That's a very important illusion--this illusion of validity. In many different forms, it has big implications.... One of the versions of it is called overconfidence: People assign much higher probability to the truth of their opinions than is warranted.... [Another example is people] exaggerate their confidence in their plans--something we call the planning fallacy.... The existence of the plan tends to induce overconfidence.

You wrote a paper recently on whether people are happier in California. Are they?
The main observation we have is that, by and large, people do tend to adapt to their circumstances so that their happiness level tends to revert, if not exactly to the same level, then to a similar level. But people don't really know that. We ran a study comparing happiness in California to the Midwest. One of the results is that both sets of people thought the people in California were happier. One reason is that people focus on climate. If you're in Chicago and you're thinking about moving to Los Angeles, the issue of climate looms large. The larger lesson is that nothing that you're thinking about is as important as it seems when you're thinking about it.

Daniel Kahneman quoted in "Nobel Laureate Debunks Economic Theory"