In this post we’ll discuss the problems that come with our famous pros and cons checklists to make decisions.
The ability to make both quick and correct decisions in life and in business in general is among the most important things that can literally make or break our attempts to succeed in any venture. A life full of wrong decisions tends to be a miserable one, in which the people of today as they are likely to attribute to bad luck, or some sort of curse. A life composed mostly of good decisions on the other hand, is more likely to be the complete opposite of the latter, in which also, the people of today as they are, are likely to attribute it to some sort of good luck or divine blessing. The truth is that our decisions are mostly what make our lives, and whatever we do today if looked closely can have an impact years, if not decades from now, starting what could be seen as some sort of ripple effect, or as we all know, a domino effect.
Warren Buffet and Charlie Munger are known for saying that in order to be successful one has to avoid making disastrous mistakes, while waiting patiently for a few almost guaranteed wins. The ones who are aware of how their choices can affect their lives in the near and farthest future, are more likely to look for ways to better make the decisions, and the one strategy most of us use for that is the famous cons and pros checklists.
The problems with pros and cons checklists for thinking
Pros and cons checklists can be of massive help in the decision-making process. The idea is simple. Make a list of the benefits of going to one day, and make another with the cons of taking the same direction. If the benefits outweigh the cons, then we chose the path, and if the opposite happens we don’t. Simple right? Not really. There are a some wrong things you’ve probably noticed in such an approach, and below are a few.
How do you weigh each item on the list?
We live in a world in which some things have more impact than others, and the same happens in a pros and cons list. Different items might have different impacts over your decisions, some are so extreme in that way, that attributing the same weigh to all items on the list could lead us to a bad representation of reality. The things that matter most should get more weigh, and the things that matter the least weigh. One simple solution of this problem is to just take an intuitive approach to the weigh attribution task. What we feel might have greater importance takes greater weigh, and so we do the same the other way around. But there is a rather more insidious problem that might make render this approach useless at best, and full-blown harmful at worst: our cognitive biases and hidden desires.
The problem with clear thinking is that it can seem so even when it isn’t. What we want to believe can easily become what is in our minds, making the truth from false truths even harder to distinguish. Oddly enough, even when we ask other people for their input we can still fail to get the right answer, since other people just like us also have their own motivations to bend the truth, and one of them being the plain old desire to avoid any conflicts with others. Thus, others might fail us to tell us the truth like it is even when it would prove beneficial to us in the long run.
This is why making an estimate of the weigh of each element in the list might not be as useful as we tend to think. How can we know whether the weigh we just gave to an element on the list isn’t the one it really deserved, but the one that would greatly get us to come to the conclusion secretly want to come with? This way, we’ll get to have the “proof” that our decision is the right one, even when the proof was fabricated. We’ll get to be justified on concluding on what we concluded or believe on what we believe.
The crazy thing about all of this is that when we’re done weighing each element on the list based on how much impact has on our decision, we are likely to not only believe on it as a sound judgment, but stick to those weights we came up with, all due to what Charlie Munger calls: consistency bias.
The problem of the unknown unknowns
“There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.”-Donald Rumsfeld
Here’s another problem: how can you tell you have an exhaustive list? When we make a list of pros and cons we make only a list of what we are aware of. What we don’t know exists, is thus left out. Those are the unknown unknowns.
In networking, computers are constantly trying to find the best routes to use to send their messages. This is easily done in a rather small network, but the problem arises when we change the subject to a large scale network of networks such as the internet. Having information about all the computers in the world can be a monumental task, so mechanisms are in place to allow for worldwide communication with only partial information of the network and its routes. This happens to work for the internet as you’re probably aware of, but it can be detrimental for our decision-making, specially if the decisions are of the life changing kind. Sometimes we can’t afford to make decisions based on limited information.
We’re generally not aware of all the pros and all the cons, and how they can affect your decision, but we somehow trick ourselves into believing that either we know all that matters, or that the list is exhaustive. The fact that there might be things we are not aware we are not aware, is disconcerting, since those are the very things that can have the greatest impact t in our decisions. Is Often the case where one thing alone can be a deal breaker even when there are many upsides, and so the same happens the other way around. We can never really know whether there are “deal breakers” or “deal makers” on the list if we’re not aware of them.
