The quality of your decisions today will determine the quality of your life tomorrow.
Our decisions influence how well we make use of our talents, efforts and resources.
Better decision-making improves our capability to solve bigger, more complex problems — quickly
and reliably.
In this increasingly complex, disruptive and uncertain period of human history — the
best decision makers will innovate, succeed and leave the rest behind.
We should also be able to rely on the smartest people to make good decisions and provide
the best answers to complex problems.
After all, they are ‘experts.’
But, we know this isn’t always true.
Recent political events and elections across the world — especially in Europe and America
— have highlighted how inaccurate expert predictions and decisions can be.
Why do smart people make stupid decisions?
And, how can you avoid making bad decisions?
Let’s dive in.
In the most comprehensive study to date on expert predictions, Professor at the University
of Pennsylvania , Phillip Tetlock, gathered a large group of experts to analyse their
ability to predict future events.
During this study, Tetlock asked the experts to predict the probability of various events
occurring i.e.
Would the dotcom bubble burst?
And then, he would analyse how their thought processes came to these conclusions.
After 20 years of collecting and studying 82,361 forecasts from experts, Tetlock came
to a comical conclusion.
According to Tetlock, the average expert…
“Is not much better at predicting the future than a dart-throwing chimpanzee.”
Tetlock suggested that most of these experts would have made better predictions if they
had made random guesses.
Fortunately, there were a few experts who made good predictions.
These experts had a different approach to decision-making, thinking and solving problems.
Instead of falling prey to a ‘know it all’ attitude, they made modest predictions.
But, only after analysing a wide range of external data and information.
They were comfortable with uncertainty and complexity.
They were open to reviewing ideas that challenged their beliefs and assumptions.
In contrast, the experts who had the most knowledge in this study were on average, the
least reliable.
Even after reviewing the results, they struggled to admit they were wrong.
They were overconfident and held to their beliefs, regardless of any contradictory valid
evidence.
There’s a scientific explanation for this type of bias that we all struggle with.
But, before we discuss this, I have a quick question and challenge for you to illustrate
this point.
A father and son are in a car crash and are rushed to the hospital.
The father dies.
The boy is taken to the operating room and the surgeon says, “I can’t operate on
this boy, because he’s my son.”
Question: How is this possible?
I’ll reveal the answer to this question shortly.
In the meantime, let’s get back to discussing why smart people make stupid decisions.
There are several mental errors that affect our decision-making, but by far the most powerful
is “confirmation bias.”
Confirmation bias refers to our tendency to look for and favour evidence that confirms
our pre-existing beliefs, whilst simultaneously ignoring or devaluing information that contradicts
our beliefs.
There’s a reason for this.
We experience discomfort whenever we face ideas or information in conflict with our
current beliefs.
To relieve this tension and discomfort, we seek to re-confirm our existing beliefs — even
if they may still be wrong.
Don’t believe this could happen to you?
Let’s get back to the question I asked you earlier.
What was your answer?
If you struggled to think of any reasonable answer, don’t beat yourself up.
Confirmation bias affected your ability to uncover the correct answer.
And, in case you’re wondering, the correct answer is simple — the surgeon is the boy’s
mother.
In hindsight this is obvious, but it’s possible that you unconsciously overlooked the possibility
of a female surgeon.
Instead, you searched for solutions to the problem that were wrong, but maintained your
beliefs of the surgeon being male.
I’m sure you can now see how confirmation bias affects our decision-making abilities
and may lead us to making stupid mistakes.
It restricts the information we choose in making our decisions.
It leads to a bias in interpreting this information and distorts our memory.
This is why smart people make stupid decisions.
The more knowledge you have, the more confirmation bias you will struggle with and the more likely
you’ll reject ideas that differ from your own.
Once we become close-minded, we are prone to making bad decisions, even more so than
a person with much less knowledge than us.
Now that we’ve discussed this, how can you best combat your confirmation biases and avoid
making bad decisions?
Here are two simple steps to help you avoid making bad decisions…
Step 1: Practice Self-Awareness You can’t change what you don’t know exists.
This is why being aware of your own limitations in making rational decisions is so important.
Studies have shown that self-awareness exercises that encourage you to slow down and relax
could also help you to improve your creativity and decision-making.
Deliberately focusing your attention on what is important is a skill that develops with
practice and patience.
It’s simple and powerful.
Step 2: Disprove yourself It takes courage to admit you’re wrong after
the fact.
It takes even more courage to disprove and challenge your own assumptions before the
decision.
Next time you’re faced with a problem or challenge, seek out all possible ideas that
may contradict your current beliefs.
This will prepare you to make a well-rounded good decision, instead of an irrational bad
decision based solely on your beliefs and emotions.
Another variation of this type of (first principles) thinking has also been used to create innovative,
breakthrough ideas.
Across history, great thinkers including the likes of philosopher, Aristotle and Billionaire
Entrepreneur, Elon Musk, credit this for contributing to their success.
Smart people make stupid decisions because they struggle with the same challenge that
we all do — overconfidence.
Overconfidence causes us to be close minded towards different ideas than ours.
It makes us slow and rigid in adapting to change.
It prevents us from solving complex problems and dealing with uncertainty with confidence.
And, worst of all, it leaves us vulnerable to making bad decisions that could cost money,
time and possibly, lives.
Next time you feel absolutely certain about a decision, remember that you may be wrong.
Stay open-minded to the possibility that there is a lot more information that you don’t
know yet.
After all, the wisest person in a room listens more than the others because they know there’s
still more knowledge to learn.