Gloom in the Forecast
Monday, August 28, 2006
By Wray Herbert
On the TV game show Wheel of Fortune, the winning contestant always moves on to the bonus round. She has typically won several thousand dollars at this point, but the bonus prize always dwarfs the regular winnings: It might be a lump sum of $25,000 or a shiny new SUV. There is no risk. She must simply fill in the blanks between a few consonants and vowels to guess the bonus word.
But it’s hard. Contestants often lose the bonus round. And when they do, host Pat Sajak opens the envelope to reveal what the hapless wordsmith might have won had she been more clever. Twenty-five grand! The studio audience moans, and the camera zooms in on the contestant’s disappointment. But Pat always ends the show by saying something like this: “I’m sorry. I can’t really feel bad for Mary, because she is walking away with $8,600!” Helper Vanna White flashes a knowing smile as the credits roll.
Pat and Vanna are probably not aware of it, but they are demonstrating a fundamental principle of human psychology at the end of each day’s contest. People must confront disappointments and losses every day, and if we took each loss to heart we would be unhappy much of the time. But if Mary is like most of us, she is not going to leave the TV studio feeling bad about losing out on $25,000. She is going to leave feeling grateful for winning $8,600. Such is the power of the mind to “reframe” losing in an emotionally healthy way.
The problem is that we don’t know we have this skill. Psychologists have demonstrated time and again that we greatly exaggerate how badly even small setbacks are going to make us feel. As a result, we may unnecessarily make important life choices—about everything from health to finances to politics—in order to avoid risking the pain of loss.
Consider this recent experiment by Deborah Kermer and Timothy Wilson at the University of Virginia. The psychologists turned their lab into a makeshift casino. They staked gamblers to $5, and in a game against a computer they either won $4 or lost $4. Afterward they rated how they felt. Other participants didn’t actually play, but instead observed the game and predicted how they would feel if they won or lost in such a game of chance. The forecasters, as expected, said that their pain after a loss would far exceed their joy following a win. But in fact those who won were no happier than those who lost.
The scientists repeated the experiment with more favorable conditions. This time they had a 50 percent chance of winning $5 and a 50 percent of losing $3. That’s a good deal, but the gamblers didn’t like it. Indeed, when queried about various levels of risk, it turned out that on average they were only willing to risk $1.86 for the chance of winning $5. Only a small fraction were willing to risk even $3. As in the first study, the gamblers anticipated that the pain of losing would be much worse than the gratification of winning. And once again they were wrong. As reported in the August issue of the journal Psychological Science, the losers felt happier than they thought they would, both immediately after losing and later on.
But here’s the interesting part: The reason they were so far off in their emotional forecasting is that they failed to anticipate how they would mentally process the $3 loss. It’s a glass-half-full or glass-half-empty kind of situation. Those who in advance said they would be disappointed with a loss rarely mentioned words like profit or gain, even though they would be walking away with a $2 windfall even if they lost. Once they had actually lost, however, the gamblers’ most common thought was about the $2 profit. The memory of losing $3 faded rapidly as the gamblers reframed half-empty as half-full. But they had dramatically underestimated their own mind’s powerful ability to rationalize this bad experience.
Kermer and Wilson don't dispute that losses may sometimes be more emotionally powerful than gains. Negative events appear to be processed in different brain regions and trigger more intense biochemical activity. But unfortunately, we don't seem to be able to learn from our mistakes in emotional prediction, mostly because we're unaware of our psychological defenses.Consider the implications of this. In both these experiments, as in the bonus round of Wheel of Fortune, people are playing with someone else’s money. When we are playing with our own money, as in real life, we are probably going to be even more averse to risk and loss. Since we are so lousy at knowing our own coping skills, we are likely making choices every day that maximize neither our wealth nor our happiness. Viewed that way, life looks awfully like a wheel of misfortune.
For more insights into the quirks of human nature, visit the Association for Psychological Science website at www.psychologicalscience.org/onlyhuman.
posted by Wray Herbert @ 2:34 PM