Making postmodern decisions with prehistoric brains

By Gary Raham
Nature Writer and Illustrator

We've all said it: "How could I have been so dumb?"

These days the particular act of dumbness may have involved stock market or mortgage decisions, but the complexity of our modern world – and the length of our modern lives – makes bad decision-making easy. In some ways, even though we may be among the smartest animals on the planet, we are under-qualified for picking the right food to eat, much less helping to run a global civilization.

But knowledge is power. If we learn to recognize our human brain wiring biases we can compensate for them. A whole field of study has developed under the heading "behavioral economics."

As a species we have specialized in "smartness" almost to an extreme. We make tools, we Facebook ourselves around the world, we deduce and abstract and imagine, but the amazing, swollen "wetware" perched on our shoulders is much better adapted to avoiding a lion attack than picking a 401K.

Even choices as basic as mate selection and child rearing can go awry when we live to 80 instead of 30. Fifty percent of modern marriages end in divorce, and since children are discouraged from leaving aged and infirm parents in caves, those parents have to plan for enough income to live in Sun City.

So what anachronistic biases do we carry from our prehistoric past and how do we surmount them? Some examples follow.

I'm smart, but you're just lucky: We all cherish the illusion that we're a bit smarter than the other guy. Thus, I may get a fantastic writing gig because of my amazing wordsmithing abilities while Shakespeare was just lucky getting all those plays performed to rave reviews. Likewise, I lost some plum jobs because of the recession, but Stephen King's sales are down because he just isn't very scary anymore. In behavioral-economics-speak, this is the "fundamental attribution error." Perhaps without the self-confidence to try and beat the odds we might still be pounding rocks on the savannah, but this assumption can derail efforts to improve our skills.

Compensation strategy: Awareness of this common tendency is the best defense.

You see, I told you so: The confirmation bias is our tendency to bolster existing opinions by gathering only information that supports those views. We tend to avoid or downplay contradictory information. Thus one rarely sees Republicans or Democrats at the other party's rallies (unless they want to sabotage them), and Creationists rarely attend symposia on the evolution of cetaceans. Perhaps group solidarity had survival value, but it also leads to unexamined, and thus sometimes poor, choices.

Compensation strategy: If you are really looking for the truth, start without preconceptions and explore both sides of the argument with equal diligence.

I'm not flying there. A plane crashed last year: The availability bias often pushes us to make decisions based on emotionally charged memories that may rarely reflect actual dangers. Seeing news images of hundreds of people dying in a spectacular plane crash can dull our intellectual awareness that cruising down the freeway every day can be much more dangerous. When our forebears heard a roar behind them, it was prudent to expect it was probably a lion like last time and make enough noise to imitate a whole tribe of trouble for the cat. Today's dangers, however, are often more subtle and complex.

Compensation strategy: Slow down the decision-making process enough to collect all the available and relevant facts.

Yeah, well, that's the way it is. It always has been: We love to see patterns and make predictions based on them. Michael J. Mauboussin, an investment strategist, wrote in the March/April issue of The Futurist about the failure of induction – predicting future events from what's happening in the present – in an article titled "Smart People, Dumb Decisions." He talks about the turkey that thought room and board with Farmer Brown was a pretty cushy deal – right up until the end of November when things took a sharp turn for the worse. Such an event is called a "phase transition" and is common in lots of phenomena like water suddenly turning to ice and global climate temperatures spiking out of control.

Compensation strategy: Analyze the system to see if it could contain a rapid phase transition. Prepare for the full range of possibilities. Resist the temptation to treat a complex system as simpler than it is.

George Loewenstein and Peter Ubel in "Economics Behaving Badly" (New York Times, July 14, 2010) also urge people (and governments) not to forget the principles of old-fashioned economics, either. Governments, for example, can label foods with nutritional information to induce people to make healthier choices, but if healthier choices are more expensive than junk food, individuals may choose the latter. One could either tax unhealthy foods or reduce subsidies on corn to make the costs of some sugary foods rise, for example. Which technique would be less objectionable? The authors conclude that, "Behavioral economics should complement, not substitute for, more substantive economic interventions."

Nevertheless, we need to keep in touch with that Ur-woman or Ur-man within us. Only forearmed with knowledge can we boldly decide what no one has decided before.