Duration Neglect

Duration Neglect

My last post was about the Peak-End Rule, the way our brains remember events where we subjectively rate them based on an average between the peak moment and the end. A great experience can be ruined by a poor ending, while a poor experience can be remember more positively if it ends on a high note. Duration Neglect goes along with the Peak-End Rule to shape the way we subjectively remember an experience that doesn’t necessarily align with our actual experience of the event in the moment.

 

Regarding an experiment with individuals rating painful colonoscopies, Kahneman writes, “the duration of the procedure had no effect whatsoever on the ratings of total pain.”

 

Again, what mattered for individuals is the peak level of pain and the pain they experienced at the end of the procedure. Patients who had a short colonoscopy with a painful ending rated the entire experience as more painful than individuals who had an equal peak in pain, but overall had a longer colonoscopy that ended on a less painful note. If two patients experience the same peak of pain, but one experiences it early rather than at the end, the subjective pain ratings will be skewed, even if the person who had the peak at the end had less total pain because their procedure was shorter.

 

What this means for gastroenterologists is that it is better for the procedure to go long than to be painful. We can tolerate pain as long as it is spaced out and as long as the ending is relatively better than the peak. A procedure that lasts 20 minutes with an average pain level of 4 is better than a 5 minute procedure with an average pain level of 6. The mind doesn’t remember how long the pain lasted, it only remembers how bad the pain was at the peak.

 

We can translate this into our daily lives as well. If we know there is going to be something unpleasant, then we can try to space it out and frontload the unpleasantness, knowing that the ending will lift the overall subjective feeling if it is relatively better. And, if we have something that is really positive, we can see that it is truly is better to leave on a high note. Once we reach a peak in terms of positivity, any additional goodness will only diminish the overall rating of people’s experience. Adding more positive notes that don’t quite match the peak doesn’t actually help improve the overall level that people will ascribe to the event when they think back on it.
The Peak-End Rule - Joe Abittan

The Peak-End Rule

Our experiencing self and our remembering self are not the same person. Daniel Kahneman shows this in his book Thinking Fast and Slow by gathering survey information from people during unpleasant events and then asking them to recall their subjective experience of the event later. The experiencing self and the remembering self rate the experiences differently.

 

We can see this in our own lives. During the day you may have had a frustrating project to work on, but when you lay down at night and reflect on the day, you might not remember the project being as bad as it felt in the moment. Alternatively, you might sit around all day binging a TV series and really enjoy a lazy relaxing day. However, you might remember the day much differently when you look back at it, no longer appreciating the experience but regretting it.

 

With our brain experiencing and remembering events differently, we are set up for some strange cognitive biases when we reflect on past events and think about how we should behave in the future. The Peak-End Rule is one bias that factors into how we remember events and can influence our future choices.

 

You might expect to rate a poor experience based on how bad the worst moment of the experience was. Say you had to go to a child’s gymnastics routine that you were really dreading. A certain part of the routine may have been all but unbearable to you, but if at the end you found a $20 bill on your way back to the car. Your judgement of the event is going to be influenced by your good luck. Rather than basing your judgement of the show purely on that dreadful routine, or on an average of the whole evening, you are going to find a spot somewhere between the worst moment and the happy moment when you found $20. Its not an average of the whole time, and its not really indicative of your actual experience. A random factor at the end shifted your perspective.

 

In his book Kahneman writes about the Peak-End Rule as “The global retrospective rating predicted by the average of the level of pain reported at the worst moment of the experience and at its end.” This definition from Kahneman comes after describing a study with participants sticking their hands in icy cold water and subjectively judging the experience later.

 

The peak-end rule is not limited to painful and unpleasant experiences. Instead of a miserable experience, you could have a truly wonderful experience that ends up being remembered somewhat poorly by a momentary blip at the end. Picture a concert that is great, but flops at the end with the speaker system failing. You won’t reflect back on the entirety of the experience as positively as you should simply because a single song at the end was ruined.

