page_title: Affective forecasting
section_title: Projection bias
hierarchical_section_title: Affective forecasting / Major sources of errors / Major sources of error in cognition / Projection bias
caption_attribution_description: English: Graph 1 depicts the income of US Citizens in 2013 and theoretical expenditures which are calculated by multiplying the average empirical expenditures as a percentage of income from ages 25 to 54.
context_page_description: Affective forecasting is the prediction of one's affect in the future. As a process that influences preferences, decisions, and behavior, affective forecasting is studied by both psychologists and economists, with broad applications.
context_section_description: Overview
  Projection bias is the tendency to falsely project current preferences onto a future event. When people are trying to estimate their emotional state in the future they attempt to give an unbiased estimate. However, people's assessments are contaminated by their current emotional state. Thus, it may be difficult for them to predict their emotional state in the future, an occurrence known as mental contamination. For example, if a college student was currently in a negative mood because he just found out he failed a test, and if the college student forecasted how much he would enjoy a party two weeks later, his current negative mood may influence his forecast. In order to make an accurate forecast the student would need to be aware that his forecast is biased due to mental contamination, be motivated to correct the bias, and be able to correct the bias in the right direction and magnitude.
  Projection bias can arise from empathy gaps (or hot/cold empathy gaps), which occur when the present and future phases of affective forecasting are characterized by different states of physiological arousal, which the forecaster fails to take into account. For example, forecasters in a state of hunger are likely to overestimate how much they will want to eat later, overlooking the effect of their hunger on future preferences. As with projection bias, economists use the visceral motivations that produce empathy gaps to help explain impulsive or self-destructive behaviors, such as smoking.
  An important affective forecasting bias related to projection bias is personality neglect. Personality neglect refers to a person's tendency to overlook their personality when making decisions about their future emotions. In a study conducted by Quoidbach and Dunn, students' predictions of their feelings about future exam scores were used to measure affective forecasting errors related to personality. They found that college students who predicted their future emotions about their exam scores were unable to relate these emotions to their own dispositional happiness. To further investigate personality neglect, Quoidbach and Dunn studied happiness in relation to neuroticism. People predicted their future feelings about the outcome of the 2008 US presidential election between Barack Obama and John McCain. Neuroticism was correlated with impact bias, which is the overestimation of the length and intensity of emotions. People who rated themselves as higher in neuroticism overestimated their happiness in response to the election of their preferred candidate, suggesting that they failed to relate their dispositional happiness to their future emotional state.
  The term "projection bias" was first introduced in the 2003 paper "Projection Bias in Predicting Future Utility" by Loewenstein, O'Donoghue and Rabin.
  Market Applications to Projection Bias
  The novelty of new products oftentimes overexcites consumers and results in the negative consumption externality of impulse buying. To counteract such, Loewenstein recommends offering "cooling off"  periods for consumers. During such, they would have a few days to reflect about their purchase and appropriately develop a longer-term understanding of the utility they receive from it. This cooling off period could also benefit the production side by diminishing the need for a sales-person to "hype" certain products. Transparency between consumers and producers would increase as "sellers will have an incentive to put buyers in a long-run average mood rather than an overenthusiastic state". By implementing Loewentstein's recommendation, firms that understand projection bias should minimize information asymmetry; such would diminish the negative consumer externality that comes from purchasing an undesirable good and relieve sellers from extraneous costs required to exaggerate the utility of their product.
  The application of this solution extends past a seller's market into other fields like politics. A Rasmussen Study of 2014 found that only 4% of likely U.S. voters believe that politicians keep their campaign promise
caption: Income of US Citizens in 2013 and theoretical expenditures which are calculated by multiplying the average empirical expenditures by income
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