Is It Really All Relative?

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There’s a common saying that goes “perception is reality.”

I was waiting outside a restaurant last week when a couple came up and mentioned they were visiting LA from Chicago. During our small talk, the woman made a comment that everyone she saw in LA was all bundled up in warm clothes, despite it really not being that cold.

Sitting there in my puffy jacket while it was 58 degrees, I realized she was right — this is weird.

I grew up with the highly variable Midwest climate (rain, snow, ice, and temperature swings of over 100 degrees over the course of the year); yet in LA, just the chance of rain makes the front page of the newspaper. Is California weather making me soft?

Then, a few days later, I came across this concept called the Weber-Fechner Law. It states:

The minimum increase of stimulus which will produce a perceptible increase of sensation is proportional to the pre-existent stimulus.

Put differently, the more we are adapted to feeling something, the greater fluctuation it takes to noticeably feel a change.

The opposite is also true — in LA where the weather is almost always perfect, it only takes a slight fluctuation to throw us Angelenos into disarray.

Three things in life are certain: death, taxes, and people in LA complaining about the weather.

Here’s an example from the original study by Weber, which basically found that subjects easily noticed the difference in number of dots between the boxes on the left, but had a harder time with the ones on the right.

We humans evolved to understand change as relative to our baselines rather than in absolute levels.

This isn’t a groundbreaking finding — it’s literally how we experience things every day, and it spreads across all facets of our lives. And by better understanding our brain’s wiring and how we instinctively perceive the world, we might be able to act more thoughtfully and make better decisions.

Where do we see the Weber-Fechner Law?

Personal Finance

One of the most obvious examples of the Weber-Fechner Law in everyday life is in personal finance and our purchase decisions.

Imagine you’re buying a house. You can easily justify adding on $500 to the total without thinking twice for something that costs several hundreds of thousands of dollars. But for something like groceries, the idea of adding $500 to your bill sounds crazy.

On an absolute level, the two add-ons are worth the same amount. But on a relative level, $500 is just a tiny fraction of the house’s transaction value.

There are massive industries created and funded by taking tiny percentages of major purchases (think legal or investment banking fees on major business deals). The thought of paying a $1 million advisory fee sounds absurd. But when it’s framed as 1% of a $100 million transaction, it’s a lot easier to justify.

Advertising

Similarly, think about advertising from your favorite brands. When finding deals, we tend to naturally feel value in percentages, not dollars. If we see an ad for 20% off from a brand we like, we don’t pause to think “How much is that 20% worth to me, based on my average or expected order value?”

From a higher-priced clothing retailer like Lululemon, 20% off could be worth $40. But from the coffee shop down the street, it might only be worth $1.

The frequency of the discount also matters. If Lululemon sends out 20% discounts every week, that becomes my expectation. So if I get that same discount for the 43rd week in a row, I probably no longer think of it as particularly valuable, and I don’t even entertain the idea of using it.

But if my favorite coffee shop never gives discounts, and then one day I see 20% off, it might seem more compelling, despite the fact that it’s really only worth $1 to me.

Our baseline expectations influence our perception of value more than the actual value.

Risk Perception

This idea also applies to risk-taking. We’re more likely to take precautions against risk if we perceive the risk to be increasing rapidly, even if the absolute level of risk remains low.

It’s why daredevils feel the need to take bigger and bigger risks to “feel” the same rush.

Base jumpers, solo mountain climbers, gamblers, day-traders — for these people, risk has become a drug.

As we continue to take larger risks, the rush of dopamine feels less and less pronounced, so we need to do crazier and crazier things to feel the same rush.

We feel risk in relative terms, as well, not in absolute terms.

Sports Training

When I’m in the middle of marathon training, an “easy run” might be 8 miles, and a 15 mile long run is just an average Saturday. This is because, in the midst of a high-volume training cycle, the physical stimulus is no different from my baseline.

However, at my current fitness (when I’m not marathon training), that 8 miles feels like a long run. And a few months ago (when I was completely sidelined due to an injury), even 3 or 4 miles felt daunting.

