A mental model for taking big decisions — better

A mental model for taking big decisions — better

We’ve all had to take some big decisions in our lives— shall I change my job? Shall I ask that boy/girl out? Shall I apply for this leadership position in college? Shall I end this relationship? Shall I spend my summers doing this intern, or that intern, or something completely different?

Image source: Inc.com

How people take these decisions is one area that I personally find very intriguing, and it’s something that I’ve found myself thinking about a number of times. Hence, I’ve come to develop what I like to call a mental model for taking big decisions. One could credit my personal experiences, as well as talking to a number of people in similar positions and observing their thought processes for the model that I’ve come up with. So let’s go straight into it!

What we generally do / are advised to do, and why it’s not necessarily the best way to go about doing itTalk to others who have been there, done that.Think about what you really want by ‘listening to your heart’ (Okay…)Toss a coin (Heads or Tails — simple!)Toss a coin and you’ll know what you want while the coin is in mid-air, right? (Just a fancy way of implementing 2, to be honest)List out the pros and cons on a blank sheet and decide (good, we’re getting better!)

I won’t refute that talking to people who have gone through similar experiences helps; we learn what some people did when they were in similar positions, and why they did what they did. But then, every individual and their situation together is unique, and there’s no set of IFTTT rules that could help every one to make a choice. Every decision that we make is unique to us, we have to think about our own situation ourselves, and then take a decision based on our situation, assumptions, and biases.

‘Listening to your heart’ — an oft-asked question by people is this — why do you need to structure everything? What is the need of noting everything down? Why are you looking at all the aspects? Why not simply ‘trust your gut instinct’ (yeah sure, whatever that means). The very simple answer to this is that the human mind often looks at only one side of things/perceives the benefits and risks as it finds convenient. No, this is not me cooking something up out of thin air. Daniel Kahnman wrote in ‘Thinking, Fast and Slow’ about how people tend to overestimate the associated benefits and underestimate the associated risks of their favored path, and vice versa for a path that ‘their heart’ doesn’t favor — the affect heuristic, to put it more technically.Hence, we need objectivity and clear-cut comparisons to make these big decisions.

I hope that the case against tossing a coin is fairly straightforward and needn’t be elaborated.

Alright, so what’s the plan? Why not just use the good ol’ pros and cons?

Not surprisingly, the most used practice is to list down the pros and cons of our decision (more specifically, its impact), and to try figure out whether the pros are going to outweigh, not (just) outnumber, the cons — if they are, we take the decision, or drop it otherwise. Now, the main problems that I find with this approach are:

It’s too simplistic — just 2 categories for jotting down everything about your decision.It’s difficult to compare the pros with the cons because often they would be falling under different categories altogether. Take, for e.g. — skills developed by doing a course as a pro v/s its financial (and temporal) cost as a con(?). How do you figure out whether it’s worth it or not?The very reason why we wanted to start off with a (different) model — we tend to overestimate the pros and underestimate the cons for our favored paths, we need something to compare with.

Hence, over all these years I’ve developed a mental model of my own that helps me objectively (to the extent possible) list down various aspects of the decision, without over-complicating it, and then evaluate which is the best way forward. I like to call it the A-BCR model — Alternatives, Benefits, Costs, and Risks (Yes, I do realize it’s a naive name). I’ll explain these four in more detail.

The A-BCR Model

Alternatives: This is probably the most important of them all. We often just think about whether I should do this or not, without considering what we will be doing in the absence of that decision. If not this, then what? If I’m not switching jobs, am I going to continue in the current job the same manner, or invest more time and effort in getting a promotion, or spend more time with my family instead? If I’m not going for this leadership position in college, what am I going to do? Am I going to attend conferences, do a number of projects, give more attention to my health — there are so many possibilities. You need to jot down the key alternatives to the subject. The reason why this is so important will hopefully become clear in a while, if not already.