What if there are some pros or cons that could heavily impact our decision?
This is what we where talking about previously. The fact that there might be unknown unknowns in our list implies that there might also be unknown and unlisted “deal breakers” or “deal makers”. When we take this in consideration we are more likely to take longer thinking about our lists, and sometimes this is not ideal. Sometimes immediate decisions are what’s called for, but how can you do that if even when we think we are certain of the way to go, there is still the possibility that there might be something that would get us to vote the opposite way we overlooked? For this question there is hardly a satisfactory answer, since the problem is inherent in our brains. We can’t know what we don’t know beforehand. This can be said to be in part what goes on in divorces. Before marriage we only see what the person lets us see. This includes their perfections and imperfections. Those imperfections that if we where aware of beforehand would get us to vote for “no” are hidden, and so we make a life changing decision based on incomplete data. As we see from the divorced people, when they made the decision they had a false sense of certainty for their choice and judgment.
If we could somehow have access to all the information we need for our decision lists, we could be sure, if we so desired, to make the right decisions 100% of the time. But most of the time we can’t. This is not to say that there are no cases in which we can successfully list the all or at least the most important elements on our lists. There are cases in which we can do that, and whenever we make the right decisions, chances are that’s what happened. But how can we know it before we get the fruits of our decisions that we’ve made the right decisions in the first place?
What do you do when you get a tie?
Another problem with this kind of lists are ties. What if we get the same number of pros and cons? Here the logical solution is to weigh each element differently, but we’ve already been there haven’t we? What criteria to you use of such weighing? We can rely on our best judgment to know how to attribute the right weights, but the problem as we discussed already, is that we can never be completely sure that we are not under the influence of some insidious bias. Again, we might secretly want to make a specific choice, so we weigh some pros heavier than they should.
The second solution for the problem of ties is to weigh every option equally on the list. Let’s say we give to all the weigh of 1. The problem here is as we also discussed already, that chances are that different items on the list have different weights in real life. So, by giving everybody the same weigh as a way to avoid the under weighing or over weighing problem, we unintentionally fall in the same trap. Whatever item deserves lets say a weigh of 5 is under weighted and whatever item deserves a weigh of 0.5 is over weighted.
What can be better than a pros and cons list?
Let’s make this clear. Pros and cons lists are in general better than nothing. With such an approach we will at least be forced to 1) come up with reasons why we are voting for something, and 2) in case of ties, force ourselves to come up with reasons why we think the pros list has more points than the cons list. But there is something we can say.. more objective, and this approach is based on your big picture goal.
In the end of the day, the most important thing is the end goal. This, whatever it represents to you is what you work for, sacrifice and dream of. The big picture goal is what most people define as their dream. The one thing that once accomplished would make them the most satisfied. The big picture goal need not however, be only about dreams, we can also have smaller big picture goals, but whatever the scale, they are what should guide your decisions.
The simple approach which requires no listing of pros and cons that is also less likely to be rendered useless by our biases is just a simple question: “will doing this move me closer to further away from my big picture goal?”. If the decision has the power to move you closer than you take action, if it does the opposite you don’t. It’s that simple.
With this approach there is:
1) no room for ties, since you’ll only get a yes or no answer in the end.
2) No such thing as unknown unknowns causing us to not know whether there is some game changing item we are not aware of.
3) Reduced influence of our own biases on the final decision
The keyword here is reduced, not eliminated. The reason for this is that in the end of the day, our biases are inherent on the technology existing in our brains. They are a part of us. As Charlie Munger often said on Poor Charlie’s Amlanack, the best systems are the ones that either make cheating difficult or impossible to do. This approach does the first. We can’t remove our biases, so the next best thing is to reduce their influence. By building a list of pros and cons there is just more room for the influence of our biases, either in under weighing or over weighing the importance of specific items, or on our “forgetting” the existence of some pro or con point. All we have to do is to answer one question with a “yes” or a “no”.
Although even here our secretive desires can render the approach useless, this is not easily done since the question we ask ourselves is simple. There is little if any room for ambiguity.
It is all about knowledge and experience 😉
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