Advertising
Advertising

Three Cognitive Biases That Cost You Money, Stress, and Happiness

Three Cognitive Biases That Cost You Money, Stress, and Happiness

Lets start with a simple question: how many of each animal did Moses take into the ark? If you pounced with the answer “2,” you have fallen into the same trap as most people. (The answer is zero—figure the rest out yourself.) Cognitive biases tell us we know when we don’t, create absurdly optimistic estimates of what we can achieve, and keep us stuck in bad relationships and bad jobs.

Here are three biases and some strategies for getting out of the trap they set.

1. The Sunk Cost Fallacy

Imagine you have a ticket to the movies for which you forked out 10 bucks, but you are attending with a friend who got hers for free.  The weather turns sour and they are re-running Dukes of Hazard.  Which one of you is more likely to cancel?  If you say “my friend, duh,” you are trapped by the sunk cost fallacy.

Your ten bucks is gone (assuming you can’t plead a refund).  Since you are out ten bucks whether you go or not, it should not affect your choice.  What matters is the cost-benefit of braving the weather, and whether your movie features more interesting characters than Boss Hogg. (Unlikely. Still.)

Advertising

The sunk cost fallacy traps people in bad relationships, bad investments, and traps countries in destructive, no-win wars.  (“We can’t withdraw because we have spent billions and people have given their lives.”)  What matters is the future—whether you can turn the relationship around, or whether the next billion dollars and young lives will be squandered in vain.

The sunk-cost fallacy is an example of a cognitive bias—a habitual, predictable, way of thinking that leads to error.  Wiki lists over 100; it seems the amazing human brain has many hard-wired flaws.

Some of these flaws may have conferred an evolutionary advantage.  Who knows what the exact conditions were five thousand years ago, but the hard-wiring of our brains may not have changed quickly enough to keep up with the white-heat of cultural and technological evolution that has happened in the last 5000 years (a blink of an eye in genetic evolution).

Conquering the sunk-cost fallacy is very tough.  Who has not poured time and money into something and wished they hadn’t, only to pour more in on the next occasion?  We like to self-justify (to believe that we made good decisions in the past); who likes to say “I was a fool then”?  Then, we look for confirming evidence things are going our way.  “He stopped drinking for a week, and had a job last year.”

Advertising

One technique is to create an imaginary scenario.  Imagine you parachuted into the (house, relationship, investment) for free, with nothing invested.  What would you do then?  If the answer is “run for the hills,” then you have your answer.

2. The Planning Fallacy

A second bias which causes enormous stress is the “planning fallacy.”  Humans suck at estimating how long things will take. Partly, we like to believe we are super-human, but mostly we are deluded about how complex things get.  As a writer, I’m constantly amazed that the last 5% of a project takes 30% of the time.  The average overrun on big technology projects is 27%, and many really big ones overrun by one hundred percent or more!  A group of students were asked to estimate how long a term paper would take, their “best case” guess was 29 days, and the “worse case” (excrement hits the fan) was 48 days.  They took an average of 55 days!

tough decisions

    How much stress and misery, I wonder, comes from people in offices saying “I can do it by Friday,” only to find that a couple of more Fridays are required?  We like to people-please, and to look confident and competent, but we are incompetent at estimating how long things take!

    3. Optimism Bias

    Our final bias rears its head in conflict situations, where everyone is sure of their “facts” and confident in their predictions about how different actions will pan out.  This family of biases means we take a rosy view of our knowledge, and a dim view of other’s.  Nobody is as right as they think they are.

    Advertising

    Professor Philip Tetlock has studied expert predictions over a lifetime.  He found that experts (real experts, not talk radio experts) who were 100% sure of an outcome were wrong 25% of the time.  Further, when they thought an outcome had “no chance,” it happened 15% of the time.  What percentage of people are above average listeners?  96%!

    This “confidence without competence” is one cause of conflict running out of control.  People who are dogmatically sure of themselves beget adversaries who become similarly dogmatic. The next time you are in a conflict situation, make a table with two columns; write the facts (as you see them) in one column, and your opinions and conclusions in the other column. Ask your adversary to do the same (nicely!).  Check off the facts on which you agree, and where you disagree. Do some homework together.

    The difficult part of resolving conflict lies in the area of opinions, interpretations, values and predictions, so you are only part of the way there.  But going through the process of developing a shared set of facts will diminish the polarization, and allow you to get down to business.

    Learning about our biases can help.

    The sunk-cost fallacy keeps us stuck in a miserable past, throwing good time and money away after bad decisions. The planning fallacy creates tremendous stress as we struggle to meet unrealistic deadlines. Optimism biases make us feel sure of ourselves when we have no right to be, which leads us to prolong and exacerbate conflict.

