Improving our future decisions

By definition, the future has not yet happened. Yet what happens in the future is very much influenced or created by the decisions and actions made today. Many things from the present may repeat or continue in the future, but many events and opportunities will be new having never yet been experienced.

Understanding how we view the information around us and how it impacts our decisions can lead to better decision-making about the future. The future is uncertain, and as humans we have a tendency to want to reduce uncertainty. Big data, discussed in this issue, has the potential to provide more historical data and assist in improving decision-making. However, there are cognitive biases that influence how we use and interpret both the data provided and also the data which is missing.

Wisdom is often thought of as the combination of experience and judgement on which we rely to make decisions. Data can help in this process, but often data is missing. How do we make decisions then? Decisions that shape the future - rather than continue the present - are often made lacking the necessary information. The biases of the decision-makers then often influence the decision.

Over 100 cognitive biases have been documented. There are four biases highly relevant to future decisions: confirmation bias, status-quo bias, projection bias and the current-moment bias. The first, confirmation bias, gives greater weight to information that supports your existing view, or ignores information that contradicts your existing view. The future is not just one option - there are many, and understanding and factoring multiple viewpoints into a decision can make the decision more robust.

The second, status-quo bias, is a preference for keeping the current state of things. Choices are made which ensure little change will actually occur, often due to the assumption another option would lead to a less favourable outcome. In business, this can result in continuing with products or services despite evidence or data that other options may be required. Think of companies encountering disruptive innovation in their industries that continue their current course of action ignoring new innovations.

Projection bias is the tendency to believe others think like you do. This often leaves your assumptions unspoken and unchallenged. This can often result in miscommunication and lack of commitment or ambiguity around why decisions were made.

Thinking about the future and imagining the impact of decisions is often difficult. The current-moment bias results in people favouring the short-term pleasure of now over any longer-term pleasure, even if it is greater. The impact of long-term decisions is often discounted in favour of easier short-term solutions or ‘quick wins’.

Biases are part of being human. Increasing your awareness and knowledge of how you interpret information and data, or react to missing information, when making decisions can lead to better long-term decisions.