We are prone to believing that outcomes will have stronger emotional impacts on us than they often do. This state of expectation, or impact bias, highlights why anticipation of an event is a much more palpable emotion than the event itself. The impact bias can lead to behaviors that make us less content despite our best efforts for happiness.
Let’s learn more about how to recognize this bias and make better decisions for our future.
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The Climbing Project Dilemma and the Impact Bias
Let’s say a driven sport climber chooses a difficult project for the season. She puts in days of effort on the objective, and soon becomes emotionally involved. Her friends and other local climbers have witnessed her efforts and are now fully aware of her commitment. This social awareness heightens the relative importance of the objective.
Once the moves and sequences are dialed, redpoint efforts begin. She is beyond the heady early days of exploration and rapid progress; she’s now in a perceived phase of black and white success or failure. Each time she ties in, she either does it or she doesn’t. Progress can still occur, but ultimately may be seen as less important if the expectation is a less nuanced outcome. As Paige Claassen noted in our podcast discussion, the phase of knowing something is possible is generally the positive emotional peak of the experience. We’ve broken through a phase of uncertainty, and the anticipation of eventual success is high.
At this point she might begin to imagine the grandeur of success. Western cultures in particular hold discreet achievements in high regard. She might visualize the elation of clipping the chains, or the euphoria of sweaty hugs back at the base of the route. Dave MacLeod imagined himself rewarding his success with a raspberry cheesecake.
Success Takes a Different Form
When success eventually comes, one of two reactions generally occur (oftentimes both):
1. The emotional response is subdued. We might experience a sense of relief more than elation.
2. Feelings of euphoria are short-lived. The feeling of success we imagined might last for weeks is gone within days or even hours.
This process is known as the impact bias, first discussed in detail by Wilson and Gilbert (2005). In short:
The impact bias causes us to overestimate the magnitude and duration of an emotional reaction to a future event.
The Early Retirement Impact Bias
These same concepts can be applied to early and traditional retirement.
Affective Forecasting and the Impact Bias
In this 2011 paper, author Dr. Melissa Knoll notes that those who are tired of work or dissatisfied at work believe that retirement (or simply quitting a job) will make them happier. This belief, however, may represent a flaw in the way we process our future feelings, otherwise known as affective forecasting.
The process of affective forecasting suggests that people underestimate or overestimate how an event will influence their future feelings. For instance, if I eat an entire bucket of fried chicken in the parking lot of a grocery store, I will buy fewer groceries than if I shopped on an empty stomach. By buying fewer groceries, I’m potentially buying less food than I might need for the rest of the week. Because I’m full of chicken now, I’m failing to appreciate that I will once again be hungry in the future.
We Recall the Best and Worst Experiences
We tend to recall the best and worst aspects of an experience, and also tend to minimize the more average or mundane parts of those same experiences. We’ve all heard the phrase “rose-colored glasses,” which highlights the fact that we view past events more favorably than they actually were. For example, we might say silly things like, “high school was awesome.” Additionally, bad memories are forever seared in our psyche. This explains why we can recall with great clarity where we were for major tragedies such as 9/11 or Johnny Depp’s divorce.
When looking back at our experience at work, it’s easy then to imagine how we can project the future experience of work based on our strongly positive or negative experiences at work. The strong negativity bias, however, means we are far more likely to view future work in a negative context. As such, we place a great sense of importance and anticipation on the idea of not working in hopes of alleviating the perceived pain of these negative experiences. Furthermore, we fail to consider the potential downsides—reduced social connections, lack of purpose, potential boredom, etc.—of life outside the workplace.
Building Hope
Bloggers have grown considerable status, and perhaps even income, on the idea that early retirement is the desired end-goal of financial independence. Conversely, I’ve yet to come across a truly content early retiree living a life of leisure; most have returned to something resembling a job or are attempting to.
There is even an essence of religiosity—the concept of early retirement provides hope for those that find themselves miserable in a job that is misaligned with their values or inherent skill sets. And as with any devotion, affective forecasting errors prevent us from fully analyzing critical nuance. We settle instead for simplified and easily digestible narratives to enhance our pleasure or reduce our pain. We certainly can understand that those experiencing a crisis of hope—even mildly—are most likely to gravitate toward thought leaders who offer a promise of some better future outcome.
A bad job or dead-end career can indeed be a crisis of hope. It’s not the worst problem in the world, but try telling that to someone who dreads Monday through Friday and worries about the next week on Saturday and Sunday. Just because there are worse problems doesn’t make someone feel better about their problems.
