The planning fallacy is a common tendency for people to underestimate the time and effort needed for projects, and overestimate the outcome. This error is universal, but there are exceptions such as accurately estimating unwanted pregnancies. People also tend to be overly optimistic about their future, but pessimistic people may have more accurate predictions. The optimistic bias may also lead to improved performance.
Planning fallacy is an intuitively obvious and scientifically well-measured tendency of people to assume that projects will take less time than they do, and that the outcome will be better than justified by past data or experience. For example, newlyweds almost universally expect their marriages to last a lifetime, when in fact less than half of marriages do.
The planning error has been studied by cognitive psychologists who have found evidence and strongly suspect that the error is universal across the human species. The fact that people’s predictions are optimistically biased has been called the most robust discovery in the psychology of forecasting.
There are some exceptions to the planning fallacy. One is that people actually seem to accurately estimate some important and personally relevant event like an unwanted pregnancy. It is also known that people overestimate the likelihood of rare and highly negative events happening in or around them, such as overestimating death from a plane crash and underestimating death from a car crash. These are exceptions to the planning fallacy.
Planning error is probably a special case of overoptimism in general. It has been observed that people overestimate the likelihood of good things happening to them. Between 85% and 90% of people believe their future will be better – in terms of health and other things they value – than that of their average peer. In cognitive psychology, there is even a phenomenon called “realistic pessimism,” in which very pessimistic people are found to have more accurate predictions in the domain of task prediction than people of optimistic or average dispositions.
It has also been found that people are selectively overly optimistic when the predictions they make aren’t personally relevant, and slightly less so when they are. It has been found that people take their abilities into account when predicting whether or not they can accomplish something within a given amount of time. The optimistic bias may also be related to improved performance. So the threat of irrational optimism is not as bad as it seems at first glance.
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