Benefits: I like to think of the pros essentially as benefits, simply because of the way I’ve segregated cons into ‘costs’ and ‘risks’ (more on that later). Think of as many tangible and intangible benefits that taking the decision will bring to you and your life. The only limits are possibilities, and not high probabilities. Of course, you can and should prioritize the benefits, but make sure you write most of them. It often helps to segregate them into further categories (social, financial, personal, etc) but that’s completely up to you and isn’t a hard requirement for this model.It’s worth mentioning here that at times the intangible and subjective benefits can be more important than the tangible ones — for e.g., the alignment of the decision with your long-term goals or your values, the interest (aka motivation) you have for one option which manifests itself as a general feeling of contentment and positive energy when you go with that option (and it’s this feeling that should be the benefit, not the motivation).

Costs: Now this is where things get interesting because a number of times we don’t elucidate all that we should in ‘cons’. Ask a simple question — ‘What will this decision cost me?’ and again, it doesn’t have to be tangible. It could cost you money, time, sleep, health — and it could still be a good decision, depending on what other aspects are there. Think of it as a simple give and take — what am I giving out by taking all those benefits in? Oh, and since a number of us these days forget this — your attention is a commodity as well that you give (hence, a cost) Yes, you’re paying your time and attention right now for reading this piece to probably gain some half-baked knowledge from a random person on the Internet.(… If you didn’t quit reading after the last sentence, then we have more ahead!)

Risks: And finally for the last one, the risks associated. This is another feature why I prefer this model over the pros-cons one, because the latter either doesn’t cover risks properly, or simply writes it off as a con (even when it’s just a measure of probability, and not objective either). Risk, simply defined, is the probability of something bad happening. Risks could translate into costs, but do not, until a certain event happens, and hence shouldn’t be clubbed in the same category as other normal costs. Additionally, this is also where the ‘process’ comes into picture — whether it be the process of applying for something, or leaving something — most of the risks make their presence felt in the process of executing/aiming for the decision. So, you not getting the job you wanted for, while quitting your current job, is a risk, and not a con — and thinking of the two as the same defeats the entire purpose. When we’re making big decisions, the risks are often high as well (so are the benefits and costs, for that matter, which is why we call these ‘big’ decisions in the first place). And thus it’s important to note the risks for your decision separately — risk of rejection, risk of failure, risk of losing something you hold dear. This category often also holds the answer to “What’s the worse that could happen?” when we take a decision, and many people tend to write off those events as highly improbable ‘cons’ — hence, the need…

Tying it all together

Now, for the most important reason for this classification — you should always compare across alternatives. That sounds quite obvious, doesn’t it? But this is what a lot of people don’t do when they’re looking at each alternative individually.

You need to do cross comparisons between benefits of A v/s benefits of B and costs of A v/s costs of B. I don’t particularly believe that risks should be compared directly across options owing to the fact that they represent possibilities which might or might not happen; but regardless, the benefits and costs should surely first be compared across alternatives before comparing them within one alternative. The risks could be analysed separately and, may I say, subjectively. Proceeding further, you then need to align the scores and the differences with your values — what you believe is more important and what is less important for you in that situation across the alternatives. Is financial security more important for me at this stage, or is it about the impact that I’m going to create? Can I let go off some amount of personal time, or will I rather let go off my social commitments — and so on, and so forth. Hopefully, at the end of this exercise, you’ll have a clearer picture in front of you about what you should do in the decision, and that is when you should take the final judgement call.

The importance of objectivity and having a clear picture in your mind for crucial decisions really cannot be overstated. All of us aren’t Ratan Tatas who can take decisions and then make them right, hence this small suggestion in making those big decisions that matter in your life 🙂

Note: Since the underlying theme of this piece is to dismiss/undermine the currently used methods by a number of people, it’s bound to come off as off-putting and condescending to a certain degree, and I apologize for that; I’ve tried my best to alleviate it. I hope some of you would relate to this mental model and surely some of you would have vastly contrasting opinions on the topic — would be glad to hear both the sides, do leave a comment below!

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A mental model for taking big decisions — better was originally published in Noteworthy – The Journal Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

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