 

What we should remember from this is that endings matter a lot. Don’t end your meeting with the bad news, end it with the good news so that people walk out on a positive note. The ending of an experience weighs much more heavily than everything in the middle. The points that matter are the peak (either the best or worst part) and the ending. A great ending can buoy a poor experience while a bad ending can tank a great experience. For company meetings, job interviews, or performances, make sure you bring the ending to a high point to lift the overall level of the subjective experience.
Subjective Gains and Losses

Subjective Gains and Losses

“Outcomes that are better than the reference points are gains. Below the reference point they are losses.”

 

Daniel Kahneman writes extensively about our subjective experiences of the world in his book Thinking Fast and Slow and about how those subjective experiences can have very serious consequences in our decisions, political stances, and beliefs about the world. One area he focuses on are reference points, our baseline beliefs and expectations about the world. As it turns out, our expectations can influence whether we think things are going well or going poorly, regardless of what the actual outcomes are. On top of that, we will make adjustments to our behavior based on what we expect in regard to those outcomes.

 

Kahneman continues, “When directly compared or weighted against each other, losses loom larger than gains. This asymmetry between the power of positive and negative expectations or experiences has an evolutionary history. Organisms that treat threats as more urgent than opportunities have a better chance to survive and reproduce.”

 

Without diving into the evolutionary psychology component of Kahneman’s quote (something that I normally would love to do) I want to focus on how complex our reality and decision making becomes when we predict outcomes, shape our behavior in response to those predictions, and bias those predictions based on personal reference points.

 

In the United States, two major economic indicators that are used by banks, economists, and the media for deciding whether we have a good economy or a poor economy are GDP growth and interest rates. Both of these measures are represented as percentages, both have specific targets that we have decided are good, and from both follow a set of decisions that we hope will improve the numbers in the direction we want to see. What is interesting, is that we have reference points for the numbers in terms of what percentages we believe reflect a strong and growing economy, and our subjective experience of the economy can be changed by those outcomes.

 

A 1% increase in GDP growth is growth in overall GDP, but to an economist, that growth is abysmal, and actions need to be taken to get that growth rate closer to 3 to 4%. At the same time, if expectations for GDP growth are only .8% and we hit the same 1% outcome, we might be very happy. In both situations, our decisions and behaviors might change based on the delta from our expected reference point and the final reference point. A gain can feel like a gain, but it can similarly feel like a loss depending on where exactly we placed our reference point.

 

Interest rates reflect similar dynamics, and might be even more complicated by more clear competing interests and desires in terms of interest rates. Banks might want to see higher interest rates, to earn more money, while people taking out loans may love the low interest rates. A 2% interest rate might feel like a huge loss to one entity, while simultaneously feel like a gain to another.

 

This creates strange competitive dynamics, because our brains hate losses. We generally need an expected or realized gain to be 2 times larger than a potential or realized loss before we will risk money or accept an outcome. If we have a certain reference point in mind for the outcome we want or would be happy with, we may need to see a large skew in a positive direction for us to be happy, while even a minor loss will feel disastrous.  (At this very moment in the United States this is what is taking place with the presidential election. Several journalists have noted that in December of 2019, the Democrats would be thrilled with the election outcome we have today, but many adjusted their reference point to a Biden landslide win, so a close win feels like a tragic loss – and somewhat of a win for Trump).

 

Reference points feel like a simple idea, but what I hope this post shows is that they can be hugely consequential, and incredibly complex, especially when we have multiple actors with multiple reference points all interacting on small and large issues. Choose your reference point carefully, and try to recognize when you are operating with a certain refence point in mind and be willing to adjust or discard it when necessary. Don’t let a win get wiped away because it ended up being slightly smaller than your reference point expectation.
Imaginary Reference Points

Imaginary Reference Points

My last post was about reference points and how they can create subjective experiences that differ from person to person. If my refence point is dramatically different than another person’s, then our experience of the same objective fact or reality can be quite different. If I suddenly won $1 million dollars my life might change dramatically, but if an incredibly wealthy person suddenly won $1 million, they might not care at all.

