Recency Bias (or What Have You Done For Me Lately?)

There is a lot to be thankful for! God is a good God!

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Be thankful in all circumstances, for this is God’s will for you who belong to Christ Jesus. (1 Thessalonians 5:18)

This morning on my way to the gym, a radio advertisement brought up the idea of recency bias with regard to investments.  Many people panicked at the beginning of 2014 when the Dow lost 326 (2.1%) points on February 3rd.  This came after a January which saw the Dow lose 5.3%.  What people forgot, was that the Dow had earned them 27.36% during the previous year–2013.  The point was that people have developed a tendency to only remember the latest overly inflated negatives.  Look at your local newspaper or listen to one of the televised newscasts.  Compare how many uplifting positive reports there are to the number of reports there are regarding things that are illegal, immoral, or simply discouraging.  It will be no contest.  The negative reports will outweigh the positive. …

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