Four Ways to Make Better Decisions
We are living in a world where we have so many choices that our days can feel like an exhausting exercise in making decisions. I equate making decisions with solving problems; I do this because I believe it’s more empowering to fix than to choose. So, if you want to get better at making decisions and problem-solving try these suggestions (quantitative folks will like steps 1 and 2; intuitive people will gravitate toward 3 and 4). Getting out of your decision-making comfort zone will improve your decisions so I encourage you to try the approaches that feel least natural to you.
Option 1. Use Probability
Probabilistic thinking is the ability to hold multiple, conflicting outcomes in your mind and estimate their relative likelihoods. Probabilities tell us how things are likely to proceed. There’s still uncertainty, but as long as you embrace that uncertainty, you can make the odds work for you.
Think of decisions as having a probability and a reward or payoff. The reward can be any unit you assign (money, time, satisfaction, or a combination). For example, recently, I was trying to decide between four possible new projects to pursue and was having trouble choosing a clear winner. So I assigned a probability to each option and an estimate of the reward (which in this case was some combination of all three from above):
Option 1 – 60% chance of succeeding with a reward of 8 (out of 10)
Option 2 – 20% chance of succeeding with a reward of 10
Option 3 – 90% chance of succeeding with a reward of 3
Option 4 – 75% chance of succeeding with a reward of 6
Next, I multiplied the probability by the reward:
Option 1 = 4.8
Option 2 = 2
Option 3 = 2.7
Option 4 = 4.5
Based on the chances of being successful and the potential pay-off, option one was the best decision and is what I choose to pursue.
Of course, this process depends on making good assumptions about what the probability and the reward actually are. This is known in Bayesian Psychology as the “base rate” assumption. We get the right assumptions by getting as much good information as we can and updating our assumptions along the way when we get new information. So if I had received new information that would have made me boost my estimated reward to a 7 in option 4 I would have gone with that.
TLDR: You can almost always improve your odds of making the right decision by doing things that will give you more information.
Option 2. Values and Weighted Decisions
Another way to approach tough decisions is to clarify, weight, and rate the values involved in the decision. By values, I mean the things that are important to you in making the decision. For example, my wife and I were contemplating a move to a new city. There were a number of places, some familiar and some far away, that we were considering; we got pretty stuck. So we weighted and rated our values to help us clarify our decision.
Using this system you:
Rate each of the criteria that are important to you (in this case, we went with a scale of 1 to 4)
Apply any weighting (in this example, for us, “Friends” was particularly important so it gets a weighting of .5; “Weather”also mattered to us, though not as much as Friends, and and so it gets a weighting of .25)
Add up your scores.
Decide based on the highest score.
Note: It’s okay, and important, to add more intangible factors into your chart, like “values” (political, community, religious, however you define that for yourself) and “gut” so that all criteria that are important to you are taken into consideration. If you don’t include it, you will end up with a chart and score that doesn’t accurately reflect what you really want.
As you can see based on this chart we decided to move to Oakland. And so far it’s been a good decision. But if for whatever reason it doesn’t work out, Mexico here we come!
Option 3: Optimize for time of day.
In his book, When: The Scientific Secrets of Perfect Timing, Dan Pink points out that our cognitive abilities do not remain static over the course of a day. These daily fluctuations are more extreme than we realize and impact our ability to make decisions and solve problems.
Mornings are generally better for problems or decisions that require sharp analytic thinking and reasoning (read my post on productivity for more on the power of mornings). Our “inhibitory control” is better earlier in the day and this helps our brains solve analytical problems by keeping out distractions. When we wake up, our body temperature slowly rises. That rising temperature gradually boosts our energy level and alertness — and, that in turn, enhances our executive functioning, ability to concentrate, and powers of deduction. For most of us, sharp-minded analytic capacities peak in the late morning or around noon. (For example, looking over various stock investment options and deciding between them.)
Later in the day, generally in the late afternoon, we excel on tasks where creative insight is needed which requires less inhibition and resolve. These are known as “insight problems.” Reasoning in a methodical, algorithmic way won’t yield a correct answer. It relies on a “flash of illuminance,” an “aha!” that requires less vigilance and fewer inhibitions. A few distractions can help us spot connections we might have missed when our filters were tighter. (For example, figuring out how to solve a problem that has been stumping us.)
So solve your data heavy, analytic based problems in the morning when you are mentally sharpest and your more creative problems in the late afternoon.
Option 4. Get Perspective: step away, sleep on it, meditate, reconnect with your purpose, get a coach
One of the best ways to make a decision or solve a difficult problem is to get some distance from it. Hedge fund titan Ray Dalio says, “Everything looks bigger up close. In all aspects of life, what’s happening today seems like a much bigger deal than it will appear in retrospect. It helps to step back and gain perspective and sometimes defer a decision until some time passes.” This helps take the emotionality out of things that can cloud our thinking. So before making a tough decision, take a walk, sleep on it, or if it’s the end of the week wait until after the weekend.
I have also found that an amazing side effect of meditation is more clear decision-making. In most forms of meditation you are not meditating “on” any particular problem or issue. Rather you are focusing on your breath or other reference point or sensations you feel in your body to experience the present moment. Over the years I have noticed that a clear decision on something I have been struggling with will often emerge during meditation. It’s the clearest thing, without any doubt or uncertainty. I think this has to do with calming the nervous system and letting the mental clutter that has been clouding things settle and the decision becomes clear. So again, another reason to meditate if you’re not already. (If you aren’t convinced yet, read about how I journeyed from helplessness to power through meditation here.)
Last but not least when you’re struggling with a decision, it’s helpful to reconnect with your sense of purpose, the “why” that drives you. Make your decision from that place. If you’re not clear what your purpose is, a good coach can help you figure it out.
If you’re interested in reading more about decision-making, I’d love to recommend these three books, especially when it comes to using probability to make decisions: Paradox of Choice: Why More is Less by Barry Schwartz, Principles by Ray Dalio, and Smarter, Faster, Better by Charles Duhigg.
And, there are also some good apps to assist you in making better decisions (that do the math for you). Check out ChoiceMap, Decision Buddy Decision Maker, and FYI Decision.
Living Your Best Life is a new blog series aiming to answer the question, How can I live my best life? This twelve-month series explores this question through the topics of productivity, leadership, motivation, psychology, family, wellness, and society.