Don’t Ask, Can’t Tell

The Calm Investor | Perspective Matters

Our (lack of) self-awareness

Let’s do a quick quiz to determine what makes you happy. Rate the following on a scale of 1 (very little) to 5 (a great deal) depending on how much each item causes your mood to fluctuate on any given day:

  1. How well your work day went
  2. Amount of sleep you got the preceding night
  3. How good your health is
  4. How good the weather is
  5. Whether you had sex
  6. Day of the week

Now, if I were to then on a daily basis, ask you, how your day went, your response should have a relationship with your ratings to the previous question. Simple enough?

Except, there seems to be very little to indicate that your answers to the first question (how important are these factors in determining your mood) are accurate. Here’s why.

In a study at Harvard, psychologists asked students to report their mood, at the end of the day, for two months. They also reported answers to the questions above (quality of work day, amount of sleep…). The women reported an additional factor, the stage of their menstrual cycle. At the end of two months, participants were asked, how they thought, each of the factors tends to affect their overall mood.

This data gave the researchers two things:

  1. how much participants thought each factor affected their mood
  2. how well each factor actually predicted their mood

Turned out, the participants were not accurate at all. Meaning, if someone said the amount of sleep was important to how their day went, the actual association between sleep and mood at the end of the day was equally likely to be low as high.

Assuming we’re not blessed with greater self-awareness than the research group in the study, it’s safe to say that we’re ignorant in large part, to what drives our own emotions, attitudes and behaviours.

How malleable our attitudes really are

(Selective) Total Recall. Suppose I ask you about three positive events in your life and then ask you about your life satisfaction. OR, I ask you about three negative events and then about your life satisfaction. In which case do you think you would report greater life satisfaction?

Whichever your guess, it’s most likely wrong.

It all depends on whether those events were in the recent past or happened five or more years ago.

Your life seems worse if you thought of some recently negative things versus recently positive things. But the reverse is true if you thought about more negative things in the more distant past. Your life seems not-so-bad considering the bad things in the distant past or not-so-great when considering the good things in the distant past.

Happy Marriage = Happy Life? What do you think is the correlation between satisfaction in one’s marriage and satisfaction with life as a whole? Higher the correlation, higher the impact of marriage satisfaction on overall life satisfaction.

People were asked how satisfied they were with their marriage, followed by how satisfied they were with their life.

This correlation was found to be 0.67. So, a major effect of marriage satisfaction on life satisfaction. Intuitive.

But, when the order of questions was reversed, first asked about satisfaction with their lives, followed by satisfaction with their marriage, the correlation was 0.32. So, only a modestly important factor in overall life satisfaction.

Verbal priming (in the order of questions in the first case), serves to make the marriage more salient, and influences our feeling about life overall. In the other case, you consider a broader set of influences in coming to the answer.

Hot muggy day, a sad life. Your friend calls and asks you how things are going. You’re more likely to say things are going well if the weather is nice, than if it is bad. However, if the friend first asks about the weather, and then asks how things are going, there is likely no effect of the weather on your answer.

The prompt about the weather causes you to discount some of your current mood / discomfort as being weather-related and to add back to your overall assessment of life.

“Life seems to be just about ok, but probably part of the reason I feel that way is that it’s 36 C, 95% humidity and the AC is not working, so I guess things are actually going pretty well.”

Don’t trust financial surveys and polls

We have no file drawer in our head out of which we pull out our attitudes when asked. What we report as our attitude is mostly influenced by question wording, previously asked questions and even by incidental situational stimuli.

What does it mean when we can’t be certain of our own feelings and their impact and that our outlook on something as broad as our lives can be tinkered based on a few external cues?

That when you hear that Bankers expect a rate cut, or economists expect India’s GDP to grow by a certain number, or that consumer optimism declined but rural sentiment rose, ignore all of it. Even without factoring in the distortion of skewed incentives (when large stock investors clamour for rate cuts) or CEOs of FMCG companies talk up rural demand, asking people for their opinions or forecasts, is one of the least reliable ways to tell what they really think.

Additional reading on how our thinking and decision-making are often compromised by external factors:

Magazine subscriptions and the fault in our reasoning

Have you been framed?

And this TED talk on findings from the longest ever study on what makes a happy life

 

What do you think?