, knowledge about patients' forecasts can potentially inform policy on how resources are allocated.
[69] Others argue that although biases exist and should support changes in doctor-patient communication, they do not unilaterally diminish decision-making capacity and should not be used to endorse paternalistic policies.
[70] This debate captures the tension between medicine's emphasis on protecting the autonomy of the patient and an approach that favors intervention in order to correct biases.
