Distinction bias — a tendency to over-value the effect of small quantitative differences when comparing options.

When comparing things side by side (like 40“ and 45” TVs), you tend to think the 45″ one would give you a greatly more pleasurable experience.

In reality, when you have it at home, it hardly makes any difference if it’s 40“ or 45”.

Your brain isn’t that smart

Psychologists believe we are in two different modes when we compare options versus when we experience them. When making a choice, we are in comparison mode — sensitive to small differences between options, like me choosing a television. But when we live out our decisions, we are in experience mode  — there are no other options to compare our experience to.

In comparison mode, we’re pretty good at deciding between qualitative differences. For example, we know that an interesting job is better than a boring one or that being able to walk to work is better than having to suffer driving in rush hour traffic.

Humans are not very good at predicting how quantitative differences, those involving numbers, affect happiness.

We make the same mistake in real life all the time. We think a 1,200 square foot home will make us happier than a 1,000 square foot home. We think earning $70,000 a year will make us happier than earning $60,000 a year.

How to outsmart your brain

1. Don’t Compare Options Side by Side

In comparison mode, we end up spending too much time playing “spot the difference.” This is where we run into trouble and focus too much on inconsequential quantitative differences. To combat this, avoid comparing two options side by side.

Instead, evaluate each choice individually and on their own merit.

If you are buying a house, don’t compare one with another. Spend time at each house focusing only on what you like and dislike about that house to form a holistic impression of it. Then choose based on this impression.

2. Know your “must-haves” before you look

Marketers often use distinction bias to trick us into paying more for things we don’t actually need and won’t make us any happier.

You can defend yourself by writing down what really matters before you shop. Write down your must-have reasons why you’re buying the item. Then, once those conditions are met you’ll be free to pick the cheapest option that has your requirements without getting suckered into features you don’t really need.

3. Optimize for things you can’t get used to

Researchers believe that we fall victim to distinction bias when we underestimate our tendency to return to a baseline level of happiness over time — this tendency is known as “hedonic adaptation.” Despite thinking we’ll live happily ever after, a higher income or a bigger house doesn’t make us happier for very long.

Your happiness will adjust back to anything that is stable and certain like your income, the size of your house, or the quality of your TV. These things do not change day to day so you can expect your happiness level to fade.

On the other hand, infrequent or uncertain positive events, like quality time with friends or an exciting road trip, occur too sporadically to get used to. Inserting more of these hard-to-adapt-to experiences in your life will create longer lasting happiness.

When our species first evolved, picking the ripest fruit on the bush or selecting the right animal from the herd served us well. Today however, the same shortcut that helped us survive can get us into trouble. Instead of optimizing for what will make us happier in the long-term, we play “spot the difference” regarding attributes that don’t matter much.

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At first glance, today’s article may seem only slightly related to growing revenue. But it was too interesting not to mention it.

But there were a few reasons for that:

• Avoid reducing your revenue by recognizing the bias and not giving in to false hopes
• Grow your long-term revenue by focusing on providing real benefits and value to your customers, instead of adding gimmicky features which are not necessary, and which can lead to getting your customers eventually disillusioned with your product
• It was just too interesting not to mention it.

Distinction Bias: Why You Make Terrible Life Choices

PS. Size of a house, amount of money, features of a car, GB of RAM, how many times a week you did X, etc. Don’t measure numbers side by side.