When I saw this research paper, it attracted me like a headline. It had a catchy headline. The decade-old paper by Baumeister, Bratslavsky, Finkenauer and Vohs goes about explaining how life is full of bad and good instances and how bad was predictive, underestimated, more lasting, more pervasive, elicited more processing, got more attention, was more unusual, was connected to speedy decision making, universal and simply stronger than the good.
The 50-page research paper had made a compelling case to justify its headline. The more I thought about it, the more I could confirm that the authors were correct. Just look around, there is more bad news than good news. Bad interested the society more than the good. Life is a collection of bad memories, which we systematically erase to stay positive.
The paper lists a series of instances. The long-term success of a relationship depended more on not doing bad things rather than on doing good things. Bad reputations were easy to acquire but difficult to lose, whereas good reputations were difficult to acquire but easy to lose. The overall goodness of a person was determined mostly by his worst bad deed, with good deeds having the lesser influence. Even pessimism, not optimism, uniquely predicted psychological and physical health outcomes. The universality of stronger bad over weaker good was unequivocal.
There could be some extension made with how we invested. The strength of bad was also visible in the stock markets. Investors attached more weight to a loss than a gain. This was the reason for risk aversion. This was also the reason why there were more momentum investors tracking winners, compared to contrarian bets looking at depressed losers because the fear of a rising trend to cave in was less than the fear of a loser to keep falling. This could also explain the popularity of growth compared to value. Value is depressed while growth was exuberant, even if irrational. A downtrend will always appear stronger than an uptrend, fear was stronger than greed. When prices are in an uptrend, there is always another day to buy. When there is a downtrend, there is no tomorrow to sell. And when we combine these characteristics with more patience (longer duration), need for anticipation in value compared to short term, easier trend following in growth, the popularity of growth becomes more comprehensible.
The paper explains how trauma has no true opposite concept. Unlike many good experiences, a single traumatic experience can have long-term effects on the person’s health, well-being, attitudes, self-esteem, anxiety, and behavior. Ability to feel pain has served humans well on both a personal and an evolutionary level. People, who fail to feel pain, fail to adapt and die early. People who write about their most traumatic experiences typically show significant improvements in physical health, as compared with the control group. Market panics also have an ability to inflict a generational pain, which creates new financial habits.
How we handle a bad event, loss, pain, subconsciously or consciously, is our choice, a risk preference, or something we just do out of impulse. If we are conscious about it, we might learn more from losses than gains. We might embrace the bad worst losers more than the good winners. In the end, we have a psychological framework that keeps us alive, but our inability to see the behavior and detach from it becomes our failing.