This is part three of the cognitive bias series. You can see part one and part two here.
Our brains are prone to cognitive biases—systematic errors in thinking, which largely occur because we’re trying to process information quickly. These erroneous patterns of thinking are predictable and we’re all affected by them. They’ve served an important evolutionary role by enabling us to quickly assess and respond to information, which is an invaluable ability in situations of danger.
But complex decisions, reasoning, and challenging projects require a different type of thinking—more critical, analytical and balanced in assessment of facts. Because cognitive biases are automatic, our familiarity with them and the way they hijack our thinking patterns can help improve our decision-making.
In this series, I explore some of the more common cognitive biases, their implications and some thoughts on how we could protect ourselves from them.
Narrative fallacy: we force logical connections upon unconnected facts
“Our comforting conviction that the world makes sense rests on a secure foundation: our almost unlimited ability to ignore our ignorance.” – Daniel Kahneman
Narrative fallacy refers to our proclivity to take in selective facts and weave them into questionable explanations. We seem to force logical connections upon events where no such causality exist.
We are storytellers. Stories have played an important evolutionary role, and we continue to tell stories to learn, teach and live. Essentially, we’re trying to make sense of the world and by virtue of that we create stories that explain our experiences and observations. But as the word is not the tree, so are our stories about reality not reality. And not only that, but they tend to be a rather flawed account of reality.
Research shows that we are biased to favour simple over complex, and concrete over abstract stories. We also tend to undervalue the role luck plays, while we overestimate the role of talent, intensions and stupidity. We also discount the countless times something didn’t happen, but focus on the few shocking instances when it happened.
Nassim Taleb, a former options trader, who introduced the term in his book, The Black Swan, writes:
“Explanations bind facts together. They make them all the more easily remembered; they help them make more sense. Where this propensity can go wrong is when it increases our impression of understanding.”
Implications
We are almost incapable of looking at facts without creating a story that explains them.
Our obsession with the habits and routines of successful people are an example of narrative fallacy. We create cause-and-effect relationships between random facts and attributes that are not connected.
The stories we’ve been telling ourselves about anything and everything—success, happiness, money, performance—shape our decisions and expectations of the future. But these stories aren’t necessarily accurate.
The benefits of overcoming it and some thoughts on how to
Narrative fallacy leaves us vulnerable to making decisions on the grounds of wrong assumptions.
The more compelling a narrative is and the more it overlaps with our existing beliefs, the more likely we are to believe it.
Questioning our hypothesises, testing our thinking and deconstructing the narratives we and the world around us tell can be helpful in making sure we don’t base our decisions on fictions masquerading as facts.
Status quo bias: we resist change
Status quo bias refers to our tendency to prefer the familiar over the foreign. Even when change is beneficial, we resist it in favour of maintaining things as they are.
An example that illustrates the status quo bias is our tendency to stick with the default option if there is one. As a result, in countries where people must opt-in to become organ donors only a small percentage of people do so. Conversely, in countries with an opt-out system, the percentage of people registered as donors is much higher.
Studies have shown that we tend to prefer the current state of affairs even when there are financial benefits associated with making a change. In studies on switching utility providers, households were offered the same service at a cheaper rate if they changed their energy provider. Despite the potential cost savings, between 40% to 60% of people preferred to stick with their current supplier.
Implications
Our resistance to change has decision-making implications for all areas of our lives, from financial decisions to exercise regimens to relationship and healthcare decisions.
We avoid change, even when change is clearly beneficial for us. We are likely to remain with existing habits and routines than introduce new ones. We favour our existing providers of products and services even when we’re aware of better alternatives. We resist adopting innovation and change which can affect our work and business decisions.
The benefits of overcoming it and some thoughts on how to
Clearly even when change is beneficial sometimes the time and effort savings of not changing outweigh the benefits of change. And this is increasingly more relevant in our age of information and choice overload.
We often only change when the pain of the status quo outweighs our fear of change. But when change is in our interest, even after we’ve factored in the inconvenience of changing, it is helpful to be more fluid about it.
Our bias to the status quo is often linked to our loss aversion. But whether we maintain current affairs or venture into new territories, there are gains and there are losses. Our world is changing very fast and the pressure to keep up is ever-growing. But it is an illusion that we could ever keep up. As such, it is helpful to consider whether certain aspects of life are more worthy of our fluidity to change.
For me, change which broadens our thinking and increases our knowledge of ourselves is always worth disrupting the comforting grip of the status quo for.