It happens in most of our lives that what looked like a bad event or a decision a few years back actually doesn’t seem like that bad an event or a decision today. Similarly, what looked like a great decision or an event a few years back doesn’t seem like that great a decision or an event today. It happens because one always looks at the past with the knowledge of the present. The more dangerous thing is that one looks at the future too with the knowledge of the present. These are two classic phenomena in psychology – the former is called Outcome Bias and the latter is called Affective Forecasting.

Outcome bias is the error made in evaluating the quality of a decision once the outcome of the decision is known, instead of evaluating the quality of the decision based on the information available when the decision was made. Have you ever wondered how everybody is an expert once a decision goes wrong? Everything is obvious once the result is known. Isn’t it? This is partly because humans are excellent in coming up with causal reasons for an event once the result is known, and it makes us excellent story makers.

On the other hand, Affective forecasting is about predicting how one will feel in the future. It is about how one’s emotional state (affect) will be in the future? As it turns out, we’re terrible at it. We’re not good judges of what will make us happy in the future, and we have trouble seeing through the filter of the present moment. Our feelings in the present blind us to how we make decisions in the future when we might be feeling differently and how we predict our future experience.

There is an old adage: past is always good. The truth is: people who want a good story for themselves actually choose to see their past as good. One always has an option to make either a good story or a bad story of one’s past or future in relation to one’s present, and that’s how we live. Man’s quest for meaning makes him create stories full of cognitive biases.

References:

1. http://www.psychologytoday.com/basics/affective-forecasting

2. http://faculty.chicagobooth.edu/christopher.hsee/vita/Papers/DecisionAndExperience.pdf