Travelling in the Big Yellow Taxi: From Jo Biden to Hedonic Adaptation

When he made his historic announcement not to seek re-election for US president in 2024, Joe Biden referenced Benjamin Franklin. Franklin, of course, was one of the authors of the American Constitution. History tells us that in 1787, he was asked what kind of government he and his fellow delegates had created. He answered: “A republic, if you can keep it”. Biden quoted Franklin over 200 years later to underscore the fragile nature of valuable institutions like democracy. But Franklin’s words also speak volumes about human psychology. About we value what we have versus what we have not.

Biden warned that Americans had “…to choose between moving forward or backward, between hope and hate, between unity and division”. And that they had to decide whether they “still believe in honesty, decency, respect, freedom, justice and democracy”. After reflecting on Biden’s words, I could not help hearing Joni Mitchell’s “Big Yellow Taxi” in my head:

Don’t it always seem to go 
That you don’t know what you’ve got 
Till it’s gone

In an earlier post, I discussed loss aversion. Typically the pain associated with losing something is greater than the pleasure associated with gaining something of equal value. This can lead us into all sorts of quandaries. But Biden’s channeling of Franklin and my consequent channeling of Joni Mitchell highlights an opposite tendency. That we may not always value what we have, that too often we take things for granted. How can we reconcile these two contradictory tendencies of human decision making and value judgment?

Valuing What We Have: Loss Aversion

Loss aversion is a cornerstone of behavioural economics. As mentioned above, it reveals that people tend to prefer avoiding losses over acquiring equivalent gains. The pain of losing something is felt more acutely than the pleasure of gaining something of equal value. It is the psychological reason behind the endowment effect and status quo bias, where people ascribe more value to things merely because they own them.

Consider how we cherish family heirlooms, even if they have little market value. Or how fiercely we might cling to a job we’ve held for years, despite better opportunities elsewhere. This intrinsic valuation is a testament to the power of loss aversion.

Taking Things for Granted: Hedonic Adaptation

On the flip side, hedonic adaptation is our psychological tendency to return to a stable level of happiness despite major positive or negative changes in our life. This can lead to the paradox of taking things for granted. Over time, the excitement and appreciation for what we have diminish, and these once-cherished possessions or statuses become part of our baseline existence.

The excitement of a new gadget, home, or car, quickly wears off and becomes the new normal. Our experience has adapted and we forget how much we initially valued the new thing.

Sensitivity to Change: A Possible Explanation

One way we can resolve the apparent contradiction between loss aversion and hedonic adaptation is through our sensitivity and vigilance to the prospect of change. In classic loss aversion, we are explicitly evaluating the change that comes with giving up something we possess. This heightened awareness makes the potential loss feel immediate and significant.

However, when we take things for granted, we are not considering the possibility of change. Our possessions, relationships, and statuses become part of our everyday backdrop, and we do not contemplate their potential loss. This lack of vigilance allows us to become blind to the risks, creating exactly the sense of complacency that Biden and Franklin are warning against.

Moreover, while we are on the hedonic treadmill, constantly pursuing new goals and desires, we often fail to recognize that achieving new gains might require relinquishing something we already have. This blindness can lead to a scenario where we are chasing after X, oblivious to the fact that it may only be possible if we give up Y.

Recent political history in the UK exemplifies this: The Brexit campaign clamoured for greater freedom and sovereignty. Remainers regularly warned that leaving the EU would spell, amongst other things, the end of free movement of goods and people. This in turn would have dire economic consequences. But Brexit proponents dismissed such arguments as “Project Fear“. It was only once the British government tried to implement Brexit, that they realised they could not have their cake AND eat it. Not too surprisingly, the majority of people in the UK now think that it was wrong to leave the UK. Put differently, the British People in 2024 are with Joni Mitchell and express regret over having given up what is now gone.

Navigating the Tension Between Loss Aversion and Hedonic Adaptation

The coexistence of loss aversion and hedonic adaptation presents a fascinating contradiction in human behaviour. On one hand, we place immense value on what we have because we dread losing it. On the other hand, we adapt to our circumstances so thoroughly that we often fail to appreciate them until they’re threatened or lost. This tension is a core aspect of our emotional and psychological lives, influencing everything from personal relationships to our engagement with societal structures.

So what can we do about it?

As always, understanding why the paradox occurs can help us navigate it more effectively. By being aware of our propensity to take things for granted, we can make a conscious effort to cultivate gratitude and mindfulness. In a recent post I wrote how the ancient Six Element Practice cultivates mindfulness of change and interconnectedness. The more we are aware that everything is in constant flux, the less likely we are to succumb to complacency. And tuning into the connectedness between ourselves and our environment (including people and institutions) fosters gratitude. A healthy awareness that nothing remains fixed forever, combined with appreciation of what we have are powerful antidotes to the dangers of complacency that come with hedonic adaptation.