Expected Happiness = (odds of gain) x (value of gain)

This is how to do exactly the right thing all the time

We make errors in calculating odds and errors in calculating value and this is 
why we don't use this

We know how to calculate odds, but we fuck it up all the time
Americans lose more money on gambling every year than on any other type of 

People don't calculate odds properly
Whichever grocery line you choose is the slowest one -- how can this happen so 
Standing in a slow line is EXTREMELY memorable

We decide odds by the ease of bringing things to mind -- how easily can you 
envision it?

Are there more dogs or pigs on leashes in Austin?
Dogs are more probable so we can envision this easier
How quickly something comes to mind isn't necessarily a good indicator of 
probability though!

Example of asking people to estimate death rates:
-- dramatic (tornado, fireworks) events are overestimated
-- boring (asthma, drowning) seriously underestimated

Economists like to say that "lotteries are a stupidity tax"
If you buy a lottery ticket, the chance of getting your money back is the same 
as if you flushed your money down the toilet
Your gonna throw in a dollar, flush and millions are gonna come streaming back 

When people are asked whether they are more likely to get mugged in Michigan or 
Detroit, people always say Detroit! They can vividly imagine that
Dying of cancer or heart attack vs Dying of natural causes -- same deal

Most of us spend most of our mental time contemplating success than 
contemplating failure
It is easier to imagine through practice
People are therefore horribly over-optimistic about all good things happening 
to us

Planning fallacy -- thesis example
If you think about success it impacts your estimation

Strangely, errors are value are more frequent

We compare with the past instead of the possible
The correct way to make the decision is to compare with the possible
However, people normally compare with the past (does it cost more or less than 
it used to?)

Our brains are basically change detectors -- "this is why you can't smell 
yourself and everyone else can"
You can't detect sight, sounds, smell unless it's changing
Eyeball jiggles a little bit -- designed this way so that there are changes in 
what you're seeing

We should care about price, not changes or history of price
"Price cut" is the most magical phrase in marketing
People prefer a job where they have increasing wages, but get less money overall

"We prefer a bad deal that used to be a horrible deal, to a good deal that used 
to be a great deal"

We make mistakes when comparing with the possible as well though

Context is everything -- comparison is everything
Quality or value of something is always gotten by comparing to something else

Example of identical grey dots on a black background vs a white background

Retailers have known this forever, so they take you to the broken-down 
crackhouse and THEN to the place they want to sell to you
Tailors always sell you the expensive suit before the expensive tie (which 
seems cheap by contrast)

Retailers keep "aspirational items" on the shelf so the "middle thing" tends to 
be more expensive
Comparisons made in the wine store are different to those made when drinking

When you save a hundred dollars, the $100 doesn't know where it cames from!
But we view $100 saved on a big ticket item ($31000) is worth less than on a 
small ticket item ($200)

Ask people to eat crisps and predict how much they are going to like them:
	-- in one room is Godiva chocolates --> low prediction of enjoyment
	-- in another room is Spam --> high prediction of enjoyment

Americans love variety and this comparison issue is why that's a problem
You pay more for variety packs at the store, but people still buy them!
You compare each thing to the other
People are actually happier getting their favourite every time than with 
variety (Snickers example)

Too much variety makes decision-making difficult -- and often causes the 
decision not to be taken
"For every 10 funds added, participation drops 2%"
When doctors are given more choice in drugs, they don't prescribe anything 
because they don't want to make the decision

It's harder to compare things in both space and time
We almost always choose the sooner option:
-- $50 now, $60 in a month
-- $50 in a year, $60 in 13 months

Subjective value
Illusions of spatial perspective
The further away two things are (in time or space), the smaller the delta 
between it and something else seems
Same for wanting something further away -- patience vs impatience
Things that are close to you are compared differently

The equation is useless, because we can't calculate it properly

We're not stupid, but we are ancient -- our brain was developed/evolved for 
different circumstance to what we live in now
This brain is trying to function in a world for which it was never made
It makes mistakes when it tries to solve these very

The solution is the kind of equation that Pascal & Fermat came up with -- using 
science does better than our own intuition
The importance of decisions is what he's really talking about
Frito and Snickers decisions aren't very important, but big decisions are
We are the only species that we know about that doesn't have natural predators, 
isn't susceptible to smaller natural disasters
The one thing that might wipe us off this planet is that we don't make the 
right decisions

Sometimes we need to use science to make the right decision rather than just 
relying on intution