How sure are you?: A Guide to Better Decision Making

It seems like everyone believes they can fix the world’s problems today. And anyone who disagrees with them is ignorant or malicious. How did we become so divisive?

Much of this strife stems from our natural tendency to over-simplify complicated ideas and concepts. Life isn’t black and white, but unfortunately, resources like social media further perpetuate this tendency. By favouring speed over accuracy and sound bites over distilled thoughts, the result is often assumptions and overconfidence.

So, how do we overcome this over-simplicity and overconfidence? It’s something I’ve been thinking about for a while, and have come up with a few suggestions:

• Remember humans are wired for simplistic thinking
• Embrace reality and deal with it
• Socialize broadly
• Diversify your sources
• Keep your identity small
• Think in confidence intervals and update your opinions

Humans are wired for simplistic thinking

Survival throughout the ages often required quick decisions. A rustle in the bush could just be the wind, but it could also be a predator. Best not to dither and find out the hard way.

In his book, Thinking, Fast and Slow, Daniel Kahneman outlines two thinking systems: System 1 and System 2. System 1 is quick and automatic. It’s how we solve simple problems like 1 + 1, and tie our shoes. System 2, on the other hand, is employed to answer more intractable problems, like 24x36. It’s how we work through complex issues.

Our brains optimize for efficiency. With thousands of daily tasks, most problems require quick resolutions. Although helpful, this can cause complex problems to be confused for basic ones, where System 1 is subconsciously enlisted when System 2 is more appropriate.

There are times for quick decisions and times to take time to think. Knowing the difference between the two is important.

Embrace reality and deal with it

Most people are more concerned with being right than finding out what is right. This often leads to confirmation bias, where we search for proof to support our beliefs and the dismissal of evidence that conflicts with them. As obvious as it is when someone else does it, we often remain blind to when we do the same.

In his book Principles, Ray Dalio writes, “Successful people - those who change the world - accept that life is the way it really is (reality) but are determined to figure out how to best navigate the world (deal with it), to serve their lives and purposes. In other words, they either try to change things or work around the system the best way they know how.”

Neville Chamberlain served as British prime minister from 1937-1940. For several years he deluded himself into believing Hitler’s acts of aggression would be limited. Why was Chamberlain unable to see Hitler for what he was? Some believe Britain’s poor financial situation swayed him towards passivity. Others noted his faith that negotiating with Hitler like a businessman would secure a satisfactory deal. Regardless, he was either unable or unwilling to effectively judge the situation at hand. Had he accepted reality and dealt with it, it’s possible millions of lives would have been spared.        

Accepting and dealing with reality can be unpleasant, especially when it threatens a long-held belief. But looking the other way not only leads to inferior results, it can also sometimes create catastrophic ones.

Socialize broadly and intelligently

Someone born in a Christian country, raised in a Christian town and brought up by Christian parents is unlikely to choose Islam as their religion. Environment matters.

This doesn’t just apply to religious beliefs. Engineers have a unique way of looking at the world. So do social workers and police officers. Considering one-third of your day is often spent with people in your own profession, a clustering of perspectives can further reinforce natural and vocational tendencies. To counterbalance this environment, ensuring you have a diverse social group outside of work can expose you to different ideas. It can be uncomfortable, but it can also protect against tunnel vision and groupthink.

For an example of social diversification, look no further than Warren Buffett. Buffett is among the greatest investors of all time. However, many, including himself, believe much of his success resulted from partnering with the equally brilliant Charlie Munger, who began his career as a lawyer. By providing different perspectives and challenging Buffett’s beliefs, Munger encouraged Buffett to modify his investment philosophy and entertain opportunities he might otherwise have ignored.

The people you spend time with not only influence the nature of your thoughts, but also the quality of them. As Jim Rohn was fond of saying, “You are the average of the five people you spend the most time with.” So choose those you spend time with wisely.

Diversify your sources

I once had a friend who was passionate about politics. She was smart and prided herself on her thorough research. However, her research was a solid diet of Rush Limbaugh, Fox News, and other conservative sources.