 

Reference points can get even more complicated than the example I just shared which was borrowed from yesterday’s post. Sometimes reference points don’t need to be real in order to shape our subjective experiences of the world. In his book Thinking Fast and Slow, Daniel Kahneman uses the example of an expected raise. If someone knows that their colleagues have received a raise, and expects to get a similar raise but does not, then they can feel as though they have really lost. Their financial situation has not changed, but they created an imaginary reference point in their mind which has shaped the way they think about their current situation.

 

We all have certain expectations about the world that we adopt as reference points. These reference points don’t have to reflect anything real about the world, but they can still greatly impact our subjective opinions and considerations of the world. They can be vain, such as how attractive we expect our spouse to be, or more positively aspirational, such as how much we expect everyone in society to participate in social causes to help those who are the most needy.  There is no real reference point that we are using, just hazy ideas of the way we think things should be, but nevertheless, these imaginary reference points can guide a lot of our thinking and behavior.

 

In my own life, examining these imaginary reference points has been incredibly helpful for making me a more happy and confident person. It is easy to let imaginary reference points fall to the background, where they run our lives without being considered in a critical way. By thinking deeply about our reference points we can better consider what we should and should not strive for, how much effort or money we need to put toward certain endeavors, and whether our behaviors are really reasonable and worthwhile. Through self-reflection and self-awareness we can recognize goals that serve as reference points which are unreasonable, desires which are vain and should be discarded, and ideas about who we are supposed to be that don’t truly align with our lives and what would help us live in a meaningful and fulfilling manner. Imaginary reference points matter, and they can greatly influence how we live our lives. We should make sure we think about them and let go of those which drive us in the wrong direction.
Subjective Reference Points

Subjective Reference Points

One reason why we will never be able to perfectly understand other people and the opinions, decisions, and beliefs that other people hold is because we all have different reference points. I cannot be inside your head, I cannot see things from exactly the same angle that you see things, and I cannot have the same background and experiences that you have. Our differing reference points create subjectivity in our lives, and not just in areas that we would all agree don’t have one true correct answer. Even areas where it seems like there should be a single objective fact or reality can be very subjective. We expect to see a lot of subjective variability in terms of our preferences for living in the city versus the country, in preferring private insurance versus state sponsored insurance, or preferring soft versus firm mattresses, but we probably don’t expect to have the same different subjective experiences or preferences for how loud a sound is, how light or dark a shade of gray appears, or the value of a $2 million dollar gambling win.

 

Each of these areas of unexpected subjectivity are discussed by Daniel Kahneman in his book Thinking Fast and Slow. He shows that understanding and predicting subjective experiences in these areas is possible if we understand the different reference points that are in play for each individual. There may be an objective and unchanging fact at the base of the reality each individual experiences, but the experience can nevertheless be subjective. Kahneman writes,

 

“To predict the subjective experience of loudness, it is not enough to know its absolute energy; you also need to know the reference sound to which it is automatically compared. Similarly, you need to know about the background before you can predict whether a gray patch on a page will appear dark or light. And you need to know the reference before you can predict the utility of an amount of wealth.”

