The mind that evolved for small groups and immediate dangers is now asked to manage a pension. It does its best. We describe the departure from the model as an error. We might equally describe the model as a hopeful guess about us. Understanding people turns out to be a more urgent task than changing them, and a great deal harder. Every one of us runs the same shortcut, and every one of us believes we are the exception.
What the evidence shows
The usual story is that we are careless calculators. The better story is that we are careful about the wrong things. None of this is new. Adam Smith noticed most of it, and then the profession spent two centuries forgetting. Every one of us runs the same shortcut, and every one of us believes we are the exception. Consider gossip. It is a small thing, and small things are where habits live.