While there is nothing wrong with exposure to these sources, her sole reliance on them stunted her intellectually. She willingly trapped herself in an echo chamber.

While this example may seem extreme, given what happens on social media every day, my friend probably wasn’t an outlier.

Chapter 8 (Idea Labs and Echo Chambers) of Tim Urban’s brilliant blog series, The Story of Us, delves into the dangers of echo chambers:

At the individual level, they repress free speech with a minefield of taboos, hinder learning and growth, and foster delusional arrogance. As mini-nations, they’re more like old school dictatorships than constitutional democracies, and they pull their citizens downward on the Psych Spectrum.

At the community level, Echo Chambers are more than the sum of their parts only in raw power. Intellectually, the Echo Chamber giant is less capable of finding truth than a single independent thinker.

And at the national and pan-national level, we can thank Echo Chamber coalitions for fun parts of our history like war, oppression, bigotry, and genocide. The grand, species-wide Idea Lab is why we’ve made progress. Giant Echo Chambers are why that progress hasn’t happened a lot faster.

All of us are living in at least a few Echo Chambers right now. To discover the Echo Chambers in your life, think about the different communities you’re a part of, and ask, “Is there a sacred baby in the room when I’m with those people? Are there ideas or viewpoints that are socially off-limits?”

As Urban shows, we all belong to one echo chamber or another. It’s important to recognize this, diversify our information sources, and be open-minded.

If we fail to do so, there are many ways - Internet algorithms, natural biases, social networks, and more - to be trapped by the gravitational pull of an echo chamber.

Keep your identity small

When you identify as something, you are picking a side. In considering yourself a conservative or Canadian, or, heaven forbid, a Buffalo Bills fan, your perspective changes. You’ll side with your “identity” more often. It’s called bias, and it muddles your thinking.

As Paul Graham reflects in his essay, “Keep Your Identity Small”:

“When people say a discussion has degenerated into a religious war, what they really mean is that it has started to be driven mostly by people's identities....For example, a discussion about a battle that included citizens of one or more of the countries involved would probably degenerate into a political argument. But a discussion today about a battle that took place in the Bronze Age probably wouldn't. No one would know what side to be on...If people can't think clearly about anything that has become part of their identity, then all other things being equal, the best plan is to let as few things into your identity as possible.”

While we are naturally inclined to identify with labels or groups, it’s important to minimize this tendency. The smaller our identity, the easier it will be to remain objective.

Think in confidence intervals and update your opinions

Annie Duke, a former poker champion, thrived in a sport where decisions are made with limited information. In explaining her thinking process, she said:

“What makes a decision great is not that it has a great outcome. A great decision is the result of a good process, and that process must include an attempt to accurately represent our own state of knowledge. That state of knowledge, in turn, is some variation of ‘I’m not sure.’”

As Duke understands, there are few times when someone should or can be 100 per cent confident. In a conversation with Farnam Street, she explained that to improve her decision-making, she trained herself to think in confidence intervals. She applied this strategy to everything from poker to everyday events. Afterwards, she would compare how often she was correct in her degree of confidence. When the two aligned, it confirmed her progress. Poor predictions, however, pointed towards a process in need of refinement. Rinse, wash, repeat.

Thinking in confidence intervals has two benefits: You learn how often you are correct relative to your degree of confidence, and your ego is less attached to an opinion or belief. For example, if you are sure raising the minimum wage will cost jobs, you’re apt to make excuses if employment rises after mandated income increases. However, if you’re 80 per cent sure of that opinion, by default, you’re also 20 per cent skeptical of it. This makes it easier to update your opinion when coming across new information. It’s also a fun game to play.

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A lot of the information we receive today is uneven - especially if it’s through websites, channels or platforms that rely on algorithms to customize content. Given our natural propensity for simplistic thinking, it’s important for us to be intentional regarding where and how we source our information.

While having a process to filter information in order to form rational opinions and decisions will make you wiser, the real benefit is that it will help you live a better life!