By Dan Monheit, 9.7.21
Question submitted by Jenny, Sandringham
Ah yes, we’ve all been there. For months you’ve pined over what a little bit of extra dosh will do for your happiness. You’ve imagined the luxe restaurants you’ll be able to dine at, how that magnificent new watch will look on your wrist and how much sweeter the red wine will taste when you’re not paying it off in regular instalments.
Yet here you are, post payday, 8% richer but certainly not feeling 8% happier. Maybe Biggie was right? Mo money, mo problems and all that. Maybe you just don’t have the palate for that fancy Syrah? Or perhaps that sour taste at the back of your mouth is a behavioural bias trying to get your attention.
The Focusing Illusion refers to our tendency to concentrate on a single aspect of our lives (or a particular decision) to the exclusion of all others. Daniel Kahneman, the Nobel Laureate and unofficial godfather of Behavioural Economics explains it simply as follows: ‘nothing in life is as important as you think it is, while you are thinking about it’.
In other words, whatever you happen to be focusing on has a funny way of becoming the most important thing to consider (in the interest of brevity, I will skip my rant about focus groups).
In 1978, Brickman, Coates and Janoff-Bulman compared the happiness of lottery winners with paraplegics and quadriplegics caused by accidents. Both groups were asked to rate how happy they are now, how happy they were before winning (for the lottery group) or before the accident (for the victim group) and how happy they expect to be in a couple of years.
It’s fair to assume that those who won the lottery would end up far happier than those who’d suffered debilitating injuries. But you’d assume wrong. Millions richer or physically poorer, the researchers found that both groups had a similar outlook on current and future happiness.
While focusing on money or one’s physical condition makes them feel critically important in the moment, the impact from a major change in either dissipates over time as we adapt to our new reality. It’s worth remembering that paraplegics aren’t paraplegics full time. Sometimes they’re just people enjoying a meal, reading the newspaper, basking in the sunshine or catching up with friends. The same goes for new millionaires too.
Commercially, we see the Focusing Illusion at play everywhere. It explains why the constant talk about border closures is making us all travel obsessed, why a yoghurt that suddenly claims to be ‘high protein’ magically finds its way into our shopping trolleys, and why singles can long to be coupled and vice versa. It’s so tempting (and so very human) to believe that there’s just one little thing between us and total happiness, when in reality, it’s what we choose to focus on that makes all the difference.
Woah Jenny. Sorry to go all life coach on you. Let’s bring it back to the Benjamins.
Of course, it was a great day when you received that pay increase, and from the way you write emails, I bet you really deserved it. But let’s be real. Our attention spans are short. Once ‘get that damn payrise’ got crossed off your list, it was on to the next thing, wasn’t it? And there’s no doubt that whatever that next thing is will absolutely, positively, definitely make you happy from here until the end of time, so go get it!
For brands, the Focusing Illusion provides an opportunity to align what we’re selling with what’s top of mind for consumers. In any one product, there are hundreds (if not thousands) of details a customer could focus on. Identifying what’s most important — or better yet, helping customers decide what’s most important — will put you in the box seat when it comes time to buy.
PS If you missed the last edition, you can still check out why you’ve stopped compulsively checking your investments here.
Bad Decisions Podcast
Learn more about the Focusing Illusion on episode 18 of the Bad Decisions podcast.
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Check out Dan’s latest write up in Carsales on The year to date, through Behavioural Science.