 

I don’t want to end up in a point where we say there is no objective reality we can all observe, after all, “a dead body is a dead body, and someone is going to jail,” as a friend who is a federal judge here in Reno, NV once said to me. But I do want to highlight just how much of our world can be interpreted differently based on our reference points. Sounds, colors, and the value we would get from a certain amount of wealth are not obviously subjective, but Kahneman shows just how subjective these areas are in his book. This should make us consider how much our backgrounds, our unique points of view, and the circumstances in which we make our observations shape how we understand the world. A lot of our understandings of reality are context dependent, and that should cause us to pause before we say with absolute certainty that reality is exactly as we have experienced it. We should pause to consider the reference classes which shape and influence how we experienced the world, and how those references might be different than those of other people. We can’t just say that there is one way to interpret and experience everything in the world, we have to accept that how we experience the world will be shaped by many factors that we might not be aware of and might not consider if we don’t slow down to think about the references.
Affect Heuristics

More on Affect Heuristics

For me, one of the easiest examples of heuristics that Daniel Kahneman shares in his book Thinking Fast and Slow is the affect heuristic. It is a bias that I know I fall into all the time, and that has led me to buy particular brands of shoes, has influenced how I think about certain foods, and has shaped the way I think about people. In his book Kahenman writes, “The affect heuristic is an instances of substitution, in which the answer to an easy question (How do I feel about it?) serves as an answer to a much harder question (What do I think About it?).”

 

The world is a complex and tricky place, and we can only focus a lot of attention in one direction at a time. For a lot of us, that means we are focused on getting kids ready for school, cooking dinner, or trying to keep the house clean. Trying to fully understand the benefits and drawbacks of a social media platform, a new traffic pattern, or how to invest in retirement may seem important, but it can be hard to find the time and mental energy to focus on a complex topic and organize our thoughts in a logical and coherent manner. Nevertheless, we are likely to be presented with situations where we have to make decisions about what level of social media is appropriate for our children, offer comments on new traffic patterns around the water cooler, or finally get around to setting up our retirement plan and deciding what to do with that old 401K from that job we left.

 

Without having adequate time, energy, and attention to think through these difficult decisions, we have to make choices and are asked to have an opinion on topics we are not very informed about. “The affect heuristic”, Kahneman writes, “simplifies our lives by creating a world that is much tidier than reality. Good technologies have few costs in the imaginary world we inhabit, bad technologies have no benefits, and all decisions are easy.” We substitute the hard question that requires detailed thought for a simple question: do I like social media, did I feel that the new traffic pattern made my commute slower, do I like the way my retirement savings advisor presented a new investment strategy. In each case, we rely on affect, our emotional reaction to something, and make decisions in line with our gut feelings. Of course my kid can use social media, I’m on it, I like it, and I want to see what they are posting. Ugh, that new traffic pattern is awful, what were they thinking putting that utility box where it blocks the view of the intersection. Obviously this is the best investment strategy for me, my advisor was able to explain it well and I liked it when they told me I was making a smart decision.

 

We don’t notice when we default to the affect heuristic. It is hard to recognize that we have shifted away from making detailed calculations to rely solely on intuitions about how something makes us feel. Rather than admitting that we buy Nike shoes because our favorite basketball player wears them, and we want to be like LeBron, we create a story in our head about the quality of the shoes, the innovative design, and the complementary colors. We fall back on a quick set of factors that gives the impression of a thoughtful decision. In a lot of situations, we probably can’t do much better than the affect heuristic, but it is worth considering if our decisions are really being driven by affect. We might be able to avoid buying things just out of brand loyalty, and we might be a little calmer and reasonable in debates and arguments with friends and family when we realize we are acting on affect and not on reason.
Fluency Versus Frequency

Fluency Versus Frequency

When it comes to the availability heuristic, fluency seems to be the most important factor. The ease with which an example of something comes to mind matters more than the real world frequency of the event. Salient examples of people being pulled over by the police, of celebrity divorces, or of wildfires cause our brains to consider these types of events to be more common and likely than they really are.

 

In Thinking Fast and Slow, Daniel Kahneman shares results from a study by German psychologist Norbert Schwarz which demonstrates fluency versus frequency in our analysis of the world. Schwarz asked participants to list six instances in which they behaved assertively, and to then rate their overall level of assertiveness. In a second instance, Schwarz asked participants to list twelve instances where they were assertive and to then rate their overall level of assertiveness. What the studies show is that those who were asked to come up with 6 instances of assertiveness considered themselves to be more assertive than those asked to come up with 12 instances. Kahneman describes the results by writing, “Self-ratings were dominated by the ease with which examples had come to mind. The experience of fluent retrieval of instances trumped the number retrieved.”

