The illusion of dispassionate decision making

koenfucius

Jul 29

We don't always need to perform a comprehensive cost-benefit analysis to make good decisions.

Earlier this week, I took half a day off and went to see an old friend, whom I had not seen for over twenty years. On the way there (and back) I could not help myself reflecting on the costs and benefits of my decision – and indeed whether I could argue that it was sound. That may seem like a bad case of nerdview or professional deformation (and I hold my hand up) – perhaps only a decision making nerd would entertain such thoughts. But it does not detract from the fact that my very choice appears to demonstrate that, to me, the costs must have been outweighed by the benefit. Did that stand up to scrutiny?

The cost aspect was relatively easy to establish: my friend lives about two hours away (by car; it is a lot longer by public transport, even on a day when the rail network is not paralysed by strike action). Time is an appealing measure to use in our evaluation, since the benefit can be expressed in similar terms: the amount of time I got to spend with my friend (we will call him Pete, for that is his actual name). Does it make sense to spend four unproductive hours travelling by car in return for a couple of productive hours? It doesn't look too promising. And adding in the financial cost of the trip (at current petrol prices, you wouldn't get much change from £50) makes it worse still.

Intriguing asymmetry

Taking the cost of a choice as the starting point implicitly puts it in a negative light compared to the status quo – not travelling, in this case – which, by definition, carries no cost. If we are inclined against a particular option, its cost will often figure prominently in our argument against it. The hard work to persuade us of the opposite will then need to be made by the benefit. Is whatever I would gain from this trip going to compensate for the clear, well-defined debit side of the calculation? Unsurprisingly, this approach will make us verge towards staying put. It is difficult to quantify a visit to a friend in such a way that it tips the balance, particularly if the time element works so obviously against it.

Even with Kraftwerk through the speakers, four hours on the motorway is pretty long!

Do things look the same if we start at the other end? The benefit of catching up with an old friend definitely outweighs the status quo, almost regardless of what this would be. It would be hard to maintain that, say, in a whole week, there is nothing that we'd value less than rekindling an old friendship with some we wish we had not neglected for so long. So, having established this would be a good thing to do, the argument against it would need to show that the costs are so high that we'd be unwilling (or unable) to bear them. Would that be where we end up?

Imagine someone else asked you for advice whether she should take a half day off, and make a four-hour round trip for a meeting (the nature of which she does not detail). Your default answer would likely be no, unless she had a good reason to do so. Would you consider catching up with an old friend as a sufficiently good reason? That is not at all certain. However, if instead she asked whether she should, after many years, go and see an old friend she had lost touch with, your initial reply would likely be yes, unless it would be so disruptive, or costly as to be totally impractical. The threshold above which the cost would be prohibitive would be pretty high, and a couple of hours' drive each way plus the travel expense would probably clear it comfortably.

This asymmetry shows why, in decisions where the costs and the benefits are hard or impossible to reduce to a common measure, the starting point can matter greatly. If we judiciously pick the starting point, there is a good chance we will be making a good decision, especially if we are led by what is important ** to us at the time (saving cost or time, or this friendship). If, on the other hand, that starting point is not our own conscious choice, we should be on our guard. Especially if someone else determines it, they may well have an ulterior motive, like a salesperson bigging up the benefits of a potential purchase, and encouraging you to imagine ourselves already as the proud owner of this kitchen gadget, that three-piece suite, or the car we have just had a test drive in. (Then again, we may adopt a similar approach to try and talk our spouse into taking up badminton – or perhaps quite the opposite.)

Playing with the costs

How we frame the costs can also alter their prominence in the evaluation. Instead of weighing up the time and money involved in a decision with the benefit, we may want to look at them over a longer timespan, or as part of a broader (and vaguer) budget. If we make such a journey only sporadically, four hours or £50 lose a lot of their significance if the denominator is 'a year' rather than 'this trip', or if they come out of an annual 'visiting friends' budget.

Old friends reunited – an indescribable feeling (image: via DALL·E 2)

Costs can also influence our judgement of a benefit. We tend to see ourselves as reasonable and intelligent beings, who would not frivolously waste scarce time and money on something we do not value. It is but a small step from there to conclude that, because we spend time, money, or effort, or made any kind of sacrifice, it must mean that the benefit we derived from it was worth it. This is illustrated in a surprising way in a classic experiment, carried out in 1959 by Leon Festinger and Merrill Carlsmith (who developed the theory of cognitive dissonance). Participants had to perform two boring tasks during an hour (putting spools on a tray and then removing them, and turning pegs a quarter turn at a time). Subsequently they were asked to describe the tasks to another person (supposedly another participant, but really a confederate) as interesting and enjoyable. Intriguingly, participants who received a compensation of just 1 dollar later rated the tasks as more enjoyable than those who earned 20 dollars (not a trivial amount in 1959). Why was that? Cognitive dissonance theory suggests that because they only received one dollar, they resolved that the reason they performed the task not for the payment, but because they actually did enjoy it (clearly more so than those who were happy to perform boring tasks in return for $20).

Thus, the sacrifices we make in order to obtain a particular outcome becomes a signal of the value we attach to that result – both to ourselves and to others. The perceived causal link is reversed: instead of giving up resources because we value what we get in return, we infer the value of the result by what is being sacrificed.

This may all look as if we are a million miles from the straightforward, rational and dispassionate weighing up of costs and benefits, which is sometimes considered as the superior way for making decisions. But I think that would be a mistaken conclusion. Arguably, quite the opposite is the case: rather than deviating from cool and calculated judgement, we are adopting a sophisticated approach to decision making, which goes well beyond totting up its quantifiable pros and cons.

Dispassionate decision making is not just an illusion, it is an oxymoron: we cannot make good decisions without recognizing how they make us feel. We may not be able to calculate the value of friendship, but we can most definitely determine that the way it feels it decisively outweighs a four-hour return trip.

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