People are generally quite bad at Affective Forecasting:
Systematic errors beg for scientific explanations, and as it turns out, the errors that people make when they try to predict their emotional futures are quite systematic. Specifically, people tend to overestimate the impact of future events. That is, they predict that future events will have a more intense and more enduring hedonic impact than they actually do. We call this the impact bias.
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We’ve seen the impact bias in just about every context we’ve studied. For example, we’ve studied numerous elections over the last few years, and voters invariably predict that if their candidate wins they’re going to be happy for months, and if their candidate loses they’ll be unhappy for months. In fact, their happiness is barely influenced by electoral outcomes. We see the same pattern when we look at the dissolution of romantic relationships.People predict that they will be very unhappy for a very long time after a romantic relationship dissolves, but the fact is that they are usually back to their baseline in a relatively short time — a much shorter time than they predicted. Professors expect to be happier for years after getting tenure than after being denied tenure, but the two groups are equally happy in a brief time.
How do you improve your affective forecasting accuracy?
There are two ways to make a prediction about how you’re going to feel in the future. The first is to close your eyes and imagine that future — to simulate it in your own mind and preview your own hedonic reaction. That’s the kind of affective forecasting we’ve studied extensively, and what we now know is that the process of projecting oneself into the future is a process that is fraught with error. But there’s a second way to make these kinds of forecasts, namely, to find somebody who’s already experiencing that future and observe how they actually feel.If you were trying to decide whether you should take job X or job Y, you might try to imagine yourself in each of them, but you might instead observe people who have job X and job Y and simply see how happy they are. What we’ve discovered is that (a) when people do this, they make extremely accurate affective forecasts, and (b) no one does this unless you force them to!
What makes people happy?
If you actually looked at the correlates of happiness across the human population, you learn a few important things. First of all, wealth is a poor predictor of happiness. It’s not a useless predictor, but it is quite limited. The first $40,000 or so buys you almost all of the happiness you can get from wealth. The difference between earning nothing and earning $20,000 is enormous — that’s the difference between having shelter and food and being homeless and hungry.But economists have shown us that after basic needs are met, there isn’t much ‘marginal utility’ to increased wealth. In other words, the difference between a guy who makes $15,000 and a guy who makes $40,000 is much bigger than the difference between the guy who makes $100,000 and the guy who makes $1,000,000. Psychologists, philosophers, and religious leaders are a little too quick to say that money can’t buy happiness, and that really betrays a failure to understand what it’s like to live in the streets with an empty stomach. Money makes a big difference to people who have none.
On the other hand, once basic needs are met, further wealth doesn’t seem to predict further happiness. So the relationship between money and happiness is complicated, and definitely not linear. If it were linear, then billionaires would be a thousand times happier than millionaires, who would be a hundred times happier than professors. That clearly isn’t the case.
On the other hand, social relationships are a powerful predictor of happiness — much more so than money is. Happy people have extensive social networks and good relationships with the people in those networks. What’s interesting to me is that while money is weakly and complexly correlated with happiness, and social relationships are strongly and simply correlated with happiness, most of us spend most of our time trying to be happy by pursuing wealth. Why?
Of course, we have to ask how we’re measuring happiness there…