BiasMemory & retrieval · Cognitive Bias · Entry 99
Hedonic Recall Bias – when satisfied employees think they earn more, and unhappy ones think they earn less
Do you feel satisfied with your salary and think you earn more than you actually do? Or, if you're unhappy, does your salary seem smaller than it really is? That’s Hedonic Recall Bias – the tendency to overestimate or underestimate earnings based on job satisfaction.
Where it can show up
- Salary negotiations – satisfied employees might ask for less than they could because they believe they already earn a lot.
- Perceived unfairness – dissatisfied employees tend to feel their salary is even lower than it actually is.
- Financial planning – misjudging income can lead to poor financial decisions.
A practical countermeasure
- Look at actual numbers, not feelings – check your payslip instead of relying on memory.
- Separate emotions from finances – job satisfaction doesn’t change your actual earnings.
- Reevaluate your market value – even if you’re happy with your salary, check what similar jobs pay.