Decision and experience: why don’t we choose what makes us happy?
“Many psychologists suspect that we do not make choices that maximize our happiness.”
Abstract (Via UC)
Recent years have witnessed a growing interest among psychologists and other social scientists in subjective wellbeing and happiness. Here we review selected contributions to this development from the literature on behavioraldecision theory. In particular, we examine many, somewhat surprising, findings that show people systematically fail to predict or choose what maximizes their happiness, and we look at reasons why they fail to do so. These findings challenge a fundamental assumption that underlies popular support for consumer sovereignty and other forms of autonomy in decision-making (e.g. marriage choice), namely, the assumption that people are able to make choices in their own best interests.
Introduction (Via UC)
A fundamental assumption of classic economic theory is that people are able to identify and choose what is best for them, conditional on being well-informed about their circumstances. This assumption is not an idiosyncratic doctrine of economics; it is shared by the general public. Our support for consumer sovereignty, free marriage, and democratic elections all reflect this assumption.
Are people really able to choose what is best for them? Other than those that meet the basic survival needs, most decisions (some would argue all decisions) are motivated by the pursuit of subjective well-being or, broadly defined, happiness. Thus, we define ‘best choice’ as one that yields the greatest happiness. Furthermore, following Bentham  and recently Kahneman , we define greatest happiness as best time-integrated momentary experiences.
Many psychologists suspect that we do not make choices that maximize our happiness. The vast popular literature on self-improvement is based on the belief that we aren’t getting everything we could out of life, and is replete with recipes to increase happiness. Recent findings from behavioral-decision research provide evidence that people are not always able to choose what yields the greatest happiness or best experience. People fail to choose optimally, either because they fail to predict accurately which option in the available choice set will generate the best experience or because they fail to base their choice on their prediction, or both (see Figure 1).
So Why Don’t We Choose What Makes Us Happy (Via UC)
1. Failures to predict future experience accurately– To choose the experientially optimal option, decisionmakers need to predict accurately the experiential consequences of their choice options. Individuals rely on a variety of strategies to make these predictions, including quick emotional responses triggered by associations with similar previous experiences, conscious recall and evaluations of related previous experiences, and savoring or simulation of future experiences to infer their hedonic
2. Impact bias – People often overestimate the impact (both intensity and duration) of an affective event [8–11]. For example, junior faculty members typically overestimate the joy of getting tenure and the misery of being turned down.
3. Projection bias – People making predictions and people experiencing are often in different visceral (arousal) states. For example, predictors might be rested, satiated or sexually unaroused, whereas experiencers might be tired, hungry or aroused (or vice versa).
4. Distinction bias – Whereas the projection bias occurs because predictors and experiencers are in different arousal states, distinction bias occurs because predictors and experiencers are in different evaluation modes [21–23].
5. Belief bias – Besides recall of related past events, another guide of hedonic forecasts is people’s lay theories of what makes them happy or unhappy, including lay theories about contrast effects, adaptation and certainty [33–37]. These lay theories are usually learned in situations where they are valid, but are then over-generalized to situations where they do not hold.
6. Memory bias – Predictions of future experiences are often based on memories of related past experiences, but memory is fallible and introduces systematic biases into evaluations [24–27]. Memory-based evaluations of a past event are disproportionally influenced by the event’s peak and end experiences and insensitive to the event’s duration [28– 30].
7. Failures to follow predictions – To choose the experientially optimal option, decisionmakers not only need to make accurate predictions of future experiences, but also need to act on their predictions. Yet they do not always do so. Instead of choosing what they predict will generate the greatest overall happiness, they variously choose the option that has the greatest immediate appeal (impulsivity), that fits their choice rules (rule-based choice), that is easy to justify (lay rationalism), or that yields the greatest token reward such as money (medium maximization).
8. Impulsivity – A major cause of sub-optimal decisions is impulsivity – the choice of an immediately gratifying option at the cost of long-term happiness. Overeating, avoiding medical exams, dropping out of college, taking drugs, and squandering savings produce immediate pleasure, but can lead to longterm misery.
9. Lay rationalism– Decision-makers strive to be rational [48,50,57] but, paradoxically, the desire for rationality can lead to less rational decisions. When decision-makers try to ‘do the rational thing’, it can prevent them from choosing what they predict to be experientially optimal.
10. Rule-based decisions – Decision-makers sometimes base their choices on rules for ‘good behavior’ rather than predicted experience [47–50]. Examples of such decision rules include ‘seek variety’ [51– 54], ‘don’t waste’ [55,56], and ‘don’t pay for delays’ (Amir and Ariely, unpublished). These rules might prevent decision-makers from choosing what they predict will produce the best experience.
11. Medium-maximization – Often when people exert effort to obtain a desired outcome, the immediate reward they receive is not the outcome itself, but a medium – an instrument or currency that they can trade for the desired outcome [59,60]. For example, points in consumer loyalty programs and miles in frequent flyer programs are both such a medium.