How to optimize your purchase decisions and why eliminating negatives can increase happiness more than buying more stuff.
In this episode you’ll learn:
- What is adaptive preference.
- Why buying things doesn’t make us happy.
- What are examples of negativity bias.
- How eliminating negatives in our life can increase our happiness.
Show Notes
What Scientific Term Or Concept Ought To Be More Widely Known – Edge
Construal – Eldar Shafir – Edge
Adaptive Preference – Steve Fuller – Edge
Negativity Bias – Michael Shermer – Edge
Letters From A Stoic by Seneca – Referred to Letters XVIII and CXVIII in the episode.
The Tim Ferriss Show – Mr. Money Mustache
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Summary Article
Why We Buy What We Buy
I like to drive. I like exploring dirt roads in the mountains or meandering down winding paved roads in places I have never been. I love the feeling of acceleration when I hit the gas pedal and my back gets pressed against the seat. I like the speed.
I don’t like when cars break. Growing up, our car was old and when it broke it was a major inconvenience because we had little money, and I didn’t know how to fix cars. There was a great deal of stress and emotional turmoil when our car broke.
In 2001, I bought a new 2002 Subaru WRX. I loved that car because it was fast and because it was new so it didn’t break.
Construals
Six years later, I didn’t like the car as much. It was still fast, but it sometimes broke, and I discovered a new flaw. The car was noisy to drive. There was very little sound deadening material in the car so I could hear a great deal of road noise.
I realized my Subaru was noisy only after I rode in a BMW owned by a client of mine. I remember how solid the door felt, and when I closed it the noise of the world seemed to melt away.
Princeton psychologist Eldar Shafir in an essay in Edge wrote, “Real world options, like automobiles, houses, job offers, potential spouses, all come in multiple attributes. How much weight we give each attribute is largely a function of where our attention is directed, our pet theories, what we expect or wish to see, the associations that come to mind.”
“When a person is presented with a choice between options A and B, she chooses not between A and B as they are in the world, but rather as they are represented [in her brain]. And that representation is not a complete and neutral summary, but rather a selective and constructed rendering—a construal.”
Shafir also points out that we judge things in comparative terms not absolute terms. I didn’t realize that my Subaru was noisy until I compared it to a BMW. And I didn’t begin to value a quiet ride and a solid feel until I experienced it. And the experience left me a bit dissatisfied with my car choice.
Adaptive Preferences
After riding in my client’s car, I started to think a lot about BMWs. I remember as a teenager that while we dealt with the breakdowns of our rusting 1977 Dodge Aspen my uncle drove a sleek silver BMW.
I thought my uncle was rich. He owned apartment buildings, his own real estate brokerage and even more impressive in my mind he owned his own gas station where he could fill up his BMW.
In 2001 when I bought the Subaru, I didn’t consider buying a BMW. With three small kids, a mortgage, an upcoming move to Idaho, a BMW seemed out of reach.
But by 2006, my adaptive preference toward a BMW had changed.
Philosopher Steve Fuller writes that “an adaptive preference results when we bend aspiration towards expectation in light of experience. We come to want what we think is within our grasp.”
I aspired to own BMW because not only did it possess attributes that I desired and had experienced, such as speed, quiet and stability, but now it was even more appealing because I could afford it.
Another interesting aspect of adaptive preference according to Fuller is “we tend to downgrade the value of previously desired outcomes as their realization becomes less likely and upgrade the value of previously undesired outcomes as their realization becomes more likely.”
For example, had I lost my job, I probably would have wanted a BMW less since it was no longer within reach, and I would have valued my Subaru more, especially since it was paid for.
But since I had a job, I leased a new 2006 BMW 5 Series. As I expected, I liked the speed, stability, quiet, and reliability.
Trade Offs
There were several negatives, however, that I hadn’t considered. First, after not making car payments for a number of years, I didn’t like having to make a $400 lease payment.
More than that I didn’t like the image the car seemed to project. Even though the car cost as much as the extended cab pickup trucks my neighbors drove, somehow my BMW felt showy. As if I was telling the world, “I’m the kind of guy who can afford to drive a BMW.”
I didn’t want to be that kind of guy. I just wanted a fast, quiet, reliable car.
Buying things is a question of trade-offs between desired features and constraints such as time and money. More than anything, though, we choose to buy things based on how we believe they will make us feel. Will they make us happier?
Often they don’t.
Buying Doesn’t Make Us Happy
“Seneca the Younger wrote in Letter CXVIII that “Happiness is not, as men think, a greedy thing; it is a lowly thing; for that reason it never gluts a man’s desire. You deem lofty the objects you seek, because you are on a low level and hence far away from them; but they are mean in the site of him who has reached them.”
“And I am very much mistaken if he does not desire to climb still higher; that which you regard as the top is merely a rung on the ladder. Now all men suffer from ignorance of the truth; deceived by common report, they make for these ends as if they were good, and then, after having won their wish, and suffered much, they find them evil, or empty, or less important than they expected. Most men admire what deceives them at a distance.”
Often buying things that we think will make us happy makes us feel just as empty and unhappy as before we bought them.
I wasn’t unhappy driving my car. Nor did it necessarily make me happy, although I liked it better than my Subaru because it was quiet and didn’t break. Still, I felt awkward when people I knew saw me in it.
When the lease ended I gave the car back. And a couple years later I compromised and bought a 2001 BMW 540I for $9,000.
I adapted my preferences based on my experience. I was willing to make a trade-off. I put up with a car that might break in exchange for feeling less pretentious while driving it, all while being able to drive fast in a quiet environment.
