Why Smart People Make Dumb Decisions

We all make mistakes, sometimes obvious ones. Why do smart people (like you and me) make dumb decisions?

There are proven reasons why we screw up. Below are a few that I discovered doing research for a presentation I gave on “how to make better decisions and fewer mistakes.”

Smart people make dumb decisions

EMOTION

Emotion clouds judgement, causing us to make errors. It also makes us freeze, delaying action and making things worse. My friend, Bruce, once gave me sage advice, “A problem is a set of facts compounded by emotion.”

TAKEAWAY: Extract the emotion, analyze the facts, and make a decision now.

QUANTITY

Quantity of data influences our decisions because we intuitively presume more is better. Sometimes that’s true. Sometimes not. Judging from the quantity (and deplorable quality) of election ads, politicians are trying to leverage our more is better bias.

TAKEAWAY: Don’t presume quantity of information is quality of information.

RECENCY

Information acquired recently influences our decisions more than information acquired long ago. We are biased to assume that what we learn today is more accurate than what we learned yesterday. Often it’s not.

TAKEAWAY: Don’t presume recent advice is decent advice.

FRIENDS

Even when not asked, friends volunteer advice (and knowledge) because they want to be helpful. Because people care doesn’t mean they know, or that their advice is right for you.

TAKEAWAY: Don’t presume a trusted friend is a knowledgeable friend.

HISTORY

I have a friend who won’t engage in meaningful relationships because her first husband was a loser. That’s like a child who won’t get back on her bike because she fell and scraped her knee.

TAKEAWAY: Don’t make broad decisions based on narrow experiences.

DILIGENCE

Failure to do our homework is the most obvious reason why we make bad decisions. I believe diligence should be in proportion to the importance of a decision. Deciding on lunch shouldn’t require the same degree of research and thought as choosing someone to care for your child.

TAKEAWAY: Do homework in proportion to importance.

More reasons why smart people make dumb decisions

Next week I’ll give you six more reasons why smart people make dumb decisions, like wishing things true that aren’t true and likely will never be true.