No man can prove upon awakening that he is the man who he thinks went to sleep the night before, or that anything that he recollects is anything other than a convincing dream.
—R. Buckminster Fuller

The rosy retrospection bias is the tendency to remember past events in a more positive light than they were experienced. For example, “It wasn’t that painful to have our first child—let’s have another!”

A number of perils can befall people when they consider the past. First, if a person “undervalues” the extent of resources, effort, and pain that were expended and experienced in the past, then the person may under-estimate the cost of repeating the event in the future. Thus, the person may undertake the effort with insufficient resources and fail in the execution. Another risk is that the person, using erroneous cost assumptions, may reject better alternatives, thereby missing an opportunity.

A person can also have recollections that are more negative than the events really were. The person may then, without proper consideration, reject a similar idea in the future, thereby missing an opportunity to enhance his business or life.

It is important to remember that people’s memories of the past are influenced by many situational factors. For example, a person suffering from a head cold may have a bad memory of a movie she watched in a movie theater. Another example is how good trail mix tastes after four hours of hiking up a mountain. Try eating trail mix after eating dinner and desert. It doesn’t taste quite as good.

Always be suspicious of people’s recollections of the past. They are rarely accurate—they are either biased too negatively or too positively.

Attempt to collect objective assessments of the past by asking for quantifiable and verifiable data whenever possible.

Attempt to make assessments of the status quo and possible future changes without relying on past data. Substantiate these estimates with current data.

If you must rely to some degree on past data, try to uncover any situational factors that may bias the data. Not only can the past situation bias the past data, but the current situation could be a source of bias. For example, a person may currently be under pressure and, in his desperation, start wishing data to be true, rather than proving data to be true.

Be suspicious of valid data and be sure to validate it. Uncover situational factors that may bias past data. Try to use current data whenever possible.