    Advertising

    We didn’t learn these things in school because they were not well understood, were not part of any college curricula (unless behavioral economics gives you jollies), and certainly far from mainstream understandings of how humans work.

    Learning about our biases puts us back in the game.  Like sharpshooters who correct for wind velocity and direction, knowing our thinking is skewed in a particular direction means we can auto-correct, make better decisions, and get more of what we want in life.

    More by this author

    Cognitive biases and decisions Three Cognitive Biases That Cost You Money, Stress, and Happiness Three things a skeptic should know about neuroscience Forget Resolutions: If You Only Do One Thing to Get Ready for 2014, Do This!

    Trending in Work

    1 How to Increase Work Productivity: 9 Ground Rules 2 How to Answer the Interview Question “What Motivates You?” 3 10 Signs of a Bad Boss and How to Deal with Them 4 How to Figure Out What Motivates You at Work 5 Is It Time for a Career Change? (And How to Make the Change)

    Read Next

    Advertising
    Advertising
    Advertising

    Last Updated on January 21, 2020

    How to Increase Work Productivity: 9 Ground Rules

    How to Increase Work Productivity: 9 Ground Rules

    We all have those days when completing our assigned tasks seems beyond reach. With the temptation of social media, mobile games, and the internet in general—not to mention the constant bustle of people in the office—it’s easy to fall prey to disruptions and distractions at work.

    So, what can we do about it? How to be productive at work?

    While we don’t have a foolproof system that can completely eliminate disturbances and diversions, we do have 9 ground rules that can be applied to help give your productivity levels a boost.

    Keep reading to find out our tips on work productivity.

    What Does It Mean to Be Productive?

    How to be productive at work?” is the age-old question plaguing employees and employers alike around the world. Regardless of where you work and what you do, everyone is always looking for new ways to be more efficient and effective.

    But what does being productive actually entail?

    Completing more tasks on your list or working longer hours doesn’t necessarily mean you’re being more productive. It just means you’re more busy, and productivity shouldn’t be confused with busyness.

    Productivity means achieving effective results in as short amount of time as possible, leaving you with more time to enjoy freely.

    It involves working smarter, not harder. It means refining processes, speeding up workflows, and reducing the chances of interruptions.

    Productivity is best achieved when looking at your current way of working, identifying the bottlenecks, flaws, and hindrances, and then finding ways to improve.

    9 Ground Rules on How to Be Productive at Work

    1. Avoid Multitasking

    Multitasking can give the impression that more tasks can be accomplished as you’re doing multiple things at once. However, the opposite is true.

    Advertising

    Research has shown that attempting to do several things at the same time takes a toll on productivity and that shifting between tasks can cost up to 40 percent of someone’s time.[1] That’s because your focus and concentration is constantly hindered due to having to switch between tasks.

    If you have a lot of tasks on your plate, determine your priorities and allocate enough time for each task. That way you can work on what’s urgent first and have enough time to complete the rest of your tasks.

    2. Turn off Notifications

    According to a Gallup poll, more than 50 percent of US smartphone owners admit to checking their phones a few times an hour.[2]

    Switching off your phone—or at least your notifications—during work hours is a good way to prevent you from checking your phone all the time.

    The same applies to your computer. If you have the privilege of accessing social media on your work desktop, switch off the notifications on there.

    Another good tip is to logout from your social media accounts. Therefore when you feel the urge to check it, you might be swayed because your page isn’t so easily accessible.

    3. Manage Interruptions

    There are certain disruptions in the office that are unavoidable such as your manager requesting a quick meeting or your colleague asking for assistance. In order to deal with this, your best approach is to know how to handle interruptions like a pro.

    Be proactive and inform the people around you of your need to focus. Turn your status on as “busy/unavailable” on your work chat app.

    If you’re on a deadline, let your colleagues know that you need to concentrate and would really appreciate not being interrupted for the moment, or even work from home if that’s a feasible option for you.

    By anticipating and having a plan in place to manage them, this will minimize your chances of being affected by interruptions.

    4. Eat the Frog

    Mark Twain once famously said that:

    Advertising

    “if it’s your job to eat a frog, it’s best to do it first thing in the morning. And if it’s your job to eat two frogs, it’s best to eat the biggest one first.”

    What this basically means is that you should get your biggest, most urgent task out of the way first.

    We all have that big, important task that we don’t want to do but know we have to do because it holds the biggest consequence if we don’t complete it.

    Eat the frog is a productivity technique that encourages you to do your most important, most undesirable task first. Completing this particular task before anything else will give you a huge sense of accomplishment. It will set the ball rolling for the rest of the day and motivate you to eagerly complete your other tasks.