As we’ve recently discussed, the broad and faithful acceptance of the 4% rule is one of these areas where considerable nuance exists. However, many of the most ardent supporters simply shrug off any sort of detailed-oriented discussion as unimportant, or worse yet, pessimistic.
The Good News
I’d argue that the good news is that we’re trying too hard. Contentment has perhaps always been there; we just didn’t know it. I certainly didn’t. In 2017 I loathed my job and wrapped nearly my entire existence into my performance as a rock climber. I wasn’t getting much (or any) sense of satisfaction or purpose from my career, so I subconsciously looked for it elsewhere. Like a child in a theme park, I rode a high-amplitude rollercoaster of emotions based on my performance; elated when I performed well, and completely dejected and worthless when I did not.
Meanwhile, I pursued financial independence with a kind of religious fervor. I became convinced that early retirement would finally free me from the restraints of my otherwise kind of cush corporate career and allow me to pursue what I thought was my real passion, rock climbing. I was a classic victim of impact bias.
How I Fell Victim to Impact Bias
1. I thought leaving my corporate career would be better than it was. After about two months, the high of the achievement wore off and reality set in. Positive aspects of my career that I hadn’t appreciated, including the social reps with colleagues and the recognition and affirmation for a job well done, became noticeably absent as time went on. Due to affective forecasting errors, I failed to properly consider these less memorable parts of my work experience.
2. Rock climbing carried less meaning in my life. Don’t get me wrong: rock climbing is still a major passion in my life. But with more time to devote to it, I found it less meaningful. Without the contrast of the stressful job, climbing was no longer the escape it had once been. With time, it became clear that my achievements or failures caused only short-lived and low-amplitude blips on an otherwise perfectly acceptable emotional equilibrium. I no longer felt a strong desire to appease myself with more; more sends, higher grades, more days out, etc. I simply imagined climbing would be a more important part of my life than it has become.
The best gift of financial independence has not been early retirement. It’s been the opportunity to learn about my motivations. I’ve started to peel back the onion layers on the depths of my need for achievement. This occurs at all scales, from the micro—checking and quickly responding to emails or knocking down chores—to the macro—producing major work projects or sending very hard (for me) rock climbs.
Would I do it any differently? Not at all. I’ve simply learned that the power of the impact bias means a future experience will probably be different than I envision it today.
How do we address impact bias in our life planning?
Our beliefs, values, habits, and biases are often rooted subconsciously in our mind. As such, any conscious awareness of subconscious tendencies is worth its weight in gold.
To assess whether a pursuit is worthy, I’ve been attempting to question my motivations. If it’s the grandeur of the achievement I seek—praise, recognition, status—I try to remind myself that any emotional high or low will likely be both lower in intensity and duration than we expect.
That said, an honest self-assessment is difficult. Why?
We are extremely talented at rationalizing our choices and behaviors. This is both good and bad. The good news is that failure may be easier to shrug off than we anticipate. The downside, however, is that rationalization may keep us perpetually in search of new achievements without our conscious awareness. We are master self-manipulators; highly skilled at convincing ourselves that our motivations are anything but meant to protect our fragile, wild-child egos. But if we can slowly become more aware of the drivers behind our need for achievement, we can better assess whether we should bother with a given pursuit in the first place.
Finding Lasting Contentment by Recognizing the Impact Bias
When Dave MacLeod sent his project, he no longer desired the raspberry cheesecake.
Does that mean he should have never pursued the project in the first place? Not at all. He simply imagined a higher degree of euphoria when considering future success. That’s the impact bias.
Those who find lasting contentment are the rare individuals who can pursue challenges for the sake of the challenge alone, not the achievement. These individuals don’t build up the idea of future satisfaction at the achievement. They are motivated by the present challenge. Here and now.
Many of us will convince ourselves that we also simply pursue the challenge. We may, however, be rationalizing our pursuit of the achievement instead. I certainly do. Just like a weightlifter, anyone pursuing growth in a craft or looking for a better life must provide novel and difficult stimulus to overcome.
The idea is not to abandon achievements; we need them. Instead, recognize that the impact bias will convince us that future achievements will be more important to us emotionally than they actually will be. If we can learn to recognize this bias, we can select better pursuits and better problems.
Yeah a lot of people have looked to FI as a cure-all for what they hate about their job or capitalism in general, yet when they have more time to do things like travel or play volleyball, it’s not as special because they can do it anytime, not just Sunday afternoons.
I think the cure is like you said, pursuing a challenge for the challenge itself. Using skills in different ways like volunteering, civic activism, joining a non profit board, or using your newfound wealth of time to do the things that make a huge difference, but not a lot of 9-5 workers have time for. Like rallying city council for more bike lanes!