How To Make Better Decisions
Every day, you make thousands of decisions. Over time, those decisions end up shaping the course of your life.
Here’s the problem: you’re not a rational person. No one is.
A substantial body of research has found that human beings make irrational decisions, thanks to a number of persistent cognitive biases that shape the way we evaluate our options and make choices. Unfortunately, because of the way we are wired, it’s hard to make good decisions that make us happy and easy to make bad decisions that make us unhappy.
Here is the good news: there is a specific set of tools, backed by science, that you can use to make better choices every day.
I will break these tools into two groups:
Stop making stupid decisions by avoiding cognitive biases
Make wiser decisions using mental models
How To Stop Making Stupid Decisions
The legendary investor Charlie Munger, vice chairman of Berkshire Hathaway, once said:
“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”
Our cognitive biases are what lead to stupid decisions. These biases are like automatic mental shortcuts that your brain has developed in order to make it easier to cope in daily life.
The leading researcher in the field, Dr. Daniel Kahneman, calls this automatic approach “System 1 thinking.” System 1 is a way of thinking that is nonconscious, immediate, and highly susceptible to the following thinking traps. In order to make better decisions, you need to use what Kahneman calls “System 2 thinking".” System 2 is a way of thinking that uses greater effort and deliberation.
There are common traps in your decision-making process that lead to unfortunate outcomes. Learn to avoid these and you will be able to make better choices.
Trap #1: Confirmation Bias
The confirmation bias makes you pay more attention to information that supports what you want to do.
To overcome it, ask yourself: What information would support choosing the opposite way I’m currently leaning?
Trap #2: Selection Bias
The selection bias is when you are choosing something, you focus on the positive attributes, but when we are rejecting an option, we consider the negative attributes.
If you are choosing something, ask yourself: What are the negative attributes of this choice?
If you are rejecting something, ask yourself: What are the positive attributes of this choice?
Trap #3: The Distance Bias
When we imagine the future, we tend to picture a version of it that is smooth and easy and carefree. If we’re imagining moving to a new city, we invariably imagine a beautiful day enjoying its’ many delights - not a rainy day, waiting for a cab, in the middle of running errands.
Ask yourself: What does a typical or less than ideal day-to-day of this decision involve?
Trap #4: The Easiness Bias
While most of have a very good idea of what makes us happy, or what might make us happy if we were to do it, we often don’t do it in favor of things that are easier! Many studies have found that there is a gap that exists between what what we know will energize us and how we actually spend our time. For some reason, we sometimes can’t seem to motivate ourselves to do what we know will make us happy.
We fall into the easiness trap when we make a decision based upon not what will make us truly happy, but what will be the easiest for us, cause the least amount of friction, or require the least amount of effort.
Ask yourself: Am I making this choice based upon how easy it is?
Trap #5: The Emotion Bias
Emotions are powerful, and they can be very helpful in making decisions when we have deep expertise in the area of our decision. Sometimes, though, they can seriously lead us astray - when we are either incredibly happy about something or incredibly upset about it, our emotions can become so powerful that they completely override the rational part of our brain and make it impossible to make good decisions.
Ever sent an email in a haze of anger which you then regretted? That’s the emotion trap at work. Ever said yes to something just because you were really happy? There it is again!
Ask yourself: on a scale of 1-10, how intense are my emotions right now? (If higher than a 3 or 4, take a break and revisit your decision later.)
Trap #6: The Accuracy Bias
We are bad at remembering how things in the past made us feel, which then leads to sub-optimal choices in the future.
For example, sometimes when I sit down to write, I really, really, really don’t want to. Despite having written for years and years, and knowing that it is pretty much a guaranteed route to happiness, it’s still somehow hard for me to remember that.
To counter this, we have to capture data that proves to us how we will feel once we just make a tiny movement. Write the things down that make you happy. Are they the things you tend to put off? What decisions have you made to avoid these things, when in fact you might want to move towards them?
Ask yourself: Will this decision help me to do more of the things that really do make me happy?
How To Make Wiser Decisions With Mental Models
Mental models are the way we think about and understand the world around us.
We get used to seeing the world through one specific lens, but if we consciously try out a new way of thinking, we can gain insights or expand our understanding. Try these models on.
Mental Model #1: Give advice to a friend
Take the ‘outsider perspective’ by asking yourself what advice you would give to a loved one who was in your situation. This helps us to have some distance from the decision, giving us an advantage in clarity and sometimes, an instant awareness of what the best choice is.
Mental Model #2: What won’t change?
When we contemplate a big decision, we usually focus our attention on specifically the parts of our life that will change. Ask yourself what won’t change. It will show you how much of your happiness is likely going to remain consistent. In my case, this question helped me to see that my relationship, my friendships, my dog, my apartment, and my hobbies (all things that are essential to my happiness) would stay the same, no matter what job I chose.
Mental Model #3: What you don’t do
We have a tendency to not want to walk away from things we’ve invested a ton of time into, be it a job, a relationship, a city, or a hobby.
On the other hand, though, we tend to regret the things we didn’t do, as we always wonder what would have happened. Think about what you will regret if you make the choice and what you will regret if you don’t make the choice.
Mental Model #4: Find a surrogate
We’re not special snowflakes: across the board, people tend to react very similarly to events and outcomes. Find someone who has gone through what you are contemplating - someone who moved from your city to that one, someone who moved from your company to that one - and dig into what their experience was like. Hearing their story, how does the decision feel to you? It’s more than likely that you will have a very similar experience to them. When studies ask people to use surrogates, they are remarkably accurate about predicting their own future feelings.
Mental Model #5: The big three
When we’re making decisions to optimize for happiness, we tend to overvalue an increase in money and an increase in relaxation time, and undervalue the impact of relationships. To counteract these, remind yourself of what I like to call the big three, the most important for experiencing consistent happiness and meaning:
Being engaged in what you are doing on a daily basis
Having positive relationships and spending time with the people you love
Having more control over your time and energy and what matters most to you
At A Certain Point, Let Go
It’s easy to get caught up in paralysis by analysis when making a big decision. At the end of the day, this is just an attempt to bring some sort of control to what is ultimately an uncontrollable situation. Uncertainty exists, and nothing in life is guaranteed. We can imagine that a particular outcome will be great, but we can never be certain. We might value things right now that won’t be as important to our future self. And, what’s more, choosing the ‘best’ option doesn’t mean that things will magically work out in the future, nor that choosing the ‘worse’ option mean that you are doomed to a life of unhappiness.
Yes, the decision is important. But it’s really what happens after the decision: the way you commit to it, immerse yourself in it, and think about it that matters so much more.
Here is one final piece of good news: we have something built in that helps us to cope no matter the outcome of a decision: once we’re committed to a path, we have a tendency to have a positive outlook and derive happiness from it, even if it was initially a less-than-desired outcome. Once we are stuck with a decision, we tend to see it as ours and to take ownership over it, which helps us to find the value, positives, and learning opportunities from the experience.
That’s the final tip: don’t linger on a decision too long. Set a date by which you will decide, commit to the decision, and then move forward.
