Economic Legacies
WHAT would you rather do: live 60 happy years, or 60 happy years followed by five only slightly happy years? Chances are you’d take the latter. But when psychologists put this questions to subjects regarding a fictional third person, they rate the woman whose last five years were unhappier than the rest of her life as having had a worse life. Five extra moderately happy years, and yet the change assumes an outsized role in people’s minds. As Daniel Kahneman explains here, we give too much weight to a) the peaks and b) the ends of periods, rater than logically evaluating their entire duration. Humans naturally invent and tell stories, and we care very much how the story concludes.
The “peak-end” effect is one reason why November’s election is important for Republicans—particularly the “end” bit of it. Their timing has been unlucky in the past three elections. Here’s one highly salient economic statistic, unemployment, with the election months marked by dots and the larger period around the end of those terms boxed off.
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