| Newsletter Week of April 5th, 2021 |
| RETHINKING THE QUESTION: WHAT DO YOU WANT TO BE WHEN YOU GROW UP? The interaction of “Be” and “When you grow up” are identity traps In the February 27 newsletter, I raved about Adam Grant’s new book, Think Again. Adam really hones in on why the entanglement between your beliefs and your identity makes it so hard to admit we are wrong. Obviously, to become a better decision maker, you need to admit when you are wrong…a lot. In fact, you need to be pretty actively on the lookout for places where your beliefs are leading you astray. The problem is that our identity becomes entangled with our beliefs and the things we have chosen to do in the past, that becomes super hard to do because admitting an error then becomes an attack on our identity. In a piece that Adam Grant wrote for CNBC, he points out the way in which we, as a society and as parents, exacerbate this problem by constantly asking children, “What do you want to be when you grow up?” (Apologies in advance if I’m blowing up your go-to question when you’re introduced to a child in a social situation.) Talk about training kids from the earliest age that what they do is who they are. Many of the deeply rooted pillars of our identity — like those that will influence our decision-making for the rest of our lives — form when we are just children. The problem with asking kids what they want to be when they grow up is that it implies that “what we want to be” is a stable, unchanging thing. (As well as reinforcing it because kids get asked this all the time.) As Heraclitus wrote 2,500 years ago, “The only constant in life is change.” The world changes every single day and we should expect the same of ourselves. Asking kids what they want to be when they grow up is the embodiment of the antithesis of the fluidity and agility needed to adapt to a changing world, and to adapt to the evolving discovery about one’s own talents and preferences. Even worse, if we don’t live up to that identity we have envisioned for ourselves, we will never feel like we’ve done enough, even though we, by definition, were too young to know with any certainty either what the world would be like when we grew up or what we would be like when we grew up. I don’t even know that now. Unsurprisingly, because a large part of our identities hinge on goals we set when we’re young, abandoning these goals is a long and messy process because it feels like we are abandoning who we are. That’s why it’s dangerous, Grant notes, to lock “our life GPS onto a single target.” Why? Because it “can give us the right directions to the wrong destination.” If you spend decades trying to “be” something, imagine the hit to your identity you’re facing when you think about changing course. Even in the face of clear and strong signals that we ought to change course, we’re pretty likely to construct a rationale to keep doing the same thing, resisting signals that it’s not our jam or it makes us unhappy or there’s something else we’d like more or all of the above. It’s only natural that as we grow up, we develop our strengths, understand our weaknesses, and learn many, many other things we may like more and be better at. But, because who we are depends so much on what we do, we ignore these signals and stick to the course. Instead of adapting, we commit even more of our resources to our stubborn goal. Next thing you know, you’ve passed organic chemistry and you’re headed for another six years of residency even though you don’t love what you do and might feel other professions may better suit your strengths? Instead of listening to the signals, you escalate your commitment to the cause, staying on track because changing plans feels like admitting defeat. The result is what psychologists call identity foreclosure. Identity foreclosure means settling prematurely on one sense of self without having done the proper due diligence to explore the ‘other selves’ we could have become. To remedy foreclosing on possibly valuable identities, Grant says that we would “be better learning about careers as actions to take, rather than their identities.” If we practice directing our identities away from specific goals and towards a set of aspirations, we may be able to live healthier, more meaningful lives. In other words, being open and flexible to our changing world may, over the long run, be a winning strategy. If we stop encouraging kids to take out an identity “mortgage” when they’re young, they’ll be less likely as adults to face identity foreclosure. This makes three newsletters since the new year that I’ve included an item about Adam Grant. Two takeaways: (1) I must think this is an important concept if, after bringing Adam up twice already, I want to share another of his ideas. (2) Obviously, I believe Think Again is loaded with great ideas and you should get it if you haven’t already. |
| “I KNEW IT ALL ALONG!” The dangerous combination of investing and hindsight bias. Hindsight bias is one of the central concepts of both Thinking in Bets and How to Decide. As I define it in How to Decide, hindsight bias is the tendency to believe that an event, after it occurs, was predictable or inevitable. It’s also been referred to as “knew-it-all-along” thinking or “creeping determinism.” Recently, Sam Swenson wrote a great article for The Motley Fool, warning us to stay clear of hindsight bias in the face of the new era of ‘investing.’ As you know, Bitcoin has been on a meteoric rise, rising more than 1,000% in under a year. There is, as Swenson notes, a “prevailing feeling,” especially among novice investors, that when asset prices rise in this manner, “it was all knowable in advance.” The reality is that investments like these are few and far between. They only seem obvious to us after the fact. We have an inclination to label outcomes which have already occurred as obvious because, as Swenson mentions, “that’s the version of the future that we have.” Before you make a decision, one of the things you definitely don’t know is which of all the possible outcomes that could happen will be the one that actually happens. That’s because you don’t have a time machine (sadly). Investors need reminders that, at the time they’re making an investment decision, there are many possible futures, some good and some bad. Whichever one of the futures unfolds doesn’t mean it was inevitable or knowable. Unfortunately, a cognitive bias won’t go away just by knowing it exists. You need a consistent process that anticipates the bias to help mitigate its effect. That means being explicit about why you are making an investment and noting what you believe to be true of the world at the time you invest and what you are forecasting for the future, given those beliefs. In other words, without writing down your thesis and your forecasts, there is no way to go back and check to see whether a decision was good or bad, independent of its outcome. It will be left to your memory to reconstruct the process, and your memory is not reliable. |
| In case you missed it: |
| ARTICLE in WELL + GOOD Magazine, by Erin Bunch | Mar 22, 2021 Decisiveness Is a Learned Trait—Here Are 11 Tips To Master the Art of Decision-Making Parking Thought Podcast with Jacob Roecker S1E11: Betting Against Yourself MetaLearn Podcast with Nasos Papadopoulos Learning from Experience, Overcoming Analysis Paralysis and How To Make Better Decisions The Iowa Idea Podcast with Matt Arnold E74: Annie Duke and Making Better Decisions Alliance for Decision Education Podcast Episodes 1-6 |