Are You Treating Future You As a Stranger? How Projection Bias Is Working In Your Finances

Send us Fan MailEpisode Description: You bought a ski pass in January and never used it. You signed up for a meal kit service when you were very hungry. You took out a 30-year mortgage on a house you'd "definitely" live in forever. What's the common thread? Projection bias — the very human tendency to assume that whoever we are right now is basically who we'll always be. In this episode, we break down what projection bias actually is, why your brain is wired for it, and — most importantly — how to catch yourself doing it before it costs you money.What You'll Learn:What projection bias is and why it's not just "bad planning"The three financial zones where it hits hardest: big purchases, savings, and lifestyle creepThe "Future You Letter" technique and other practical hacks to outsmart your present-biased brainWhy marketers love projection bias (and use it against you constantly)Key Concepts Mentioned:Projection bias (Loewenstein, O'Donoghue & Rabin, 2003)Affective forecastingHyperbolic discountingThe "hot-cold empathy gap"Lifestyle creep / hedonic adaptationResources:Misbehaving by Richard ThalerStumbling on Happiness by Daniel GilbertThe Psychology of Money by Morgan HouselLoewenstein, O'Donoghue & Rabin (2003), "Projection Bias in Predicting Future Utility" — Quarterly Journal of EconomicsSupport the show