When we pay special attention to a role model’s successes, we overlook that their gains came from a small percent of their actions. That makes our own failures, losses, and setbacks feel like we’re doing something wrong. But it’s possible we are wrong, or just sort of right, just as often as the masters are. They may have been more right when they were right, but they could have been wrong just as often as you.
‘It’s not whether you’re right or wrong that’s important,’ George Soros once said, “but how much money you make when you’re right and how much you lose when you’re wrong.” You can be wrong half the time and still make a fortune.”
What does this analysis tell us about the power and longevity of regret as related to one’s pocketbook? First, the power of regret might be less, given that many alternative investment decisions can potentially offset the regret with the thrill of success. Perhaps Ingrid Bergman had many other lovers in the aftermath of Casablanca. However, it is much more likely that she remained faithful to her love for Bogie. Feelings of the heart might have greater endurance than feelings related to investments and money (unless money is one’s “true love”). Furthermore, regret in the domain of investments is much easier to measure (and subsequently remediate) than regret of the heart. As George Soros has observed, we can make up for the losses when we are wrong with money gained when we are right.
Perhaps regret is easier to manage in the monetary domain than in the domain of interpersonal relationships. On the other hand, we might find that risk and envy are even more powerful in the interpersonal domain than in the world of money. I will turn soon to these two additional motivators.
Risk and Envy
Two other entities dwell in the shadow of money and wealth. They are Risk and Envy. Risk concerns an internal assessment of what we are willing to do regarding money and wealth. At the same time, Envy involves an assessment made of other people’s willingness to deploy their money and wealth, and their rate of success in accruing wealth based on their monetary decisions.
Regret and Risk
Risk is closely associated with the prospect of regret. We regret not taking a Risk, and we regret taking the Risk and failing. Kahneman (2011, pp.346-347) offers an example:
“Regret is one of the counterfactual emotions that are triggered by the availability of alternatives to reality. After every plane crash there are special stories about passengers who “should not” have been on the plane got a seat at the last moment, they were transferred from another airline, they were supposed to fly a day earlier but had had to postpone. The common feature of these poignant stories is that they involve unusual events—and unusual events are easier than normal events to undo in imagination. Associative memory contains a representation of the normal world and its rules. An abnormal event attracts attention, and it also activates the idea of the event that would have been normal under the same circumstances.”
It is interesting to note that Kahneman’s use of airplane flights as an example is apparently quite personal (as Lewis observed regarding Kahneman’s aversive obsession regarding these flights).
