Saturday, January 5, 2013

The End of History

In the recent Science issue there is an article on "The End of History Illusion" by Jordi Quoidbach, Daniel T. Gilbert and Timothy D. Wilson. The abstract reads:
"We measured the personalities, values, and preferences of more than 19,000 people who ranged in age from 18 to 68 and asked them to report how much they had changed in the past decade and/or to predict how much they would change in the next decade. Young people, middle-aged people, and older people all believed they had changed a lot in the past but would change relatively little in the future. People, it seems, regard the present as a watershed moment at which they have finally become the person they will be for the rest of their lives. This “end of history illusion” had practical consequences, leading people to overpay for future opportunities to indulge their current preferences."

Turns out the NYtimes also found this paper interesting, see the column by John Tierney

This reminds me a little of the following:

Loewenstein, G., O'Donoghue, T. & Rabin, M. (2003). Projection bias in predicting future utility. Quarterly Journal of Economics, 118, 1209-1248.
That abstract reads:
"People exaggerate the degree to which their future tastes will resemble their current tastes. We present evidence from a variety of domains which demonstrates the prevalence of such projection bias, develop a formal model of it, and use this model to demonstrate its importance in economic environments. We show that, when people exhibit habit formation, projection bias leads people to consume too much early in life, and to decide, as time passes, to consume more—and save less—than originally planned. Projection bias can also lead to misguided purchases of durable goods. We discuss a number of additional applications and implications."

Both are reasons why we may have a hard time to make choices for our future, choices that we actually are happy about once that future occurs.

Stay tuned for more on time inconsistency...

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