Why We Make Bad Decisions
Humans make bad decisions because we are inherently terrible at objectively assessing risks and rewards.4 And as much as I’d love to tell you that we can overcome these psychological flaws with a really cute gimmick or three-step technique, the fact is that these flaws seem to be permanent features of how our minds work. We can’t escape them. The best we can do is gain an awareness of them and manage them appropriately.
I could write dozens of articles about all of the heuristics and biases that cause us to view our decisions inaccurately, but for the sake of brevity (and my sanity), I’ll lump our psychological failures into three categories and then summarize them.5
Those categories are:
- The influence of our emotions
- Our poor perception of time
- The seduction of social status
Let’s take them one by one.
1. Our Emotions Derail Our Decision-Making
Think back to some of the stupidest decisions you’ve ever made. Chances are, most of those decisions were motivated by you being an emotional wreck.
Maybe you were angry and in a fit of rage, smashed your keyboard against your desk, causing you to get fired. Maybe you were so sad from your break up that you drank yourself into a stupor, blacked out, drove home and woke up in a jail cell. Maybe you were so anxious that you passed up on a huge career opportunity that you’ve always wanted.
Whatever it is, we’ve all been there. Our emotions hijack our sense of reality, and suddenly something that is clearly a good decision feels like a horribly scary, icky bad decision. Or, what is obviously a terrible idea draws us in with an irresistible force, until we wake up in a pool of our own vomit wondering what happened.6
The problem is that our emotions operate separately from our thoughts. One way to think about it is that we all possess two brains, a Thinking Brain and a Feeling Brain. Our Thinking Brain is our higher-level human brain—it’s the intelligent, thoughtful, patient part of ourselves. But our Feeling Brain is our animalistic side—it’s our cravings, our urges, our desires.
Sadly, the Feeling Brain is much stronger than the Thinking Brain. In fact, our Feeling Brains tend to bully our Thinking Brains into submission.
Our Thinking Brains are like, “Oh hey, there’s that person we’re attracted to, it’s a great opportunity, we should go talk to them.” And our Feeling Brain starts screaming things like, “FEAR! SHAME! LOSER! YOU’RE A PIECE OF SHIT! THEY WILL NEVER LOVE YOU! NOBODY WILL EVER LOVE YOU!” until our Thinking Brain is cowering in a corner, shaking, and capitulates, “Okay, okay, okay, you’re right, they probably wouldn’t like us anyway.”
What is, on paper, a proposition to risk $1 to make $50—talking to them takes all of 10 seconds and you literally lose nothing by trying—starts to feel like an incredibly risky and terrifying proposition. So, we sit there, sipping our warm beer, watching the love of our lives quietly walk out of the room, wondering for the next week what could have been.
But how do we overcome this? How do we develop an ability to manage our emotions? How do we gain a little bit of separation between what we feel and how we act?
Well, it’s hard. And I don’t know if you ever completely master it. The first step is to develop greater self-awareness—to see your emotions as they happen.7 Many people don’t even realize they’re sad or mad until long after the fact, thus causing them to make poor decisions without knowing.
Once you’ve developed a bit of self-awareness, the next step is to develop a habit of reasoning by working through important decisions, either out loud or on paper, before saying or doing something drastic. I’ll talk a bit more about these ideas in a section below, but this can mean journaling, talking to someone you trust, or even running your decisions by a coach or therapist before committing to them.
2. Our Poor Perception of Time Derails Our Decision-Making
There’s an interesting economics experiment where if you offer people $100 today or $150 a year from now, most people will take the $100 today.8
In economics, this is known as “temporal discounting”—we “discount” the value of having something far off in the future compared to having something now.
In psychology, it’s often referred to as the “present bias,” and you see it crop up in all sorts of other areas in life.9 We’d rather eat that double pepperoni pizza every Saturday night than think about the weight we’ll gain a year from now. We’d rather be right in an argument than think about how we might be affecting a friendship a week, a month, or a year into the future. We’d rather have fun tonight than think about how we’re going to feel at work tomorrow.
We tend to overestimate the value of something now and underestimate the value of something later. This is why people are terrible at saving money. This is why we procrastinate on important tasks. This is why we put off having necessary but difficult conversations.
Time messes us up in other ways too. Think about this: take a penny and put it on the first square of a chess board. Now put two pennies on the next. Now put four on the next. Continue doubling the pennies for all 64 squares on the board. How much money is on the last square?
If you said $92.2 QUADRILLION dollars, you were right.
But let’s be honest, you didn’t say that. You probably said some generic, large number, like $5 million or something, thinking you were being clever and guessing really high. Meanwhile, you were only off by about nine zeroes.
Our minds are poor at compounding things over time. We overestimate the pain of doing something for 30 minutes today, without realizing the compounding effects it can have if we fail to do it every day for months and months on end.
