Making tough decisions can paralyze even the most pragmatic people. Faced with too many options, and with no idea what the future holds, it often feels best just to ignore the situation. On top of that, humans are full of blind spots and biases, and future outcomes can be too bewilderingly complex to anticipate.
Thankfully, there are plenty of techniques that can help us work around this hard-wired hindrance highlighted in the book, Farsighted: How We Make the Decisions That Matter the Most, by Steven Johnson . They can be applied in everyday situations or even monumental decisions that need a lot of time to process. Depending on your disposition, better decision-making can be as precise as a mathematical model or as simple as mulling it over.
In the summer of 1776, the Revolutionary War in North America was in full swing. The Americans, led by George Washington, sought to break free from the shackles of British rule. But the British refused to let go. As they massed their navy with New York in their sights, Washington was left in a quandary. Although it was clear that an attack was coming, it was less clear how the British would launch it.
This lesson from history demonstrates just how complex decision-making in real-life situations can be. Washington was faced with what’s known as a full-spectrum decision. That means numerous factors had to be taken into account for the right decision to be made.
In the battle for New York, Washington had a lot to think about. Where were there landing sites for British ships on the New York coast? What effect would the strong currents of the East River have in moving his own troops from New York to Brooklyn?
Washington also had to consider the damage British cannons could do against New York’s fortifications and the potential risk of life for his own soldiers in pitched battle. He even had to consider the internal American politics in the Continental Congress, which demanded that he stand firm against the British.
Needless to say, Washington had a tough time deciding what to do, and eventually, he found himself making the wrong decision. He actually erred in the very first one he made. He shouldn’t even have tried to defend New York at all. Since the superior British outnumbered his forces, it would have been much easier to retreat inland. But this mistake is not unique to Washington – we are often prone to forget our blind spots when making decisions.
There’s a name for this common error in human reasoning. It’s known as loss aversion. Studies repeatedly show it to be a characteristic innate to humans. We prefer to resist losses than to seek gains, even when it’d be better in the long run to do the opposite. Washington, however, was smart enough not to stick it out until his troops were completely crushed. Once his forces began to lose, he quickly signaled the retreat. He was still a born leader, and the Revolutionary War would eventually be won, despite the many difficult decisions along the way.
As a general rule, governments and corporations function as hierarchies; the bosses make the important decisions. Unfortunately, that’s often not how the best decisions are made. In reality, complex decisions need to be supported by many points of view.
The water department for the Greater Vancouver area is a good example here. Faced with population growth, they needed to expand the freshwater resources available. This called for some complex decision-making. Resource options included using three existing reservoirs, building a pipeline to far-off lakes or drilling well fields alongside a nearby river.
To make the right decision, the department took numerous perspectives into consideration. That meant asking people living near the potential sources, indigenous tribes with sacred connections to the waters, environmental organizations, as well as health and water-security specialists.
A solution was found that satisfied all – a mile long, earthquake-secure pipeline built to draw water from a dam on the Coquitlam River. This sort of broad approach to problem-solving leads to better decisions. That’s because the possible advantages and disadvantages of each solution are clarified as part of the process. In short, a diversity of perspectives ensures better decision-making.
This is also backed up by a series of studies conducted by psychologist Samuel Sommer around 2010. He created mock trials to test juries’ decision-making processes. The results showed that racially mixed juries were overwhelmingly better at doing their job than white-only juries. Diverse juries spotted more interpretations of evidence submitted, were more accurate in recalling the facts of the case and had longer and more forensic deliberations. On the other hand, ethnically homogenous groups made decisions too hastily and did so without questioning biased assumptions. Scientists have extrapolated from this that the same is probably true of homogeneity in general, whether that be of gender or political orientation. However, further studies are needed to substantiate that view.
Decision-making would be pretty easy if we already knew what the future holds. If you were aware of where real estate prices were going to skyrocket in twenty years, it would be a no-brainer to buy property there. Unfortunately, humans are dreadful at guessing the future.
The political scientist Philip Tetlock demonstrated this more than 20 years ago in his “forecasting tournaments.” In these, participants competed against others to predict what the future held for subjects like the environment or gender relations. The questions posited looked at long-term political and economic developments – would a member of the European Union leave it within the decade, or would the US experience an economic downturn in the next five years?
Tetlock collected 28,000 predictions from these forecasting tournaments and then waited to find out their accuracy. At the same time, he compared those predictions with two very simple algorithmic predictions. One algorithm forecasted no change, while the other indicated that change would continue at the current rate. With grim inevitability, human predictions were almost always less accurate than the standard forecast predicting the continuation of current trends.
So much for the average Joe. But what about experts? Well, it turned out that they were particularly poor at predicting the future. Incredibly, experts in economics and politics did worse in Tetlock’s experiment than people with no specialized knowledge!
That might seem surprising, but non-experts did better because they took a broad view, taking various factors into account. This is a characteristic found among the best forecasters of the future. When asked about the health of the economy in five years, generalists considered market trends, but also technological innovation, education, farming practices, population growth and more. Experts, on the other hand, just couldn’t break out of their own fields. Their specialist, personal opinions meant they made wildly inaccurate predictions. Economists, for instance, were either convinced that capitalism would crumble or that growth would reach unprecedented levels.
Check out my related post: Do you worry about what people think about you?