    5. Cut Down on Meetings

    Meetings can use up a lot of time, which is time that can be used to do something useful.

    You have to wait for everyone to arrive, then after the pleasantries are out of the way, you can finally get stuck into it. And sometimes, it may take a whole hour to iron out one single issue.

    The alternative? Don’t arrange a meeting at all. You’ll be surprised at how many things can be resolved through an email or a quick phone call.

    But that doesn’t mean you should eliminate meetings altogether. There are certain circumstances where face-to-face discussions and negotiations are still necessary. Just make sure you weigh up the options prior.

    If it’s just information sharing, you’re probably better off sending an email; but if brainstorming or in-depth discussion is required, then an in-person meeting would be best.

    6. Utilize Tools

    Having the right tools to work with is crucial as you’re only really as good as the resources you have at your disposal. Not only will you be able to complete tasks as efficiently as possible, but they can streamline processes. Said processes are essential to a business as they manage tasks, keep employees connected, and hold important data.

    If you’re the manager or business owner, ensure your team has the right tools in place.

    Advertising

    And if you’re an employee and think the tools you currently have to work with aren’t quite up to par, let your manager know. A good team leader understands the significance of having the right tools and how it can impact employee productivity.

    Some examples of tools that could be used:

    Communication
    • Slack for team chat and collaboration.
    • Samepage for video conference software.
    • Zendesk for customer service engagement.
    Task Management
    • Zenkit for task and project collaboration.
    • Wunderlist for listing your to-do’s.
    • Wekan for an open source option.
    Database Management
    Time Tracking
    • Clockify for a free tracker.
    • TMetric for workspace integrations.
    • TimeCamp for attendance and productivity monitoring.

    You can also take a look at these Top 10 Productivity Tools to Help You Achieve 10x More in Less Time.

    7. Declutter and Organize

    Having a disorganized and cluttered workspace can limit your ability to focus. According to researchers, physical clutter can negatively impact your ability to concentrate and take in information.[3] Which is why keeping your work environment well ordered and clutter-free is important.

    Ensure you have your own system of organization so you know what to do when the paperwork starts to pile up.

    Being organized will also ensure that you know where to find the appropriate stationery, tools, or documents when you need it. A US study reveals that the average worker can waste up to one week a year looking for misplaced items.[4]

    Here’s a useful guide to help you declutter and organize: How to Declutter Your Life and Reduce Stress (The Ultimate Guide)

    8. Take Breaks

    Taking regular breaks is essential for maintaining productivity at work. Working in front of a computer can lead to a sedentary lifestyle which can place you at a higher risk of heart disease, diabetes, and obesity. Even a 30 second microbreak can increase your productivity levels up to 30 percent.

    As well as your physical health, breaks are also crucial for your mental and emotional wellbeing. That’s because your brain is like a muscle, the more it works without a break, the easier it is for it to get worn out.

    Ensuring you actually take your breaks can prevent you from suffering from decision fatigue. It can also help boost creativity.

    Take a look at this article and learn why you should start scheduling time for breaks: The Importance of Scheduling Downtime

    Advertising

    9. Drink Water

    Although we know we should, it’s easy to forget to drink enough water during the working day.

    Many of us turn to tea or coffee for the caffeine hit to keep us going. However, like taking breaks, drinking water is essential for maintaining productivity levels at work. It’s simple and effective.

    Not drinking enough water can lead to dehydration and also headaches, tiredness, and weight gain.

    A good tip to avoid dehydration is to keep a water bottle at your desk as it can serve as a reminder to constantly drink water.

    If you find the taste of water a little bland, add some fruit such as cucumber or lemon to give it a better taste.

    You can also get more ideas on how to drink more water here: How to Drink More Water (and Why You Should)

    The Bottom Line

    The preceding 9 ground rules on work productivity aren’t the be-all, end-all. You and the company you work for may have other tips on how productivity is best increased and maintained.

    After all, it’s something that can be perceived differently depending on the exact job and work environment.

    In saying that, however, the 9 ground rules serve as a good foundation for anyone finding themselves succumbing to disruption and distraction, and are looking for ways to overcome them.

    A good tip to keep in mind is that change doesn’t happen overnight. Start small and be consistent. If you slip up, just dust yourself off and try again.

    Developing habits happens gradually, so as long as you keep up with it, you’ll soon start to notice the changes you’ve been making and eventually enjoy the fruits of your labor.

    More About Boosting Productivity

    Featured photo credit: Cathryn Lavery via unsplash.com

    Reference

    Read Next