I almost hit a deer this summer. It happened one morning while I was driving my motorcycle down to Salt Lake City from my home in Park City, Utah. It was early and still dark, so the deer appeared to come from out of nowhere. Luckily, for both me and the deer, my reflexes didn’t fail me, and we both went on our way.
That moment in time has become a touch point in my brain. Now, every time I drive by that particular spot on that particular road when it’s dark, I expect a deer to run across the road. It’s like a red warning light is going off in my brain.
But there’s a big hole in my logic. Deer cross the road at many other spots between Salt Lake City and Park City. Even though I think my experience with one deer is telling me something specific, it’s actually not.
Given all the possible factors — time, location, actual deer in the area — it’s highly improbable that I’ll see another deer at that exact same spot in the road. But the way we’re wired can lead us to make certain assumptions that aren’t based on fact.
Daniel Kahneman describes it this way in his book “Thinking, Fast and Slow”: “We are prone to exaggerate the consistency and coherence of what we see.” A few lines later he explains why: “We are pattern seekers, believers in a coherent world, in which regularities … appear not by accident but as a result of mechanical causality or of someone’s intention.”
Life is more random than we care to admit. I suspect it’s because randomness implies uncertainty and a lack of control. But when we try to assign meaning to one or two events, it can blind us to what’s really happening.
For instance, think back to 2008-9. At the time, it was incredibly painful for some people to own a home. If they weren’t upside down on their mortgage, the chances were good that the home value itself was significantly lower than in previous years.
Now, if you were one of those homeowners, it would be really easy to say, “I never want to own a home again.” But if that decision is based solely on that one, albeit painful, experience, it may be a decision based on a cognitive bias.
Yes, owning a home isn’t the best option for everyone. Making big financial decisions like buying a home, however, requires more than one data point, like the pain of owning in 2008-9 or a statistic that says everyone should now rent.
Making big financial decisions based on one or two events that may or may not be related is a horrible strategy. I say this as a person who now thinks twice about owning a home and looks for deer at the same spot in the road. But how can we determine if we’re acting based on bias or fact?
First, it helps to acknowledge that what we think we know may be biased. Recognizing that a bias exists can help us take the next step: questioning what we think we know. Does our desire to act come from one moment in time or a moment combined with other objective data? Second, we need to treat certain numbers, like statistics, with caution.
Statistics can be like that deer I saw on the road. We see a number and project out all sorts of consequences from it. The reality is that even statisticians don’t always know what the numbers mean. I do understand why it’s so tempting to make decisions based solely on numbers, however, even if we’re relying on a small sample size.
Numbers appear to be hard facts. Yet it seems to me that it’s very easy for us to take them out of context. As a result, we don’t always understand how a particular number relates to our individual situations (if it does at all).
Finally, we need to give ourselves a break. There’s a ton of pressure for us to act when these single events happen. If we don’t act, then there’s the fear we’ve made a mistake, that we didn’t see the signs, so we deserve it if bad things happen to us as a result.
Life is random, and at times, we’ll have to act with limited information. That said, we shouldn’t cheat ourselves out of the opportunity to take advantage of all the information we do have. And it’s rare that one moment in time will give us enough information to make the big decisions.
This commentary appeared October 28 on NYTimes.com.
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