For the past few years I’ve always contributed the maximum amount into my healthcare HSA. The way my company has it set up all your benefit elections roll over with the exception of the HSA contributions, so I’m always careful to elect it again.
So a couple of weeks ago I decided to transfer the accumulated HSA balance to another account and discovered to my surprise that I have been contributing nothing at all in 2017, and the only funds in the account were what’s left from 2016. Now I immediately scrambled to rectify that (you can change HSA contribution levels in mid-year) and will end up making my full max contribution in 2017.
So from a fundamental standpoint I’m not any worse off as a result of this oversight (or computer glitch or whatever). I end up making the maximum amount of contributions that I could have and am not leaving any actual dollars on the table (in the form of extra tax payments).But nonetheless, I’m a few thousand dollars poorer than I thought I was prior to this discovery. And more along that line, the net amount in my paycheck, which I had assumed was net of HSA contributions (I use direct deposit and rarely check the online statements), was actually not, and will be reduced by that amount going forward.
The question is how this compares, from a philosophical and psychological standpoint, to someone who actually had a few thousand dollars in an account and then lost it, and to someone who actually was genuinely earning more money and then had that amount reduced.
Is there any real difference between genuine misfortune, in which you actually lose something real, and simply having your illusion burst and finding out that you never had something to begin with?
Example: A very long relationship ends, and your heart is broken, and you are devastated. Which would feel worse – your SO ended the relationship because they fell out of love with you and moved on (perhaps to someone else), or you ended the relationship because you found out your SO had been lying the whole time, never loved you, and was spending all their free time cheating and mocking you to their friends?
I think the second scenario would feel significantly worse.
It’s an interesting thing that comes up in financial scams such as Bernie Madoff’s Ponzi scheme. People are entitled to compensation for the money they invested. But are they entitled to the money that they thought they earned based on false calculations? If he promised them a 20% annual return, did they really lose that 20%, or only the illusion that they had it? To the victim who thought they had a million dollars, it’s devastating, but they never really had the million to begin with.
In the OP’s alternative scenarios, I think I would feel the worst about having had a higher income and having that reduced, because the effect would be potentially much greater, net, than the other two. For that reason, I don’t think this one is a valid comparison.
Of the other two, personally I would feel worse if I had had several thousand dollars and had lost it, than if I had found out that I had never had it after all. I’m not sure why, just something in my personal philosophy I guess. Let’s say in the first case I lost the money through a foolish wager, then I would severely blame myself. Or if the money was stolen from me in some way, then I would severely blame the thief. In the second case I would still blame myself but it would be more of an “oh, oops” moment.
Dreams can be much bigger than reality so the shock of a shattered dream could be much worse. It should be easier to get over though, new dreams aren’t that difficult to create, restoring material loss can take a long time and a lot of hard work, and perhaps never get done in a lifetime.
Well, in that case I would say they had a “missed opportunity loss”. Had they invested the same money with someone else, they would have seen some sort of return. So, in addition to getting the original investment back, I would also want a premium based on broad market returns over the same period. (Obviously, the market could have gone down over the same period. In that case I would not ask for a return that matched the market - I’m not stoopid!)