For example, let’s pretend there’s some imaginary skill that if you practiced for 30 minutes a day, that you’d get 1% better each day for the next year. Now, let’s say you actually did practice for 30 minutes per day—how much better would you be at the end of the year?
Instinctively, you probably think, “Well, 365 days in a year, so I don’t know, like 400%?” If you’re somewhat familiar with compounding functions, you might know to guess extra high, so you say something like 1,000% better.
But the real answer? You’d be 3,778%—or almost 38 times—better than you were at the start of the year.
Again, our mind doesn’t think like that. Instead, we think, “Oh, what’s the big deal if I miss one workout? Not going to kill me.” Then we proceed to say that once or twice a week for years and years and years on end. And because we don’t think exponentially—our intuition thinks linearly—we vastly underestimate how much we’re actually giving up.
Because here’s how much you improve if you only practice that skill every other day for a year: 611%.
3,778% improvement vs 611% improvement. That’s 6x the difference in results, for only 2x the effort. That’s the difference between being an expert at something and being merely “good” at it. Run that out over a few years and that’s the difference between being a professional and an amateur. Not a sprint of 12-hour days, but a slow, steady marathon of 30 minutes per day, year after year.
None of us think about this shit when we’re going about our lives. That’s because it’s really, really hard. Our brains don’t think exponentially. It strikes us as counterintuitive.
We tend to vastly overestimate the short-term benefits of taking a day off, or skipping practice or bailing on one of our commitments. Missing one workout isn’t a big deal!
And you’re right, it really isn’t that big of a deal. But we don’t consider the fact that, “just one workout isn’t a big deal,” when repeated every week or even every other week for a couple of years, can have a drastic effect on our results.
3. Our Perceptions Are Easily Influenced by Status
You may be wondering why our brains function like this. It’s almost as though we’re handicapped in some way—being at the mercy of our emotions, struggling to properly value things in the future. But the truth is that for most of human evolution, these were not the handicaps but the benefits of our minds.
Fifty thousand years ago, out on the savannah, you couldn’t consider whether something would be more valuable a year from now or not. No, you had to kill a big fucking animal or be killed by that big fucking animal. That’s all that mattered. You needed to be overly concerned with the present.
Similarly, we inherit a retinue of biases and prejudices around social status as well. Why? Because we’re a bunch of fucking monkeys with fancy colorful screens in front of us. That’s why.10
Despite thousands of years of our best efforts, humans self-organize into status hierarchies with the few reaping the most resources and opportunities at the top… and everyone else scrounging for the leftovers.
Now, I know what you’re saying, “I don’t give a fuck about no status hierarchies. I am my own man/woman. I do what I want. I will not be swayed by silly social markers of prestige and class.”
Well, that’s nice… but you’re wrong.
The fact is that we are all subconsciously affected by what we perceive as valuable and socially desirable in others. It’s automatic. It colors our perceptions. It skews our emotions. When in the presence of extreme beauty, wealth or power, we all become a little bit dumber, a little bit more passive, and a lot more insecure.11
I noticed this the first couple of times I met Will Smith. I realized that, without even meaning to, I laughed harder at his jokes, paid more attention to his stories, watched if he got up and moved around the room. It was totally involuntary. And I wasn’t the only one. When he’s in a room, it’s like a vacuum sucking up all of the attention in it. Knowing that I was going to work with him on a book, I had to start consciously checking myself to make sure I wasn’t agreeing to something stupid just because he was famous. I had to question myself around him.
We tend to give way too much credit to people we perceive to have social status. In psychology, this is known as “The Halo Effect.”12 It’s our tendency to assume that physically attractive people are smarter or nicer than they actually are. That successful people are more interesting than they actually are. That powerful people are funnier or more charismatic than they actually are.
As with most of our cognitive biases, marketers take advantage of this to make money. Think about all of the celebrities doing car commercials and shilling worthless supplements and beauty products. Think about how former presidents and heads of state can get paid half a million dollars to simply be in a room. Think about how you’ve convinced yourself that you like different clothes, different food, different music, because somebody you really respect or admire likes them. We all do it. It’s impossible not to.
Like I said, we’re fucking monkeys with screens.
The best we can do is simply be aware of how we are influenced by our perceptions of status and modify our reasoning accordingly.13 Notice how you react around people you deem particularly successful and admirable. Notice how much more agreeable you become. Notice how you tend to make positive assumptions about them, even though you don’t necessarily know whether they are true or not.
Then, question these things. Ask yourself, “If some random person I know said this, would I react the same way?” And if you’re honest with yourself, you’ll find that often the answer is “no.”
It sucks to admit it. But welcome to being human.
Our biases around people of status and prestige are important because we’re likely to overvalue things related to them and undervalue things not related to them. As someone who spent much of high school and college getting drunk and high in desperate hopes of impressing the people around me, I can tell you: poor decisions were made.
