Concept
The End-of-History Illusion
The end-of-history illusion is the tendency, documented by psychologist Daniel Gilbert and his colleagues, to admit that you have changed a great deal in the past while assuming that you will change very little in the future, as if your present tastes and goals were final.
The term comes from a 2013 study in the journal Science by Jordi Quoidbach, Daniel Gilbert and Timothy Wilson. Adults of every age reported that their values, preferences and personality had shifted a lot over the previous ten years, yet predicted only small changes over the next ten. The pattern held for the young and the old alike: each group seemed to treat the present as the moment they had finally become who they are. Morgan Housel brings the finding into money in The Psychology of Money (2020). Long-term financial plans are made by one person and lived by another, and the person you will be in twenty years may not want the career, city or lifestyle that today's plan is built around. That is why he warns against extreme plans, such as maximum saving with no life now or maximum spending with no cushion later: the more extreme the plan, the more painful it is to reverse when your goals move. His second lesson concerns sunk costs. When you change, leaving a plan made by your younger self is not a failure but an update. Keeping some balance at every stage, and accepting that you will rewrite the plan, is what keeps compounding uninterrupted.
A real-life example
At twenty-four, Burak, a civil engineer in Ankara, was sure he would never want a house or children, and spent almost every lira on travel. At thirty-three he has a daughter, a mortgage application and nothing saved for the deposit. His friend Can, who vowed at the same age to retire at forty and skipped every wedding and holiday to save, is now exhausted and wants a year off. Both planned for a person who did not stay the same.
How to use it
- 1Write down three things you wanted ten years ago and no longer want; they are evidence that the next ten years will change you too.
- 2Avoid the extremes: keep saving something in the years you spend freely, and keep spending on a life now in the years you save hard.
- 3When your goals change, treat the old plan as a draft written by a younger you, and revise it without counting what it cost.