AI Optimism and the Agony of Waiting

Morgan Housel (0:06)

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Last week, we talked about a quirk of human psychology, which is when you are anticipating something good, like a vacation or a new house, the anticipation usually feels the best, and it tends to feel better than the actual experience. That's just kind of how people's minds work. And part of this, didn't really mention this last week, I think is a lot of the reason is because when you are anticipating something good, you imagine it being explicitly purely good, and you are not thinking about all of the other mundane, if not annoying and bad things that might also take place during that good experience. So when you're dreaming about the next vacation, you imagine yourself like on the beach and everything is wonderful, and that's like this perfect scenario and it feels so great when you imagine it. But when you're actually on the beach, you're jet lagged, and the guy, you had to wake up early to get a beach chair, and you got sunscreen in your eyes, and your kids are yelling, and the temperature is not perfect, and the food wasn't that good. There's all these other normal things that combine into the great experience you're having, it just makes it not as great as it was when you are anticipating it. And I bring that up because I think the same is true in reverse, in the other direction, that when you are anticipating something bad happening, the anticipation is the hardest part.

And when the actual bad thing happens, it's not as bad as you imagined. I started thinking of this because we're nearing the 25th anniversary of September 11th, and I watched a documentary on September 11th the other day that was so, so, so good, and reminding everyone what it was like that day. And for the people who are not directly involved in the attacks, like leave them aside, the hardest part of that day for most Americans was not knowing if it was over. It was the anticipation of is that it or is there more coming? That fear was among the hardest things that people dealt with that day. I had that kind of idea in my head, and I started thinking about another thing that's happening right now, these days, which is how many people all over the world are anticipating something bad to come out of AI.

And if you're not one of those, look at the surveys and talk to people about how they feel about AI, and it is off the charts bad right now. The standard view about what is AI gonna do to us is it's gonna take all of our jobs, use up all of our resources, et cetera, et cetera, cause huge cyber attacks, whatever it might be. I don't want to discount any of that. It could easily be the case.

But I think when you understand the psychology of how people anticipate things, and this being the opposite of anticipating a vacation, that when you are anticipating something bad happens, all you can imagine is the bad, the downside of it. And you cannot anticipate that when it actually happens, if something like that does happen, how much mundane and even good stuff will happen at the same time that will blunt how you feel about this episode. And I think there's more going on here than just blowing things out of proportion. When you're anticipating something good, you blow it out of proportion. When you're anticipating something bad, you blow it out of proportion. I think a lot of it is people's inability to recognize how quickly your mind adapts to the circumstances that it's in, good or bad, and that your own mind is a very proficient storyteller, and it's very good at filling in the gaps of what you might experience in the future. If you think it's good, it will fill in the gaps, and you will imagine yourself having the best time with whatever you're anticipating good thing happening, or if you think it's bad, your mind will very quickly fill in the gaps of uncertainty to make it sound like something that is absolutely apocalyptic. You are a very good storyteller inside of your own head, and most people's brains have no room whatsoever for question marks or uncertainty. You can fill them in very quickly. And so, look, making forecasts about what AI might do to our future is not something that I partake in. I don't think it's necessarily anything, it's something that anyone can do with any kind of accuracy. I mean, imagine if this was 1998 right now, when we were talking about what the Internet was going to do to our future. How many people said, oh, there's two grad students at Stanford named Sergey and Larry, and there's a sixth grader in New York named Mark Zuckerberg, and they're going to own the entire Internet platform. Nobody was saying that at the time, and I think it's very similar for what it is. But I think there's also something to be said about the amount of worry about what the Internet would do in the late 1990s. By and large, it did not come true, whether that was Y2K or the elimination of retail jobs, the elimination of retail stores. Look, around the edges, there were a lot of things that happened, but there are more retail workers today than there were back then. And two of the most thriving business successes of the last 25 years are Costco and Walmart. And so the idea that a new technology is going to be apocalyptic to either the economy or a single industry has been a worry for hundreds and hundreds of years.