For all the talk about how political and media bias distort people’s perceptions of current events, another kind of bias may have an even greater impact: recency bias. Put simply, recency bias is the practice of giving disproportionate weight to the events of the recent past when formulating expectations and plans.
For instance, starting in 2008 the U.S. Federal Reserve increased the money supply sharply, and the rate of price inflation did not rise correspondingly. One result of this recent episode of expansionary monetary policy is that America became less vigilant about inflation — and it is now living with the consequences.
Another example: For decades, antisemitism seemed to be declining in American life. Many people assumed that this trend would continue. Yet violent attacks on synagogues and rabbis, one measure of anti-Semitic sentiment, have lately been on the rise.
