Jane Galt, who is (was?) down, later argued:
So probabilistically, the chances that something good will happen to me right now are, I assume, about the same as they always were.
Holding quality of type constant (an important qualification, as some people are simply prone to bad events, and receiving another bad event signals as such), I more readily expect reversion to the mean. Good economies grow rapidly after wartime, often because they find it easier to reassemble preexisting pieces than to press forward from full employment. Much of the human capital is still there and rebuilding can occur quickly once in motion. The personal analogy is that once you start recovering from (some) catastrophes, the process is speedy. You already know where you need to go, and you might sample more randomness to court additional good events.
There is also a "naive" evolutionary argument for bad things getting better.
When things go badly, your body borrows resources from the future. It pumps adrenalin, eats stores of fat, in some views it mobilizes the (only temporarily available) placebo effect, etc., all of which restore better states of affairs and make up lost ground. More psychologically, a setback may cause a person to try harder. If a computer crashes and wipes out a page I wrote, I can write it again at an especially high speed and with the energy of anger and adrenalin.
Of course those short-run compensations can herald a problem for the longer-run future, a’la Long and Plosser. You are digging into your capital stock. At some margin pumping more adrenalin brings a long-run health cost. The computer crash means that I write lots today but tomorrow I feel a bit burnt out, and so on.
So if there is anything to worry about, it is the day after tomorrow. The immediate future appears quite bright.
You are not taking into account the basic asymmetry of reality, in which there are more bad things that can happen to you, with worse outcomes, than there are good things that can happen to you. The scale of bad goes all the way to dying, there is nothing on the good side of the ledger that is equivalent to that. Also, there are usually many ways for things to go bad but far fewer ways for things to go right. For good things to happen generally require far more effort than bad things happening, which can often only require inaction. In summary, I’d have to say life is a constant struggle against bad outcomes.
It will be interesting to study the impact of cycles in personal life.Important events -good and bad-and their impact.The normal equilibrium will be disturbed by an event and the individual adjusts.Let the event be your first job, a financial crackdown, a prize in lottery, family formation, divorce, your son/daughter getting an attractive job and so on and so forth.Economics of events is important both at the micro and macro levels.
None of these analogies seem very convincing. Surely what happens after a bad event depends on what that bad event was. The death of a loved one is different from a wiped out paper, and both are different from a war. For instance, only the war required a long-term diversion of resources, only the wiped out paper involves a specific response that will undo the damage, and only the loss of a loved one permanently removes someone important to you from your everyday life.
It seems like you should be looking to one of last year’s best books (according to Marginal Revolution and the Royal Society), Stumbling on Happiness. One of Gilbert’s points (“focalism”) is that, regardless of what things happen to you after something bad happens, things will continue to happen to you. And those things, big and little, good and bad, will capture your attention. So you’re going to spend a lot of your time focusing on all of those things, rather than on the really bad thing(s) that happened. And that’s all it takes to regress towards your natural level of happiness.
One of the keys to getting all the way back to the mean is that you’ll think about the bad thing differently once some time has passed (and it generally doesn’t take very much time). Instead of being something that sticks out, an unexpected shock (or at least something that you were unprepared for), the bad event will seem more like part of the background, something that fits into your life story. Grief over a lost love one can turn into nostalgic memories of the good times you had together (and some of the bad times), and anger over losing that paper can turn into a great story of your persistence and a valuable lesson about backing up data.
It think it also has to do with changes in expectations and resource management.
After falling on hard times, a person may have more free time for creativity, intensified social connections, an increased entrepreneurial spirit. They also realize that they can get by on less, are more focused, and don’t splurge as much or drink as much. They become less wastefull with thier time.
Most of the comments on this page are amazing. Thank you, all, for posting them. I wish I knew you all as friends…
Isn’t what you’re all talking about another way of saying that entropy is the final state of this physical universe?
I hope that this is not taken wrong, but a great comfort in my life has been the book MORE THAN A CARPENTER by Josh McDowell. He essentially proves the existence of Christ by a non-scientific process of reason and logic.
It is possibly the most important book ever written… and I say those words with extreme caution.
His words are as amazing as the comments on this page.
Thanks to you all.
Richard in Michigan
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