Exploring the Frontiers of Happiness
December 21, 2008

I recently watched a talk by Harvard psychologist Dan Gilbert ostensibly on the subject of happiness. More specifically, it was about how the brain incorrectly evaluates risk and reward, leading people to make poor decisions in their lives. His website seems pretty gimmicky, but the talk was useful, especially the part about the fallacy of “Comparing with the past instead of the possible”.

Basically, people value things in comparison to their prior experience with that thing, instead of in comparison to the thing as it exists now. This sometimes makes sense (especially from an evolutionary perspective), but also underlies most of the practice of marketing. The simplest example is valuing goods more when they’re on sale, since we compare them to their non-discounted price. But there are much more illuminating examples in the talk; I recommend it especially if you want to understand marketing better.