Sep 29

Here’s my Q&A column from the WSJ this week — and if you have any questions for me, just email them to AskAriely@wsj.com.

______________________________________________________

Dear Dan,

I am an avid football fan. When the team I am supporting is leading by, say, seven points, it doesn’t seem like a lot (we are leading by JUST one touchdown). On the other hand, when we are trailing by seven points, it seems like a lot (we are trailing by ONE touchdown). The same thing happens with runs in baseball and points in basketball. As a result, I’m always nervous while watching close games! Why do I feel this way? Is it just me?

—Jaydeep

I must admit that I don’t follow sports, but as luck would have it, I recently had a chat with Mark Cuban, the owner of the Dallas Mavericks. We talked about various links between behavioral science and basketball, including the idea of loss aversion. Loss aversion means that our emotional reaction to a loss is about twice as intense as our joy at a comparable gain: Finding $100 feels pretty good, whereas losing $100 is absolutely miserable.

When your team is ahead, you think that the game is yours, so you largely focus on dreading that it might be taken away from you. On the other hand, when you are behind, all you can do is look forward to a positive change in the lead.

As this suggests, we might benefit in other areas of life, beyond sports, by adopting the perspective of being behind and looking for the upside.

______________________________________________________

Dear Dan,

Several years ago I gave my 90-year-old mother $5,000 to pay off the bank loan for her 2007 Honda Civic. She recently decided she didn’t want to drive anymore and would sell the car, for which she should receive $6,000 to $8,000. She had originally planned to give the car to my nephew (her grandson), but since he can’t afford the upkeep, she was going to sell the car and give him the proceeds. My finances have improved significantly since the time I gave her the $5,000, but she also offered to give me back $5,000 from the sale, which would leave my nephew with very little money. What should I do?

—Anastasia 

When we face such questions, we usually engage in what is called a cross-personal utility comparison. We ask ourselves how much we would benefit from this amount of money and compare this to how much the other person (your nephew, in this case) would benefit. When we carry out this comparison we naturally have a somewhat egocentric view of the world, which means that we usually over-weigh our own benefits and under-weigh the benefits of the other person.

However, recent research by Elizabeth Dunn and Mike Norton (their forthcoming book is called “Happy Money: The Science of Smarter Spending”) shows that giving money away has tremendous benefits for the giver. In their studies, whether people buy a cup of coffee for a friend or give up their yearly bonus to help a nonprofit, the givers experience happiness beyond their expectations, and it remains high for longer than they anticipate.

In your case, the giving would be particularly powerful because both you and your mother are involved. You would feel happiness because you facilitated the gift, your mother would feel happy because she is helping her grandson, and you would feel further happiness for making your mother feel good. With all of this good feeling around, is there any doubt that you should help your nephew?

______________________________________________________

Dear Dan,

I just paid for yoga classes for the next six months, but the studio mistakenly credited me for a year. They have made many past billing errors in their favor. Should I correct the mistake or just see it as the universe making things more even?

—Random fan

Of course, it is the world restoring karma—but why did it take so long?

See the original article in the Wall Street Journal here.