Mismemory & demand

In Corrie, Gail can't remember falling down the stairs. This is a common response to trauma; a colleague of mine recently fell off his bike and broke his nose (it didn't spoil his looks - he's a scouser), and he can't remember the accident either.
The mind blocks out distressing events; it's easy to imagine an evolutionary reason for this.
But it's not just in extreme cases that our memory of bad things is distorted. Daniel Kahneman has shown (pdf) that our memories of less dramatic things can also be systematically distorted in two particular ways.
First, our memories are insensitive to the duration of a bad event; we remember long uncomfortable experiences as being no worse than shorter ones despite the fact that we'd all prefer discomfort to be as short as possible.
Second, our memory conforms to a "peak-end rule". If the end of an episode is less painful than its worst moment, we look back on the incident less unfavourably than we do if the pain suddenly stops.
Here's my question. Might this have economic consequences?
Take holidays. At first, these are deeply unpleasant - the hassle of checking in and waiting hours for a plane - but they end adequately. Or take moving house. This too is horribly stressful at first (dealing with lawyers) but it ends nicely (I hope).
These episodes are those which the peak-end rule says we are are likely to remember  too favourably - because the end of the event is less distressing than the peak.
So, could it be that demand for air travel, or moving house, is higher than it would be if our memories were correct, because we forget how unpleasant they are? If so, some part of demand for them is irrational.

Comments

[Chris]

Why do holidays end adequatly? Travelling back is just as much a painful experience as travelling there. If the psychology is correct it would seem demand for holidays would be below the rational amount because people would be unduly affected by the bad ending to an otherwise enjoyable trip.

[tom s.]

Why do people take photos of vacations? Because memories are the primary reason for going on them, not some supplementary after effect. The same applies to other things - tastes, climbing mountains etc. We experience many events primarily through memory.

The idea that there is a correct way of remembering an experience is wrong. The key is to tune the experience to fit the way we remember it, not the other way around, and we do that just fine.

[dearieme]

"Why do holidays end adequatly? Travelling back is just as much a painful experience as travelling there." But travelling back may involve only the slightest of pretence "security" before boarding, while leaving requires exposure to the spectrum of incompetence, harassment, dishonesty and discomfort imposed by the British state and its churlish wage-slaves.

[Scott Hughes]

That is an interesting question. It would probably change our actions if our memories were more accurate. Maybe there are advantages of remembering events by how they turn out at the end. That probably helps us learn to be less short-sighted.

[Shuggy]

Interesting post. Rather than holidays, this made me think of having children. The 'peak' is definitely worse than the end result - what with the stress of the birth, the sleepless nights, the stage where you can't even go for a shit without being disturbed. It's probably just as well we're irrational in the way you describe because otherwise no-one would have any children.

[gaddeswarup]

"The mind blocks out distressing events; it's easy to imagine an evolutionary reason for this." it is not clear that this is universal:
http://www.economist.com/science/displaystory.cfm?story_id=9581647
Similarly,reasons for taking holidays may be different. Some may do it for change rather than high expectations of happiness.

[jameshigham]

Second, our memory conforms to a "peak-end rule". If the end of an episode is less painful than its worst moment, we look back on the incident less unfavourably than we do if the pain suddenly stops.

That's a good point.

[Flaming Nora]

Thank you very much for the link to my Coronation Street blog, it's much appreciated!

[John Meredith]

It isn't actually very easy to think of an evolutionary reason why the memory should block out distressing events. Creatures that remember well how distressing things happen are likely to be better at avoiding them in the future and so increase their survival chances. I think it is more likely that memory loss like Gail's is down to the physical circumstances of the event rather than any subjective assessment of trauma. She just didn't have time to 'fix' the memory before she was rendered unconscious. There is no homunculous inside the brain that decides which things we remember and which things we don't.