 

The logical expectation would be that asking people to list 12 instances of assertiveness would give people more reason to believe they were a more assertive person. However, that is not what the study showed. Instead, what Kahneman explains happened is that as you are asked to pull more examples from memory, your brain has a harder time remembering times when you were assertive. You easily remember a few stand-out assertive moments, but eventually you start to run out of examples. As you struggle to think of assertive times in your life, you start to underrate your assertiveness. On the other hand, if you only have to think of a handful of assertive moments, and your brain pulls those moments from memory easily, then the experience of easily identifying moments of assertiveness gives you more confidence with rating yourself as assertive.

 

What I find fascinating with the study Kahneman presents is that the brain doesn’t rely on facts or statistics to make judgments and assessments about the world. It is not setting a bar before analysis at which it can say, more examples of this and I am assertive, or fewer examples and I am not assertive. It is operating on feeling and intuition, fluidly moving through the world making judgments by heuristics. The brain is not an objective observer of the world, and its opinions, perspectives, and conclusions are biased by the way it operates. The study suggests that we cannot trust our simple judgments, even when they are about something as personal as our own level of assertiveness.

Our Experiences of the World are Unique to Us

I often find myself extending my own experiences and feelings to other people, and assuming that other people have the same thoughts, reactions, and expectations about the world that I have. I know that this is not the case since I don’t enjoy watching much television, I am really interested in politics from a policy side, and get really excited about exercising and running (three traits of mine that I know set me apart from most people). Nevertheless, it is hard for me to remember that everyone is experiencing the world differently, and thinking about and interpreting what goes on around them in a different lens. Michelle Alexander looks at this reality in her book The New Jim Crow, specifically when she addresses economic changes and the way that people experience disruptive technology and market changes.

In her book, Alexander looks at the impact that policies and decisions have had on different races throughout our nation’s history and she specifically looks at the disparate impact that policies have had for black people relative to white people. What is important to consider when thinking about what we can learn from her writing is that our subjective experiences are just that, subjective. Other people will experience and have different reactions to the same economic and cultural realities. We must consider what this means from an equity and racial perspective, especially if we want everyone in our society to participate and have a chance to be socially and economically successful.

When our economy shifted in the 1970s and we implemented policies to help people adapt, we did so from a single point of view with a single group of people in mind. Changes in our economy had different implications for black people who had already been left out of societal progress. Alexander writes,

“As described by William Julius Wilson, in his book When Work Disappears, the overwhelming majority of African Americans in the 1970s lacked college educations and had attended racially segregated, underfunded schools lacking basic resources. Those residing in ghetto communities were particularly ill equipped to adapt to the seismic changes taking place in the U.S. economy; they were left isolated and jobless.”

I don’t have advice for how to best help those who are vulnerable to economic change and disruptive technology as it is not something I have ever looked into or studied. Technological change and advancement in many ways seems inevitable and while many individuals can potentially be left behind, many more have a chance to better themselves and their lives with the adoption and inclusion of new technologies. What we should do better, at least what I know I must do better, is understand that my perspective is limited and does not encompass the experiences and realities other people. At the end of the day we, and our politicians, must make decisions, and we must do the best with the information we have. What I feel challenged by, and what I think we should all challenge ourselves with, is incorporating more views than our own thoughts and reactions when making decisions. We must be careful and recognize when we are generalizing our thoughts and experiences to the larger population. Becoming more considerate means recognizing when we are thinking from only one perspective and making broad assumptions about other people. We do eventually need to make a decision and come to a conclusion, but we must make sure that decisions is based on more than just our own subjective experiences.