The same is true of weightlifting or any other sort of training we put our bodies through. Our bodies react to the incremental stimulus relative to what they’re used to.

Training is a matter of incremental stimulus, not absolute stimulus. If we increase incremental stimulus by too little, we hit plateaus. Conversely, if we increase it by too much, it’s a recipe for injury.

Improving fitness of any kind is a function of gradually increasing incremental stimulus by just the right amount.

Social Dynamics

We even see the Weber-Fechner Law in how we act around other people. Someone’s behavior becomes our baseline for how we think that person should act as soon as we know them well enough to establish these baselines.

Regardless of how “true” that behavior is to who the person actually is, we think of it as normal.

While we can change how we act at any time, the perception of how we’ve changed will be far more noticeable by others when they already know us well.

This is why many people who want to change something about their lives feel the desire to move somewhere new and start fresh. And there’s some truth to that idea — when you move to a new city and don’t know anyone, you have a new shot at redefining “who you are” in the eyes of others around you.

But your window in doing so is limited to before others develop an understanding of their baseline perception of you.

First impressions are important because they establish a baseline of who others perceive us as.

Our General Quality of Life

By most measures, the world has gotten objectively better in absolute levels throughout history.

However, we tend to feel changes relative to others around us (our baselines). If you watch the news, scroll social media, or have a conversation with a random stranger, you’ll likely hear about political instability, murder, disease, natural disasters, and an endless flow of bad news. Every year people label the current year as the worst year ever.

But the reality is that the world has seen incredible progress over almost any time horizon and by nearly any measure. Check out this piece by Ben Carlson for a list of stats that prove just how much better the world has become.

Violent crime rates have dropped. Deaths from natural disasters have fallen. Less people are living in extreme poverty. Education levels have increased.

We don’t feel change over decades or centuries, though. We feel things relative to last month or last year, and in relation to the people around us.

Similarly, if we get caught up with a lifestyle that becomes ever more expensive, the cycle of wanting more never ends.

This phenomenon is especially true when the wealthiest people keep getting wealthier — the highest rungs on the ladder only continue to get higher. But if we pause to look where we’re at, we’ve all been moving higher up on the ladder — it’s just that the ladder continues to get taller.

As we mentioned in a previous post:

How can we apply the Weber-Fechner Law in our daily lives?

We are often tricked into thinking certain things are more important or less important than they actually are, as perception is almost always relative to our baseline expectations.

Similarly, nickeling and diming the little things in life are often not worth the stress they create. Finance gurus will tell us how much money we’d save over the course of our lives if we just didn’t buy that coffee every day or didn’t get dinner with our friends, but the reality is that there are a few major life decisions that will have meaningful absolute impacts — where we go to school, where we choose to live, who we choose to marry, what we do for a living.

If we can get those right, sweating the little decisions won’t matter in the grand scheme of things (even though in the moment they may seem important).

Life happens in absolute terms, but we tend to perceive it in relative terms.

When we’re caught up in the day-to-day, we feel things relatively. But many of life’s dangers — lifestyle creep, drugs, the comparison trap — come from this issue of relative perception.

However, if we slow down, pause to reflect, and zoom out to think about what really matters, we can stress less and realize just how lucky we actually are. If you’re reading this, chances are you’ve already made it.

This is why gratitude is so powerful.

Gratitude forces us to pause and think about, in absolute terms, what we have and to better appreciate those things.

So when it rains in LA and the temperature drops below 60, I can’t complain. It’s sunny and gorgeous here nearly year-round, and compared to my past home in the Midwest, where it drops below zero and we wouldn’t see the sun for weeks on end during the winter, a lot of things are objectively better.

Clouds come and go in life, but behind them are always the same blue skies. And if we pause to really appreciate it, the sun shines a little brighter.

I’m one lucky guy.

-Owen

Fresh Finds

The Surprising Math of Cities and Corporation (Geoffrey West)

Video | 18 minutes

Found this fascinating Ted Talk from a few years ago that compares cities to corporations. They’re surprisingly similar in that they’re both organizations of people working together to achieve things, but there’s one key difference — every company dies, whereas almost all cities survive.

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